Electronic Health Records Company Settles Civil False Claims Lawsuit for $45 Million

Modernizing Medicine Inc. (ModMed) has agreed to pay $45 million to resolve allegations it violated the False Claims Act (FCA). The Boca Raton-based electronic health record (EHR) technology vendor is alleged to have caused millions of dollars in claims to be submitted to the federal government by accepting and providing remuneration in exchange for referrals and by causing its users to report inaccurate information in connection with claims for federal incentive payments.

The lawsuit originally was brought by a whistleblower (Amanda Long, VP of product management), in September 2017. In March 2022, the U.S. Department of Justice intervened in the case. Long will be awarded $9 million plus interest for her role as whistleblower.

ModMed sold a cloud-based electronic health records (EHR) system, through subscription services, to specialty medical practices that used the software for clinical documentation, prescribing medications, telemedicine, billing and more.

According to the lawsuit, ModMed was alleged to have falsely represented to the U.S. government that its software complied with requirements for certification and for the payment of incentives under the Meaningful Use Program. However, the software had flaws that not only rendered it unreliable and unable to meet Meaningful Use standards, but also created risks to patient health and safety such as inaccurate e-prescribing of medications.

Software flaws also caused customers who participated in the Medicare program to submit false and inaccurate reports to CMS under the Physician Quality Reporting System, which resulted in customers receiving higher reimbursement payments from Medicare than they were entitled to.

The lawsuit alleged that ModMed violated the FCA and the Anti-Kickback Statute through three marketing programs: 

  • First, ModMed solicited and received kickbacks from Miraca Life Sciences Inc. in exchange for recommending and arranging for ModMed’s users to utilize Miraca’s pathology lab services. 
  • Second, ModMed conspired with Miraca to improperly donate ModMed’s EHR to health care providers in an effort to increase lab orders to Miraca and simultaneously add customers to ModMed’s user base. 
  • Third, ModMed paid kickbacks to its current healthcare provider customers and to other influential sources in the healthcare industry to recommend ModMed’s EHR and refer potential customers to ModMed. 

As a result of this conduct, the government alleged that ModMed improperly generated sales for itself and for Miraca, while causing healthcare providers to submit false claims for reimbursement to the federal government for pathology services, and for incentive payments from the Department of Health and Human Services (HHS) for the adoption and “meaningful use” of ModMed’s EHR technology.

In January 2019, Miraca (now known as Inform Diagnostics) agreed to pay $63.5 million to resolve allegations that it violated the Anti-Kickback Statute and the Stark Law by engaging in improper financial relationships with referring physicians.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as its ability to defend those who become the target of a whistleblower action. For more information give us a call at 305-358-4500 or email info@vitalehealthlaw.com.

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