by Ben Vernia | November 2nd, 2022
On November 1, the Department of Justice announced that Florida-based Modernizing Medicine Inc. had agreed to pay $45 million to settle allegations, originally brought by a whistleblower, that the company caused the submission of false claims. According to DOJ’s press release:
Modernizing Medicine Inc. (ModMed), an electronic health record (EHR) technology vendor located in Boca Raton, Florida, has agreed to pay $45 million to resolve allegations that it violated the False Claims Act (FCA) by accepting and providing unlawful remuneration in exchange for referrals and by causing its users to report inaccurate information in connection with claims for federal incentive payments.
The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. In a complaint filed in conjunction with today’s settlement, the United States 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. (Miraca) 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 health care provider customers and to other influential sources in the healthcare industry to recommend ModMed’s EHR and refer potential customers to ModMed.
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As a result of this conduct, the government alleges that ModMed improperly generated sales for itself and for Miraca, while causing health care 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 providing to referring physicians subsidies for EHR systems and free or discounted technology consulting services. 2019 Press Release.
Additionally, under HHS’ EHR Incentive Programs, HHS offered incentive payments to health care providers that adopted certified EHR technology and met certain requirements relating to their “meaningful use” of that technology. Eligibility for incentive payments required health care providers to use certified EHR technology that, among other things, utilized certain standard vocabularies for drugs (RxNorm) and clinical terminology (SNOMED CT) in order to conduct certain transactions. The government’s complaint in intervention alleges that ModMed knew that its EHR did not always allow physician users to electronically record medical records using the required standard vocabularies, thereby causing certain of its users to submit false claims for incentive payments under that program.
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The Government announced that the whistleblower will receive $9 million of the settlement (a 20% relator’s share).
