Electronic health records vendor settles fraud allegations for $31 million

by Ben Vernia | August 17th, 2023

On July 14, the Department of Justice announced that electronic health records company NextGen Healthcare, Inc., had agreed to settle a whistleblower’s fraud allegations for $31 million. According to DOJ’s press release:

NextGen Healthcare Inc. (NextGen), an electronic health record (EHR) technology vendor, has agreed to pay $31 million to resolve allegations that NextGen violated the False Claims Act (FCA) by misrepresenting the capabilities of certain versions of its EHR software and providing unlawful remuneration to its users to induce them to recommend NextGen’s software. 

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The American Recovery and Reinvestment Act of 2009 established the Medicare and Medicaid EHR Incentive Program to encourage health care providers to adopt and demonstrate their “meaningful use” of EHR technology. Under the program, the U.S. Department of Health and Human Services (HHS) made incentive payments to eligible health care providers that adopted certified EHR technology and met certain requirements relating to their use of the technology. To obtain certification for their product, companies that develop and market EHR technology are required to demonstrate that their product(s) satisfies all applicable HHS-adopted certification criteria; the company must also identify any software components on which their EHR relies to perform the criteria. Developers must first pass testing performed by an independent, accredited testing laboratory authorized by HHS, and then obtain and maintain certification by an independent, accredited certification body authorized by HHS.

In a complaint filed in conjunction with the settlement, the United States contends that NextGen falsely obtained certification for its software in connection with the 2014 Edition certification criteria published by HHS’s Office of the National Coordinator. Specifically, the government alleges that NextGen relied on an auxiliary product designed only to perform the certification test scripts, which concealed from the certifying entity that NextGen’s EHR lacked critical functionality. The government alleges that, consequently, the EHR that NextGen ultimately released to its users lacked certain required functionalities, including the ability to record vital sign data, translate data into required medical vocabularies, and create complete clinical summaries. 

In its complaint, the government also alleges that NextGen violated the Anti-Kickback Statute, which prohibits anyone from offering or paying, directly or indirectly, any remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. In its complaint, the government contends that, notwithstanding this prohibition, NextGen knowingly gave credits, often worth as much as $10,000, to current customers whose recommendation of NextGen’s EHR software led to a new sale. The government alleges that other remuneration, including tickets to sporting events and entertainment, was also provided to induce purchases and referrals.

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The whistleblowers — two employees of a healthcare facility that used NextGen’s software — will receive $5,580,000 (an 18% relator’s share), the government announced.

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