The Department of Justice (DOJ) is investigating and has settled cases alleging illegal kickbacks involving electronic health records (EHR) companies and drug manufacturers.  Recent developments indicate that kickback claims involving EHR companies are a viable and important focus of DOJ’s efforts to combat fraud, waste, and abuse.

New public securities filings have revealed DOJ investigations into drug companies’ financial relationships with EHR vendors. In its April 2020 SEC filing, prominent drug manufacturer AstraZeneca Plc revealed that it had “received a Civil Investigative Demand from the US Attorney’s Office in Vermont and the Department of Justice, Civil Division, seeking documents and information relating to AstraZeneca’s relationships with electronic health record vendors.”

Similarly, in 2019, Merck & Co Inc also disclosed that it was cooperating with a DOJ probe related to EHR payments. While neither Merck nor AstraZeneca provided any further information in their filings, the information they did include is evidence of the DOJ’s stepped-up enforcement of anti-kickback claims relating to EHRs.

The most notable case related to kickbacks paid by EHR companies is the Practice Fusion case. In the first criminal action against an EHR company, Practice Fusion admitted that it solicited and received kickbacks of nearly $1 million from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications.

The kickbacks took the form of “sponsorship payments” to Practice Fusion in exchange for implementing clinical decision support (CDS) alerts in its EHR software designed to increase prescriptions for their opioid drugs. The payments allowed the drug company access to and influence over how Practice Fusion selected the guidelines used to develop the CDS alerts.

They set the criteria that would determine when a healthcare provider received an alert, and in some cases, even drafting the language used in the alert itself. The CDS alerts that Practice Fusion agreed to implement did not always reflect accepted medical standards.

Other notable FCA settlements involving EHR companies have included kickback allegations as well. For example, eClinicalWorks had a number of schemes where it either paid providers directly to recommend its software or disguised the kickbacks as speaker fees or referral fees. eClinicalWorks settled the case for $155 million. Similarly, Greenway Health settled with the DOJ for $57.25 million to resolve allegations that involved, in part, Greenway’s payment of kickbacks to increase sales of its EHR software.

It is too early to tell what the DOJ investigations of EHR companies’ financial relationships with drug manufacturers like Merck and AstraZenca will reveal. What is clear, however, is that illegal kickbacks are common in the EHR industry and the DOJ is interested in investigating illegal, fraudulent conduct. These EHR kickback cases are important because kickbacks result not only in increased costs to patients and the government, but also corrupt medical decision making that can result in potential patient harm.

Contact Baron & Budd

If you are aware of electronic healthcare record (EHR) fraud or have been approached with a proposal to commit fraud, you may qualify to serve as a whistleblower. Baron & Budd’s experienced whistleblower representation team has helped numerous whistleblowers achieve a successful resolution in a wide variety of cases under state and federal law. Please call (866) 845-2164 if you want to report EHR fraud.