U.S. joins whistleblower case against electronic health records vendor

Irina Baranova

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  • Lawsuit accuses Modernizing Medicine of making false claims about its software, paying kickbacks to doctors
  • Case part of broader investigation of electronic health records vendors

March 25 – The U.S. Department of Justice is joining a whistleblower lawsuit accusing electronic health records vendor Modernizing Medicine Inc of falsely claiming its software met government-required certification criteria and paid kickbacks to doctors.

The government’s decision to intervene in the case was announced Friday by lawyers for a former executive at ModMed who filed a federal whistleblower lawsuit in Vermont against the company and two co-founders under the False Claims Act.

The case is being handled by the U.S. Attorney’s Office for the District of Vermont, a leader in investigating electronic health records vendors. In three settlements with similar companies, the office has recovered $357.5 million since 2017.

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In a newly unsealed filing dated March 15, the Justice Department said it plans to intervene in the whistleblower case filed back in 2017 against ModMed; Daniel Cane, its chief executive; and Michael Sherling, its chief medical officer.

The lawsuit had until now been under seal while the government investigated claims brought under the False Claims Act, which allows whistleblowers to sue companies to recover taxpayer funds paid out based on false claims.

The Justice Department said it planned to file its own complaint against the three defendants within 90 days.

Boca Raton, Florida-based ModMed in a statement said it “disagrees strongly with the allegations in the qui tam complaint, and we intend to defend vigorously against them.”

ModMed sells a cloud-based electronic health records system to specialty medical practices, which use the software for clinical documentation, prescribing medications, billing and other functions.

The lawsuit was filed by lawyers at the whistleblower law firm Phillips & Cohen on behalf of Amanda Long, who served as vice president of product management at the company before resigning in 2017.

The lawsuit alleged ModMed misrepresented the capabilities of its software while seeking certifications required by the U.S. Department of Health and Human Services showing it met the criteria of a program that gave health care providers incentives to adopt electronic medical records technology.

The lawsuit said the flaws in ModMed’s system rendered it unreliable. The company also provided kickbacks to doctors who used its products, the lawsuit said.

Previous, similar cases in Vermont have resulted in a $155 million settlement with eClinicalWorks, a $145 million deal with Allscripts Healthcare Solutions Inc’s Practice Fusion Inc; and a $57.5 million settlement with Greenway Health.

The case is United States ex rel. Amanda B. Long v. Modernizing Medicine Inc, et al, U.S. District Court, District of Vermont, No. 17-cv-179.

For the United States: Owen Foster and Lauren Almquist Lively of the U.S. Attorney’s Office for the District of Vermont and Jamie Yavelberg, Edward Crooke, Kelley Hauser and Sarah Hill of the U.S. Justice Department.

For Long: Colette Matzzie of Phillips & Cohen and Tristram Coffin of Downs Rachlin Martin PLLC

For Modernizing Medicine: Unknown

(NOTE: This story has been updated with a comment from ModMed.)

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