The Volkov Law Group

Modernizing Medicine Settles False Claims Act Violations for $45 Million | JD Supra

The Department of Justice continues to rack up health care enforcement action — misrepresentation, anti-bribery and fraud. The DOJ is on course for a banner year.

In a recent enforcement action, Modernizing Medicine (“ModMed”), an electronic health records (“EHR”) provider, agreed to pay $45 million for violations of the AKS and the False Claims Act for receiving bribes in exchange for referrals and tricking users into falsely reporting information about federal incentive payments. (AKS law prohibits anyone from offering or paying, directly or indirectly, compensation, money, or anything of value, for referrals of items or services covered by Medicare, Medicaid, and other federally funded programs).

ModMed violated the False Claims Act through three marketing schemes:

First, ModMed solicited and received bribes from Miraca Life Sciences (“Miraca”) in exchange for recommending and arranging for ModMed users to use Miraca’s pathology services. Between January 2010 and December 2013, ModMed facilitated EHR donations to ModMed customers by Miraca who did not meet AKS requirements because donation decisions considered the volume or value of lab test referrals or other business between DSE grant recipients. who were customers of ModMed and Miraca and therefore did not meet the requirements of the AKS safe harbor exception applicable to EHR donations, 42 CFR § 1001.952(y).

ModMed customers submitted claims to federal health care programs for pathology services performed by Miraca from January 2010 through December 2013, and also submitted claims for Meaningful Use Incentive Payments as part of the HHS EHR incentive programs (the “meaningful use programs”) of the Centers for Medicare & Medicaid Services (CMS).

Second, ModMed conspired with Miraca to improperly give ModMed’s EHR to healthcare providers in order to increase lab orders to Miraca and add customers to ModMed’s user base. In September 2013, Miraca paid ModMed an upfront fee and increased transaction fees to develop and include in its EHR software, certain enhanced interface features that ModMed agreed, for a time, not to offer to any other lab. of pathology.

Third, ModMed bribed its current healthcare provider customers and other influential healthcare industry sources to recommend ModMed’s EHR and refer potential customers to ModMed. Accordingly, the United States alleges that between January 2010 and July 2017, ModMed users submitted tainted claims for incentive payments under the Significant Use Programs.

The electronic health records industry has been the subject of investigation and enforcement action under the False Claims Act. The DOJ’s emphasis recognizes that EHRs are critical to informing physician decision-making and ensuring healthcare providers select EHR technologies without inappropriate influence.

DOJ says ModMed improperly generated sales for itself and Miraca, while forcing healthcare providers to submit bogus claims for pathology services and for adoption incentive payments of the ModMed EHR system.

In January 2019, Miraca agreed to pay $63.5 million to resolve allegations that it violated the AKS and Stark Law by offering referring physicians grants for EHR systems and technology consulting services free or at a reduced price.

The False Claims Act was started by a who tam relator, which received a $9 million payout of the $45 million settlement.

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