DOJ Joins Whistleblower Lawsuit Against Electronic Health Records Vendor
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The Justice Department has filed notice of its intention to join a lawsuit accusing electronic health records (EHR) software vendor Modernizing Medicine (ModMed) and two co-founders of violating the False Claims Act (31 U.S. Code § 3729). The lawsuit, unsealed five years after the initial complaint, alleges the company's software failed to meet government-required certification criteria and kickbacks to healthcare providers.
The False Claims Act empowers private whistleblowers to file lawsuits on behalf of the government against entities that are defrauding the government. Before the complaint is made public, the government examines the allegations and determines whether to join the suit. If the lawsuit moves forward, the whistleblower is entitled to compensation.
The lawsuit was filed against ModMed on behalf of a whistleblower who served previously as senior-level executive at the company before resigning. The complaint alleges that ModMed knowingly misrepresented its "unreliable" software's capabilities to satisfy Department of Health and Human Services (HHS) certification requirements.
ModMed is accredited by the Department of Health and Human Services(HHS) to sell their cloud-based EHR system through subscription services to specialty medical practices. In turn, these practices use the software for patient records, writing prescriptions, billing, and telehealth appointments. The lawsuit also alleges ModMed incentivized healthcare providers to submit fraudulent claims for unnecessary treatments to federal healthcare programs in return for referrals.
While healthcare digitization and telehealth have expanded access to care, the flexibility has also led to an increase in fraud and False Claims Act violations, according to the Justice Department. The proliferation of telehealth systems over the past decade, distinctly in the wake of COVID-19, spawned a surge of new enforcement measures as healthcare fraud accounted for a majority of False Claims Act judgments and settlements in fiscal year 2021. According to the Justice Department, officials recovered more than $5.6 billion from false claims cases last year, of which more than $5 billion was related to healthcare—a big jump from the funds recovered in 2020 with $1.8 billion and $2.6 billion in 2019.
The Justice Department said it expects to file a complaint with allegations against ModMed, and co-founders Daniel Cane and Dr. Michael Sherling within 90 days of its decision to intervene.