EHR Vendor Fraud: When the Software Maker Causes False Claims

EHR vendor fraud involves electronic health record software makers using false product representations or kickbacks to cause false claims for government money. The decision may sit in a certification test, a calculation that helps customers qualify for payment, or a contract that buys a recommendation. If you work in engineering, product management, sales or a clinic using the software, you may know why what the customer was promised differs from what the product actually does.

Who Is Committing Healthcare Fraud?

EHR software vendors have faced government allegations of manipulating certification, paying customers to recommend their products, or accepting money to influence clinical decisions. Customers, pharmaceutical companies and laboratories can sit on the other side of those arrangements. The conduct follows different money: federal incentive payments for using the software, or payments for the drugs and services the software helps steer.

Much of this enforcement has concerned ambulatory and small-practice software.

How Can a Vendor Cause a False Claim Without Billing Medicare?

A vendor can cause a false claim by supplying the false representation on which its customer’s request for payment depends. The False Claims Act reaches those who cause false claims as well as those who submit them.

Under the historical Medicare and Medicaid EHR incentive programs, health care providers attested that they used certified technology and met the applicable program requirements. The vendor supplied the product and calculated measures that customers used in those attestations. A falsely obtained certification or a knowingly inflated measure could therefore reach the government through the customer’s payment request.

The payment connection continues through Medicare’s Promoting Interoperability programs: the hospital program and the clinician performance category in the Merit-based Incentive Payment System tie payment adjustments to certified technology. The Medicaid incentive program ended in 2021.

In the eClinicalWorks case announced in 2017, the government alleged that the company typed the sixteen drug codes used in certification testing directly into its software instead of implementing access to the complete standardized vocabulary. Its complaint alleged that customers relying on the certification unknowingly made false incentive attestations.

The case ended in a $155 million settlement covering the company and individual defendants. The Justice Department announced an approximately $30 million reward for the whistleblower who brought the case.

We find the alleged substitution extraordinary: according to the government, the company supplied the answers it knew the test would ask for, and customers relied on the resulting certificate when claiming public money.

What Does It Mean to Have a Certified EHR?

A certified EHR has demonstrated conformance with specified criteria for the product and certification edition being tested. The federal certification program’s overview describes a chain of authorized testing laboratories and certification bodies. The developer presents its product to a testing laboratory, then seeks certification from a certification body. The Office of the National Coordinator for Health Information Technology sets the program’s requirements and authorizes those organizations.

Certification carries commercial weight because payment rules tie customers’ eligibility to certified technology. The agency publishes the test procedures, tools and data. Vendors can know the test before they take it.

RxNorm supplies standardized drug terminology. SNOMED CT supplies clinical terminology. In the Modernizing Medicine case, the government alleged that the product did not always let physicians record information using the required vocabularies.

NextGen’s Temporary Test Product

NextGen Healthcare agreed to pay $31 million in 2023 to resolve certification and kickback allegations. The government alleged that NextGen put required capabilities into a temporary version of its separate Knowledge Based Model product for certification testing while knowing the software used by providers lacked required functions.

The alleged gaps included standardized clinical coding, care and referral summaries, and vital-sign functions. In its complaint, the government quoted a manager’s description of the certification approach:

United States ex rel. Markowitz v. NextGen Healthcare, government complaint, paragraph 48, quoting a manager

The government alleged that the temporary test product had functions the customer’s software lacked.

Certification Tests and the Delivered Product

Practice Fusion faced a different certification allegation: the government said several versions failed the required data-portability capability and that the company later disabled access to the export feature altogether. According to the government, customers had to ask the vendor to export their data. That alleged conduct concerned a function needed to move records out of the system, making the product’s behavior after certification part of the payment story.

The Viztek resolution announced in 2020 supplies another test-versus-delivery parallel. Viztek and Konica Minolta Healthcare Americas agreed to pay $500,000 to resolve allegations that Viztek hardcoded its EXA EHR for certification while knowing the released software would not satisfy all the tested criteria. The alleged customer claims concerned Medicare incentive payments.

When the Wrong Calculation Helps the Customer Get Paid

A measure-calculation error can supply the false number in a customer’s incentive attestation. The Greenway Health settlement addressed that alleged conduct alongside certification manipulation and customer kickbacks.

The government alleged that Greenway modified its Prime Suite test software to appear capable of using the required clinical vocabulary. It also alleged that an earlier version miscalculated the percentage of office visits for which users distributed clinical summaries. According to the government, Greenway knew about the error and left it uncorrected so customers would receive incentive payments. Greenway agreed to pay $57.25 million in 2019 to resolve the allegations.

The eClinicalWorks complaint contains an employee’s words about a similar calculation problem:

United States ex rel. Delaney v. eClinicalWorks LLC, government complaint, paragraph 77, quoting an employee

The employee’s words connect the calculation to knowledge inside the business. If you know why a customer dashboard counts the wrong encounters, that is a conversation to have with us.

What Are Some Examples of Kickbacks in Healthcare?

EHR kickback cases include payments for customer recommendations, software donations intended to generate laboratory orders, and pharmaceutical payments for prescribing alerts. The direction of the payment explains the arrangement: a vendor pays someone to sell its product, or someone pays the vendor to influence what happens inside it.

Buying the Customer’s Recommendation

The government alleged that NextGen offered customers credits worth as much as $10,000 when their recommendations produced new sales, along with sporting-event and entertainment tickets. Its complaint also alleged that prospective buyers did not learn that the references were compensated.

In the CareCloud settlement announced in 2021, the alleged arrangement went further. The government alleged that customers received credits, cash bonuses and success payments for referrals, while agreements in an earlier version of its Champions Program barred negative information about the product. Prospects allegedly knew neither about the payments nor about the restriction.

We would want to know both before trusting a recommendation. A prospective buyer seeking another practice’s experience was allegedly hearing from someone paid to help close the sale and contractually barred from criticizing the product.

The athenahealth settlement announced in 2021 covered alleged inducements including trips to the Masters and Kentucky Derby, payments for client referrals, and payments to companies discontinuing their health IT products for customers converted to athenahealth.

Laboratory Orders and Software Donations

Modernizing Medicine agreed to a $45 million settlement in 2022. The government alleged that ModMed accepted kickbacks from Miraca Life Sciences to recommend and arrange for users to obtain Miraca’s pathology services. It also alleged that the companies improperly donated ModMed software to providers to increase laboratory orders and expand ModMed’s customer base.

The alleged arrangement joined two sales efforts: new software customers for the vendor and more testing business for the laboratory. The government also alleged that ModMed paid customers and other influential sources to recommend its EHR.

A Drug Company’s Marketing Budget Inside a Clinical Alert

Under its deferred prosecution agreement, Practice Fusion admitted accepting kickbacks to use its software to influence opioid prescribing. It solicited nearly $1 million to create an alert intended to increase prescriptions for extended-release opioids. The opioid company’s marketing department financed the payment and helped design the alert. Practice Fusion sold the anticipated return in terms of more opioid prescriptions.

Clinical decision support, with a sales target.

The government’s separate civil allegations covered thirteen other sponsored-alert arrangements intended to increase pharmaceutical sales, along with the certification and export problems. Practice Fusion agreed to approximately $118.6 million in civil settlements with the federal government and participating states.

Can a Whistleblower Report EHR Fraud?

Yes. EHR cases have begun with people working inside vendors, at customer sites and for competitors. Product knowledge can come from building the software or having to make it work during patient care.

The eClinicalWorks whistleblower was a software technician at a municipal health agency that had bought the product. The NextGen whistleblowers were a registered nurse and a nurse practitioner using its EHR at a customer facility. The ModMed whistleblower had been its vice president of product management. One athenahealth whistleblower worked in business development and sales for a competitor.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with the knowledge you already have, whether it concerns the test build, the customer dashboard, the reference program or the sponsor’s instructions.

What the Settlements Required the Vendors to Change

The eClinicalWorks and Greenway settlements reached the software and the customer’s ability to leave. Their five-year integrity agreements required outside review, customer disclosures about patient-safety issues and software remedies. eClinicalWorks had to offer free updates and transfer customer data to another vendor without penalties or service charges. Greenway’s terms included free upgrades and migration options.

Switching matters because the customer already depends on the installed system. A Panacea or a Problem? Electronic Health Records and the Complicated Politics of Its Stakeholder Network, a Vassar College senior thesis from 2022, argues that the difficulty of leaving weakens vendors’ incentives to address users’ frustrations:

A Panacea or a Problem? Electronic Health Records and the Complicated Politics of Its Stakeholder Network, Vassar College, 2022

That analysis helps explain why a customer keeps working with a disputed product. The settlement terms addressed both the product’s quality and the practical ability to move the records elsewhere. For someone inside a practice, the export function is part of that dependence.

Connecting the Software Decision to the Claim

An EHR vendor case connects what the company represented, what the product did, who knew the difference and which customer payment or clinical recommendation followed. Even the audit log can be part of the alleged problem: the government accused eClinicalWorks of failing to record user actions accurately. We connect those product details to the company’s representations and the payment they helped obtain.

You Know What the Product Actually Does

If you know where the test, the sales promise or the paid recommendation departs from what customers receive, speak with our whistleblower experts about the software and the decision behind it. We build the connection between that inside knowledge and the federal claim, bring in healthcare technology whistleblower lawyers who understand certification and kickback cases, and stay beside you to build your strongest EHR vendor whistleblower case.