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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On November 1, 2022, the United States Department of Justice (“DOJ”) announced<a href="#note-i">i</a> that Modernizing Medicine Inc., an electronic health records (“EHR”) technology vendor, agreed to pay $45 million to settle allegations that it violated the False Claims Act by engaging in several practices that caused its customers to submit false claims to federal health care programs.<a href="#note-ii">ii</a> The government alleged that Modernizing Medicine improperly generated sales for itself and a strategic partner laboratory while causing health care providers to submit false claims for reimbursement to the federal government for laboratory services and for incentive payments for the adoption of “meaningful use” of Modernizing Medicine’s EHR technology. The DOJ confirmed that the United States would not have paid these false claims if it had known that the requests were associated with referrals obtained as a result of violations of the Anti-Kickback Statute.

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In this action, a former vice president of Modernizing Medicine filed a complaint on behalf of the United States, and the United States in turn filed its own complaint<a href="#note-iii">iii</a> in partial intervention alleging that Modernizing Medicine violated the False Claims Act by engaging in the following conduct, among other conduct, which resulted in Modernizing Medicine’s customers submitting tainted claims for reimbursement to federal health care programs:

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The Laboratory previously agreed to pay $63 million to settle a False Claims Act case resulting from potential violations of the Anti-Kickback Statute and the Stark Law by providing subsidies for electronic health records systems and free or discounted technology consulting services to referring physicians and physician groups.&nbsp;&nbsp;

The Modernizing Medicine settlement is fourth in a series of enforcement actions by the DOJ against electronic health record technology companies. This enforcement action is another reminder of increased government scrutiny of kickback arrangements involving vendors and health care providers. While vendors do not directly participate in federal health care programs, any kickback arrangements between vendors and health care providers, or vendors and other third parties, can implicate the Anti-Kickback Statute resulting in tainted claims submitted by health care providers to federal health care programs in violation of the False Claims Act.

Thompson Hine follows enforcement actions involving financial arrangements between health care providers and EHR and other vendors and is prepared to assist clients in assessing and mitigating potential risks of these arrangements.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

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<a id="_ftn1" href="#_ftnref1">[i]</a> <a href="https://www.justice.gov/opa/pr/modernizing-medicine-agrees-pay-45-million-resolve-allegations-accepting-and-paying-illegal">Modernizing Medicine Agrees to Pay $45 Million to Resolve Allegations of Accepting and Paying Illegal Kickbacks and Causing False Claims</a>

<a id="_ftn2" href="#_ftnref2">[ii]</a> Modernizing Medicine issued a statement denying the allegations of misconduct - <a href="https://www.modmed.com/press-release/modmed-fully-resolves-all-government-claims/">ModMed® Fully Resolves All Government Claims</a>

<a id="_ftn3" href="#_ftnref3">[iii]</a> <a href="https://www.justice.gov/opa/press-release/file/1548656/download">Justice.gov,</a> United States ex rel. Long v. Modernizing Med., Inc., No. 2:17-cv-179 (D. Vt.)

<a id="_ftn4" href="#_ftnref4">[</a><a href="#note-iv">iv</a><a href="#_ftnref4">]</a> The Laboratory’s EHR donations did not comply with the safe harbor to the Anti-Kickback Statute because the donation decisions took into account the volume or value of the referrals of laboratory tests or other business between EHR donation recipients and the Laboratory.

https://admin.thompsonhine.com/wp-content/uploads/2022/11/DOJ-Continues-Enforcement-of-False-Claims-Act-Against-Electronic-Health-Records-Vendors.pdf

DOJ Continues Enforcement of False Claims Act Against Electronic Health Records Vendors

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