eClinicalWorks $155 Million Settlement: Think Volkswagen

These days, when healthcare IT expert Stanley Nachimson sees a Volkswagen, he’s likely to think of the $155 million whistleblower settlement involving electronic health record (EHR) vendor eClinicalWorks (ECW) announced last week by the U.S. Department of Justice.

In its announcement, the Justice Department reported that ECW, headquartered in Westborough, Mass. and one of the nation’s largest EHR vendors, would pay $155 million to resolve a False Claims Act lawsuit alleging that ECW misrepresented the capabilities of its software. The settlement also resolves allegations that ECW paid kickbacks to certain customers in exchange for promoting its product.

“Much like the Volkswagen emissions case, the vendor figured out a way to beat the process, to the detriment of providers and their patients,” Nachimson said in a statement to ICD10monitor. “It was more important to get the certification than to produce a system which met the needs of providers and patients.” 

Coincidentally, on April 21, 2017, U.S. District Judge Sean Cox ordered Volkswagen to pay a $2.8 billion criminal fine for rigging diesel-powered vehicles to cheat on government emissions tests.

The ECW lawsuit was filed by Brendan Delaney, a software technician formerly employed by the New York City Division of Health Care Access and Improvement. Under the qui tam provisions of the False Claims Act (FCA), private individuals can sue on behalf of the government for false claims and share in any recovery. The Act also allows the government to intervene and take over the action. As part of last week’s resolution, Delaney will receive approximately $30 million, according to the Department of Justice.

According to whistleblower attorney Colette G. Matzzie at Phillips & Cohen LLP, the ECW case is notable because it is the first time the government went after an EHR vendor for failing to meet federal standards to ensure patient safety and quality care.

Similar to the Volkswagen settlement, ECW is being held accountable for the veracity of the representations it made when seeking certification for its EHR system. Moreover, in the ECW settlement, the government applied its anti-kickback statue (AKS) law to the promotion and sale of EHR systems.

“This case (ECW) also exposes the weaknesses of the ONC (Office of the National Coordinator for Health Information Technology) certification process,” Nachimson said. “This situation shows the extent to which healthcare providers trust their vendors to meet federal requirements like HIPAA and Meaningful Use, without their having all of the information and knowledge necessary to fairly evaluate the products. Doctors and other providers are not expected to be IT experts, but are expected to meet rigorous IT requirements.”

The Justice Department said that ECW falsely obtained certification for its EHR software when it concealed from its certifying entity that its software did not comply with the requirements for certification.

“For example,” the Justice Department stated in its news release, “in order to pass certification testing without meeting the certification criteria for standardized drug codes, the company modified its software by ‘hardcoding’ only the drug codes required for testing. In other words, rather than programming the capability to retrieve any drug code from a complete database, ECW simply typed the 16 codes necessary for certification testing directly into its software.”

The Justice Department went on to say that ECW’s software also “did not accurately record user actions in an audit log, and in certain situations did not reliably record diagnostic imaging orders or perform drug interaction checks.”

“In addition,” the news release continued, “ECW’s software failed to satisfy data portability requirements intended to permit healthcare providers to transfer patient data from ECW’s software to the software of other vendors.”

“The EHR whistleblower suit puts the healthcare electronic record industry on notice that the government is focusing on the technology that was in large part funded through the Meaningful Use program” Nick van Terheyden, MD, an internationally recognized authority on healthcare technology, said in a statement to ICD10monitor. “The broad nature of the elements included in the complaint is likely to raise concerns in other solutions in the marketplace.”

Under the terms of the settlement agreements, according to the Justice Department, ECW and three of its founders (Chief Executive Officer Girish Navani, Chief Medical Officer Rajesh Dharampuriya, M.D., and Chief Operating Officer Mahesh Navani) are jointly and separately liable for the payment of $154.92 million to the government. Separately, Developer Jagan Vaithilingam will pay $50,000, and Project Managers Bryan Sequeira and Robert Lynes will each pay $15,000.

ECW has also entered into a corporate integrity agreement (CIA) with the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) covering the company’s EHR software, according to the Justice Department. Among other requirements of the CIA, ECW must retain an independent software quality oversight organization to assess ECW’s software quality control systems and provide written semi-annual reports to OIG and ECW documenting its reviews and recommendations. The CIA also is requiring ECW to allow customers to obtain updated versions of their software free of charge and to give customers the option to have ECW transfer their data to another EHR software provider without penalties or service charges.

“Electronic health records have the potential to improve the care provided to Medicare and Medicaid beneficiaries, but only if the information is accurate and accessible,” OIG Special Agent in Charge Phillip Coyne said. “Those who engage in fraud that undermines the goals of EHR or puts patients at risk can expect a thorough investigation and strong remedial measures such as those in the novel and innovative corporate integrity agreement in this case.”

“Providers have historically depended on their vendors to keep them compliant and up to date,” Nachimson concluded. “This trust factor may now be broken.”