Allscripts to pay $145M to resolve DOJ’s Practice Fusion investigations

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EHR vendor Practice Fusion, acquired last year by Allscripts, has reached an agreement in principle with the Department of Justice to resolve HIPAA and federal anti-kickback law investigations.

In early 2018, Allscripts announced its plans to buy the physician practice vendor for $100 million in cash due—in part—to Practice Fusion’s “affordable” EHR technology. Now, Practice Fusion will end up costing Allscripts considerably more in a settlement with DOJ.

“Allscripts recorded a $145 million charge in the second quarter related to the DOJ investigations, which the company believes will be sufficient to resolve all potential civil and criminal liability in connection with these investigations,” the company announced in reporting its second quarter 2019 results last week.

DOJ’s initial investigations of Practice Fusion predate the Allscripts acquisition by about a year. In addition to Practice Fusion’s compliance with the Anti-Kickback Statute and HIPAA, the DOJ investigations focused on certification that Practice Fusion obtained in connection with the Department of Health and Human Services’ EHR Incentive Program.

“As you know from our previous SEC filings, the DOJ began investigations into certain practices of Practice Fusion before we acquired the business early last year,” said Allscripts President Rick Poulton in a conference call last week with analysts. “These investigations have many similarities to investigations that have either been settled or remain active with many of our industry competitors.”

After acquiring Practice Fusion in early 2018, DOJ’s investigations “continued to expand and required expanding levels of resources from us to support,” according to Poulton.

“The main focus has been on actions that occurred prior to our ownership and thus we were highly motivated to reach an agreement with the DOJ as soon as possible so we could put this chapter behind us,” he added. “While the amount we’ve agreed to pay—$145 million—is not insignificant, it is in line with other settlements in the industry and we are happy to have reached the agreement in principle. We will work with the DOJ to finalize the details of the settlement this coming month, and we expect to have recoveries from a variety of third parties that will help offset a portion of the amount we have agreed to pay the government.”

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