A major vendor of electronic health record systems for physicians, eClinicalWork, will pay the federal government $155 million to settle a False Claims Act lawsuit contending that its products are faulty.

The settlement is the first of its kind for a healthcare information technology company facing formal charges that its systems did not help providers achieve objectives of the Meaningful Use program for EHRs and that usability shortcomings put patient lives at risk.

In addition, the settlement contends that eClinicalWorks paid kickbacks in exchange for promoting its product, which had flaws that could expose patients to potential safety issues.

The plaintiff in the lawsuit, Brendan Delaney, an IT staff worker for New York City who was implementing the software at Rikers Island jail; he encountered numerous problems with the EHR, its coding and functionality. The suit was filed under the False Claims Act, a federal law that allows people who are not affiliated with the government to file actions against federal contractors claiming fraud against the government. The act of filing such actions is informally called "whistleblowing."

The lawsuit alleged that eClinicalWorks falsely certified that the EHR met all government criteria; that the vendor failed to adequately test software before release; failed to correct critical and urgent problems and bugs for an extended period of time; failed to ensure data portability and audit log requirements; and failed to reliably record lab and diagnostic imaging orders.

The company denied any wrongdoing as part of its formal statement on the settlement. eClinicalWorks said it fully cooperated with the Department of Justice civil investigation.

“The claims settled by the agreement are allegations only, and there has been no determination of liability,” the company statement said. “Although eCW disputed the DOJ’s allegations, it decided to settle to avoid the cost and uncertainty inherent in protracted litigation.”

The company further contended that it consistently tested software prior to release to ensure it met EHR meaningful use requirements, that any certification issues were addressed in accordance with the government’s administrative processes, and it says its software remains certified for use by providers participating in the meaningful use program.

The vendor also defended its customer referral program and does not believe the program was unlawful, but says it has discontinued it.

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DOJ further alleged that the company paid kickbacks totaling at least $392,000 to customers to recommend its products to prospective customers, as well as other kickbacks in the form of consulting and speaker fees.

Delaney, who filed the whistleblower lawsuit in 2015 on behalf of the federal government, will receive $30 million of the government’s funds.

“This is a ground-breaking case,” said Collette Matzzie, a partner at Phillips & Cohen law firm that represented Delaney. “It is the first time that the government has held an electronic health records vendor accountable for failing to meet federal standards designed to ensure patient safety and quality patient care.”

The Department of Justice also weighed in on the settlement. “Every day, millions of Americans rely on the accuracy of their electronic health records to record and transmit their vital health information. This resolution is a testament to our deep commitment to public health and our determination to hold accountable those whose conduct results in improper payments by the federal government.”

Under the settlement, eClinicalWorks’ three founders—Girish Navani, Rajesh Dharampuriya and Mahesh Navani—are liable for a payment of $154.92 million to the federal government. Jagan Vaithilingam, a developer at the company, will pay $50,000. Project managers Bryan Sequeira and Robert Lynes will each pay $15,000.

As part of the settlement, the company has entered into a corporate integrity agreement with the HHS Office of Inspector General, which dictates certain actions that it will be required to fulfill for its customers. The settlement agreement is available here.

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