Electronic Health Record Company Settles Department of Justice Kickback Probe

Electronic Health Record Company Settles Department of Justice Kickback Probe

February 26, 2020, Covington Alert

On January 27, Practice Fusion, Inc. (“Practice Fusion”), an electronic health record (“EHR”) company acquired by Allscripts in 2018, agreed to pay $145 million to resolve criminal and civil investigations with the Department of Justice (“DOJ”) related to an illegal kickback arrangement with a major opioid company. Practice Fusion solicited and received nearly $1 million from the opioid company to create a clinical decision support (“CDS”) alert in its EHR software to prompt doctors to prescribe the company’s extended release opioids (“EROs”). The settlement identified the opioid company as “Pharma Co. X.” This case represents the first time DOJ has taken criminal action against an EHR company.

Criminal Resolution

A. The Allegations

According to the Criminal Information, Practice Fusion violated the Anti-Kickback Statute (“AKS”) by offering its EHR to healthcare providers (“HCPs”) free of charge. Practice Fusion derived revenue, in part, through payments from pharmaceutical companies in exchange for creating and implementing CDS alerts designed to increase sales of their products. Specifically, Practice Fusion’s EHR software included a CDS alert in the EHR software that encouraged HCPs to evaluate a patient’s pain; if the physician identified a pain score over a certain level, the EHR offered a drop-down menu of pain options, including “Opioid Therapy.”

According to DOJ, Practice Fusion and Pharma Co. X added the "Opioid Therapy” treatment option without regard for whether a patient’s condition was indicated for EROs. The government also alleged that Practice Fusion and Pharma Co. X had entered into their partnership with the specific intention of increasing ERO sales.

The criminal complaint alleges that:

• Practice Fusion asserted in communications with Pharma Co. X that the CDS alerts would increase Pharma Co. X’s drug sales;
• Practice Fusion’s CDS alerts were not consistent with accepted medical standards and guidelines on opioid prescribing;
• Practice Fusion’s CDS alerts did not satisfy applicable government quality measures;
• Practice Fusion’s CDS alerts were funded by Pharma Co. X’s marketing department; and
• Pharma Co. X’s marketers were involved in the design of the CDS alerts.

Christina E. Nolan, U.S. Attorney for the District of Vermont, stated that the arrangement allowed the opioid company “to inject itself in the sacred doctor-patient relationship.” She added, “The companies illegally conspired to allow the drug company to have its thumb on the scale at precisely the moment a doctor was making incredibly intimate, personal, and important decisions about a patient’s medical care, including the need for pain medication and prescription amounts.”

B. The Settlement

Pursuant to a Deferred Prosecution Agreement, Practice Fusion admitted that “it solicited and received kickbacks from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications.” Practice Fusion agreed to pay $26 million in criminal fines and forfeiture, which represents the largest criminal fine in the history of the District of Vermont. Practice Fusion also agreed to adopt a comprehensive compliance program to prevent such abuses from occurring in the future.

Civil Resolution

Practice Fusion also agreed to pay $118.6 million to resolve federal False Claims Act (“FCA”) allegations. Under the government’s Meaningful Use program, enacted as part of the Health Information Technology for Economic and Clinical Health (“HITECH”) Act, health care providers received incentive payments from the Department of Health and Human Services in exchange for implementing government-certified electronic health records software. In a civil complaint, DOJ alleged that Practice Fusion had obtained certification by falsely representing that its software complied with the applicable requirements. DOJ alleged that, by failing to comply with the certification criteria, Practice Fusion knowingly caused HCPs who used its software to attest to Meaningful Use and receive incentive payments under false pretenses.

The government alleged that the following features of the Practice Fusion software failed to satisfy EHR certification criteria for Meaningful Use:

• Practice Fusion’s software did not allow users to create a standardized export summary, as required by 45 CFR § 170.314(b)(7). In fact, Practice Fusion had disabled this feature altogether and required customers to contact Practice Fusion for an export.
• Practice Fusion’s software did not allow users to record a patient's active problem list using the standard vocabulary; and
• Practice Fusion’s software did not consistently incorporate clinical laboratory tests and results using the standard vocabulary.

The civil complaint also alleged that Practice Fusion had entered into arrangements with thirteen other pharmaceutical companies, for the purpose of using CDS alerts to promote their drugs.

The Practice Fusion settlement represents DOJ’s third civil EHR company settlement in recent years, following the eClinicalWorks settlement in May 2017 and the Greenway Health settlement in February 2019. The U.S. Attorney’s Office for the District of Vermont and DOJ’s Commercial Litigation Branch, Fraud Section, led both matters. In announcing the eClinicalWorks settlement, U.S. Attorney Nolan stated that “EHR companies should consider themselves on notice.”

If you have any questions concerning the material discussed in this client alert, please contact the following members of our Pharma and Biotech practice.