Acting U.S. Attorney for Vermont Eugenia Cowles announces a $155 million settlement to be paid by eClinicalWorks to resolve allegations it misrepresented the abilities of its software and paid kickbacks. | AP Photo Feds levy $155M fine against software vendor for faulty patient records

A leading electronic health records maker and its founders will pay $155 million to resolve a lawsuit that accused the company of selling faulty software and defrauding the program that subsidized doctors to computerize their patient records, the Justice Department announced Wednesday.

The settlement, the first of its kind involving a health IT company, also states that Massachusetts-based eClinicalWorks paid kickbacks in exchange for promoting its product, which had flaws that may have exposed millions of patients to potential safety risks.


The defects reported in the settlement are familiar to anyone who has listened to doctors complain about their electronic records systems since the government started a $34 billion subsidy program in 2011 to get doctors to abandon paper records. Many of the records are clunky and invite mistakes that could imperil patients, doctors say.

Safety experts who worry that the computerized records have introduced new dangers to health care said they hoped the harsh remedy would focus industry and Congress on the need for a health IT safety center and stronger supervision of IT products by the Office of the National Coordinator for Health IT, or ONC, at the Department of Health and Human Services.

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In a news release, the company denied any wrongdoing. It said the claims settled by the agreement "are allegations only and there has been no determination of liability." The company decided to settle only to avoid the cost and uncertainty of protracted litigation, it said.

"We are pleased to put this matter behind us and concentrate all of our efforts on our customers and continued innovations to enhance patient care delivery,” Chief Operating Officer Mahesh Navani said in the release.

The action against eClinicalWorks has its roots at Rikers Island jail in New York City, where in 2010 doctors, pharmacists and nurses started complaining that the software used by the women’s hospital was malfunctioning dangerously.

Patient records often overlapped on their computer screens, making it easy to mistake one patient’s diagnosis or drug for another’s. Medication lists were error prone. Patients left the jail without proper prescriptions or lab results. One patient’s HIV drugs weren’t listed on his medical report. Another’s tapering methadone dosage was inaccurate.

The complaints came to Brendan Delaney, who worked on implementing eClinicalWorks at Rikers, and later at more than 30 other hospitals and clinics in New York City and Massachusetts.

In a whistleblower lawsuit that he filed in May 2015 on behalf of the federal government, Delaney charged that the software “failed reliably” to document and display medications and laboratory tests, resulting in “serious patient safety issues.”

What’s more, he charged, corporate managers at eClinicalWorks were aware of the flaws but failed to fix them because fixes would require addressing problems in the company’s core software and all of its modules, and because admitting the defects “would put eCW at severe competitive disadvantage.”

The case marks the first time the government has held an electronic health records vendor accountable for major meaningful use shortcomings by applying federal anti-kickback laws, said Colette G. Matzzie, a whistleblower attorney and partner at Phillips & Cohen.

The settlement is the largest False Claims Act recovery in the District of Vermont and apparently the largest financial recovery in the state's history, said Eugenia Cowles, acting U.S. Attorney for the district. “This resolution demonstrates that EHR companies will not succeed in flouting the certification requirements.”

Privately held eClinicalWorks claims to be the leading cloud-based EHR, with 4,500 employees and more than 850,000 medical professionals — including 125,000 doctors and nurse practitioners — using its software. It claimed 2016 revenues of $440 million.

The government charged that eClinicalWorks falsely obtained certification for its software by concealing faults in compliance. For example, the company entered in its programs only the limited number of drug codes required for testing rather than programming the capability to retrieve any drug code from a complete database, according to the Justice Department.

The company'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, according to the release. As a result, users submitted false claims for incentive payments. These errors may also have posed safety risks for patients, the release said.

Under the settlement, the corporation and its founders — CEO Girish Navani, Chief Medical Officer Rajesh Dharampuriya and Chief Operating Officer Navani — are liable for the penalty. In addition, developer Jagan Vaithilingam will pay $50,000. Project managers Bryan Sequeira and Robert Lynes will each pay $15,000, the release said.

As part of the settlement, the company entered a five-year agreement with HHS’ inspector general requiring it to retain an independent overseer and provide regular reports on its compliance. The company must also provide free updates of its software, take steps to mitigate any safety-related risks and inform customers of the risks.

The agreement requires the company to let customers transfer their data to another EHR provider, free of charge. If many customers take that step, it could represent a devastating financial blow to eClinicalWorks.

The government’s complaint alleged that eClinicalWorks failed to adequately test its software or to fix bugs for “months or even years” after they were detected, while paying at least $392,000 to influential customers to recommend eClinicalWorks products to prospective customers.

In a news release from Phillips & Cohen, which represented his lawsuit, Delaney said New York City health officials ignored his reports about the software’s defects. He thanked federal attorneys who “recognized the seriousness of my charges and dug into the matter quickly and thoroughly.”

Some doctors said they hoped the suit would lead to more focus on safety in health IT.

“This unfortunate event highlights the need for a national health IT safety center with investigational capabilities,” said Hardeep Singh of the Houston VA’s Research Center of Innovation. “This also underscores the need for supporting ONC’s [October] Enhanced Oversight and Accountability of Health IT Certification Program."

Although eClinicalWorks has alerted users and repaired defects since the lawsuit was filed, some smaller providers may still be using unpatched versions, said Andrew Gettinger, director of ONC’s Office of Clinical Quality and Safety.

Over time, eClinicalWorks’ processes have improved, he said. Still, “the magnitude of this, and extent of the allegations are really substantial. In my mind they stand out dramatically from what we’ve known and come to expect from the health IT development industry.”

Darius Tahir and David Pittman contributed to this report.



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