A lawsuit unsealed last week alleges 62 hospitals in the state of Indiana and a Georgia-based health IT company violated the False Claims Act by submitting fraudulent Meaningful Use attestation data in order to obtain more than $324 million in EHR incentive payments.

Originally filed in the U.S. District Court for the Northern District of Indiana by two malpractice attorneys in September 2016, the complaint was unsealed last week after the federal government declined to intervene. The attorneys, Michael P. Misch and Bradley P. Colborn with Anderson Agostino & Keller, P.C., claim the hospitals knowingly falsified data in order demonstrate compliance with Core Measure 11 of Stage 1 Meaningful Use, which requires hospitals to fulfill an EHR request within three business days.

In doing so, the hospitals accepted millions of dollars in federal grant funding that they were not otherwise eligible for, according to the complaint (PDF).

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While representing plaintiffs in malpractice and personal injury cases, the lawyers say they encountered “repeated frustrations and delays in obtaining fast, inexpensive access to electronic medical records,” at four specific hospitals: Memorial Hospital of South Bend, St. Vincent Hospital and Health Care Center, and two hospitals within the Saint Joseph Health System.

Instead of fulfilling medical records requests, the lawsuit claims the providers submitted fraudulent data to the federal government to qualify for incentive payments. For example, in 2013, Memorial Hospital of South Bend reported that it had received and fulfilled 16 requests within three days. But Colborn and Misch claim they filed five requests with the hospital between over a nine-month period in 2013, none of which were provided within the three-day window, and only one was returned in an electronic format.

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The suit claims the practice of misreporting EHR fulfillments is “widespread throughout many Indiana hospitals,” particularly those that report compliance data close to zero, or just above the 50% threshold. In contrast, the attorneys point to hospitals across the country that fulfill hundreds and sometimes thousands of electronic requests.

"Memorial was made aware of these claims last year, and cooperated completely with all inquiries, after which the government declined to join the lawsuit," a hospital spokesperson said in an email to FierceHealthcare. "Quite simply, the claims are without merit."

Saint Joseph Health System and Ascension Healthcare, the parent company of St. Vincent, did immediately return requests for comment. The lawsuit was first reported by the South Bend Tribune.

At the center of this alleged scheme is Georgia-based Ciox Health, a release of information company formally known as HealthPort Technologies LLC. The company’s website boasts that Ciox Health serves 60% of U.S. hospitals and more than 16,000 physician practices.

According to the lawsuit, Ciox Health “routinely and repeatedly” overbilled patients for medical records rather than providing electronic copies at a reasonable price, as dictated under the HITECH Act, and knowingly engaged in a scheme to boost payments for “the illegal sale of medical records to patients.”

In an email to FierceHealthcare, a spokesperson for Ciox Healthcare said the company does not comment on pending litigation.

It’s not the first time Ciox Health has been the target of litigation over electronic records fulfillment. Earlier this year, a Georgia resident filed a class action lawsuit alleging the company overcharged for electronic records.

Editor's note: This story has been updated to include comment from Memorial Hospital of South Bend.