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CareCloud Health Settles Whistleblower Lawsuit for $3.8M

— April 29, 2021

EHR software developer, CareCloud Health, recently agreed to pay $3.8 million to settle a whistleblower lawsuit.

CareCloud Health, a developer of electronic health records software in Miami, will pay about $3.8 million to settle a lawsuit filed in response to a whistleblower’s allegations that it “paid illegal kickbacks to generate sales.” 

Legal gavel
Legal gavel; image courtesy of succo via Pixabay,

According to the Justice Department, CareCloud Health’s ‘Champions’ “marketing referral program violated the False Claims Act and Anti-Kickback Statute by providing clients a variety of inducements to recommend its EHR program to prospective clients, including cash bonuses and percentage-success payments.” Additionally, those clients signed agreements that they would not say anything negative about the company’s electronic health records (EHR) software.

The whistleblower lawsuit was filed in federal court in Miami, Florida, and alleged the company “paid kickbacks to its users.” Of the settlement funds, Ada de la Vega, a former manager for the company will receive $800,000 because she was the one who filed the suit. The U.S. Justice Department joined the lawsuit shortly after it was filed and argued CareCloud’s payments “to participants violated the federal Anti-Kickback Statute and also violated the False Claims Act because the kickback payments rendered false Meaningful Use and Merit-Based Incentive Payment System (MIPS) payments.” The alleged kickbacks occurred from January 1, 2012, to March 31, 2017.

According to the lawsuit, CareCloud, Inc. acquired CareCloud Health, Inc. on January 8, 2020. At the time, the acquired company was in the midst of a civil investigation, “which began with the filing of a sealed complaint in 2017.” Despite the allegations against CareCloud, and despite the settlement, the company has admitted no wrongdoing. It agreed to the recent settlement as a way to move forward and focus “its efforts fully on the vital support and services it provides to its clients, and avoid costly litigation.”

CareCloud executives also said the settlement is in “response to government allegations that certain elements of CareCloud Health’s client reference program violated the Federal Anti-Kickback Statute several years prior to acquisition.” The company stated:

“The U.S. government declined to intervene on and pursue any claims regarding CareCloud’s EHR product, Charts. The investigation was considered as an element of the acquisition, and adequate reservations were made.”

Since the lawsuit, CareCloud has discontinued the “prior version of the marketing referral program” that led to the lawsuit being filed in the first place. 

When commenting on the settlement, Juan Antonio Gonzalez, Acting United States Attorney for the Southern District of Florida said:

“Product functionality, reliability, and safety should drive a medical software company’s success, not illegal kickbacks paid to promote its products…There is simply no place for kickbacks in our country’s healthcare system. Companies who ignore this will be held accountable.”

Omar Pérez Aybar, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) also chimed in and said:

“Medical software executives who unlawfully promote the capabilities of their electronic health record technology, and pay others to do the same, diminish their credibility and waste taxpayer money.”


CareCloud to pay $3.8M to settle charges it provided kickbacks to generate EHR sales

EHR vendor CareCloud pays $3.8M to settle whistleblower case alleging kickbacks

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