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ModMed EHR Provider Settles Anti-Kickback Allegations for $45M

— November 14, 2022

Modernizing Medicine strikes a deal with the government, resolving False Claims Act allegations.

Modernizing Medicine Inc. (also known as ModMed), an electronic health record (EHR) technology vendor based in Florida, has agreed to pay $45 million to resolve accusations  that it violated the False Claims Act (FCA) by “accepting and providing unlawful remuneration in exchange for referrals and by causing its users to report inaccurate information in connection with claims for federal incentive payments,” court records show.

The False Claims Act, also called the “Lincoln Law,”is federal legislation which imposes liability on responsible parties who defraud government programs.  The Anti-Kickback Statute, part of the FCA, prohibits anyone from “offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.”

The U.S. Department of Justice (DOJ) alleged that ModMed violated the FCA and the Anti-Kickback Statute through three of its marketing campaigns. The filing states that ModMed’s “request for a higher valuation came at an unreasonable cost by crossing the line on prohibitions against kickbacks and upcoding federal health programs and ignoring known patient safety through shortcuts in software programming.”

ModMed EHR Provider Settles Anti-Kickback Allegations for $45M
Photo by -Tima Miroshnichenko from Pexels

It continues, “First, ModMed solicited and received kickbacks from Miraca Life Sciences Inc. (Miraca) in exchange for recommending and arranging for ModMed’s users to utilize Miraca’s pathology lab services. Second, ModMed conspired with Miraca to improperly donate ModMed’s EHR to health care providers in an effort to increase lab orders to Miraca and simultaneously add customers to ModMed’s user base. Third, ModMed paid kickbacks to its current health care provider customers and to other influential sources in the healthcare industry to recommend ModMed’s EHR and refer potential customers to ModMed.”

Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Department of Justice’s Civil Division said, “Electronic health records serve a critical role in informing physician decision making, and it is therefore essential that health care providers select such technology free from the influence of improper financial inducements. Vendors of electronic health records will be held to the same standards of compliance that we expect of everyone who provides health care services.”

“U.S. Attorney Nikolas P. Kerest for the District of Vermont added, “Today’s settlement marks the fourth resolution that our office has achieved as we seek to root out fraud in the electronic health record technology field. It is imperative that medical providers be able to trust the health record systems with which they document important and sensitive patient information, and for too long electronic health record vendors have prioritized only sales. The government alleges that for years, ModMed, through a variety of schemes, engaged in illegal kickbacks that distorted both the EMR and pathology lab markets, in addition to providing its users with a deficient product. This resolution reflects the seriousness of the government’s allegations and the determination of the Department of Justice to restore integrity to the electronic health record field.”

The settlement partially resolves a complaint initially filed in the District of Vermont by Amanda Long, a former Vice President of Product Management at ModMed. The 2017 legal case was submitted under the qui tam, or whistleblower, provisions of the FCA. 

As part of the deal, Long will receive an estimated $9 million.


Modernizing Medicine Agrees to Pay $45 Million to Resolve Allegations of Accepting and Paying Illegal Kickbacks and Causing False Claims

The False Claims Act – Department of Justice

Justice Department steps into EHR vendor lawsuit

Amanda Long Whistleblower Lawsuit

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