EHR Vendor Fined $3.8M for Illegal EHR Kickback Scheme

CareCloud Health, a cloud-based EHR vendor, will pay a $3.81 million fine after an illegal EHR kickback scheme to increase its EHR sales, according to a statement issued by the Department of Justice for the Southern District of Florida.  

The Department of Justice alleged the Miami-based EHR vendor violated the False Claims Act (FCA) and the Anti-Kickback Statute through its “Champions Program” marketing referral service between 2012 and 2017.

“Product functionality, reliability, and safety should drive a medical software company’s success, not illegal kickbacks paid to promote its products,” said Juan Antonio Gonzalez, acting United States attorney for the Southern District of Florida. “There is simply no place for kickbacks in our country’s healthcare system. Companies who ignore this will be held accountable.”  

CareCloud offered and provided its “Champions Program” clients money bonuses, cash equivalent credits, and percentage success payments to suggest its EHR solution to potential clients, DOJ explained. Potential customers were unaware of the illegal kickback practice or participant agreements that prohibited negative information or conversation about the EHR vendor.

According to the published statement, these marketing ploys allegedly resulted in sales for the EHR vendor and caused providers to submit false claims to the federal government. These claims are associated with incentive payments for the Medicare and Medicaid EHR Incentive Programs, or meaningful use program, and the Merit-Based Incentive Payment System, or MIPS. 

“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,” said Omar Pérez Aybar, special agent in charge, Department of Health and Human Services, Office of Inspector General (HHS-OIG). “My Office will continue to investigate such actions to protect the funding for federal health care programs.”

Furthermore, this settlement resolved a related whistleblower lawsuit under the False Claims Act. The act permits private individuals to sue on behalf of the government for false claims and share in any recovery. The US will award the whistleblower over $800,000.

MTBC, Inc. acquired CareCloud in January 2020, and it recently discontinued the “Champions Program.”

CareCloud is the second EHR vendor to pay a hefty fine this year following an alleged illegal EHR kickback scheme.

In January, athenahealth agreed to pay $18.25 million after violating the FCA and the Anti-Kickback Statute through three illegal marketing schemes. 

These schemes included all-expenses-paid “bucket list” events, such as the Kentucky Derby, the Masters Tournament, and New York Fashion Week. It also entered into deals with competitors that discontinued their respective health IT products. 

Although the athenahealth declared no wrongdoing, it did agree to the settlement.