The electronic health record vendor CareCloud has agreed to pay $3.8 million to resolve kickback allegations.

According to a press release from the Southern District of Florida U.S. Attorney's Office, the United States accused CareCloud of violating the False Claims Act and the Anti-Kickback Statute through its "Champions Program" marketing-referral initiative.  

"Product functionality, reliability, and safety should drive a medical software company’s success, not illegal kickbacks paid to promote its products," said Acting United States Attorney Gonzalez in a statement.  

"There is simply no place for kickbacks in our country’s healthcare system. Companies who ignore this will be held accountable," Gonzalez added.

"On January 8, 2020, CareCloud, Inc. acquired the company now known as CareCloud Health, Inc. (formerly CareCloud Corporation)," said CareCloud representatives in a statement. "The acquired company was, at the time of the transaction, subject to a civil investigation, which began with the filing of a sealed complaint in 2017.

"CareCloud Health has admitted no wrongdoing in this matter and has accepted settlement in an effort to move forward, focusing its efforts fully on the vital support and services it provides to its clients, and avoid costly litigation," representatives continued.

"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."

WHY IT MATTERS  

According to the settlement agreement, between January 2012 and March 2017, CareCloud gave existing clients cash-equivalent credits, cash bonuses and percentage success payments to recommend its EHR products to prospective clients.

The agency says participants in the program agreed in writing not to provide negative information about CareCloud's EHR products to the prospective clients.  

Prospective clients were allegedly unaware of the rewards that program participants had received.  

The United States alleged that these actions violated the Anti-Kickback Statute, along with the False Claims Act (because the kickback payments "rendered false" the claims submitted for federal incentive payments under meaningful use programs). The settlement agreement notes that CareCloud denies the allegations. The vendor has since discontinued the program as described.   

As part of the agreement, the company will pay $3,806,967 to the United States. The whistleblower who originally sued the company in federal court will be awarded $803,269.97.  

THE LARGER TREND  

This isn't the first EHR company under fire for alleged kickbacks this year. In January, athenahealth agreed to pay $18.25 million to resolve False Claims Act allegations.  

Under the "Concierge Event" program, according to court documents, athenahealth is said to have provided existing and potential clients trips to the Masters Tournament, the Kentucky Derby, New York Fashion Week, the Indy 500 and the NCAA Final Four, among other events. The company also was accused of paying existing clients for referrals of new practices that signed up for athenaOne or athenaClinicals, regardless of how much time the existing client spent speaking with the lead.

Last year, Allscripts' Practice Fusion subsidiary agreed to a $145 million settlement after admitting to illegal kickbacks from an opioid maker.  

ON THE RECORD  

"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 Pérez Aybar, special agent in charge at HHS OIG, in a statement.   

"My office will continue to investigate such actions to protect the funding for federal healthcare programs," Aybar said.

Kat Jercich is senior editor of Healthcare IT News.
Twitter: @kjercich
Email: kjercich@himss.org
Healthcare IT News is a HIMSS Media publication.