NextGen Healthcare pays $31M to settle alleged False Claims Act violations

The electronic health record vendor was accused by the DOJ of "misrepresenting the capabilities of certain versions of its EHR software" and providing kickbacks to customers to drive new sales.
By Mike Miliard
09:57 AM

This story has been updated with a statement from a NextGen spokesperson.

The U.S. Department of Justice announced July 14 it had reached a settlement agreement with NextGen Healthcare over alleged violations of the False Claims Act and Anti-Kickback Statute. NextGen will pay $31 million to resolve the allegations.

The DOJ alleges that the electronic health record vendor misrepresented the capabilities of certain versions of its EHR software, and also claims that the company offered "unlawful remuneration to its users to induce them to recommend" its technology products.

The government had contended that NextGen falsely obtained meaningful use certification for its EHR software in connection with the 2014 Edition certification criteria published by the Office of the National Coordinator for Health IT. 

Specifically, the DOJ alleged that NextGen "relied on an auxiliary product designed only to perform the certification test scripts, which concealed from the certifying entity that NextGen's EHR lacked critical functionality." 

As a result, the case held, the EHR software that the company ultimately released "lacked certain required functionalities, including the ability to record vital sign data, translate data into required medical vocabularies, and create complete clinical summaries."

The government complaint also alleges that NextGen violated the Anti-Kickback Statute, which prohibits the offering of any remuneration to "induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs."

DOJ says NextGen gave financial credits worth as much as $10,000 to customers – as well as tickets to sporting events and entertainment – to some customers whose recommendation of its EHR software led to a new sale.

"Electronic health records are an essential part of our healthcare system," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division, in a statement announcing the NextGen settlement. 

"Every day, millions of patients and health care providers across the country rely on such records to accurately identify and transmit vital health information," he said. "The Civil Division is committed to protecting the integrity of the electronic health records software that is available to providers and the process by which they decide which software to select."

The settlement agreement resolves a whistleblower complaint first filed in 2018 in the U.S. District Court of Vermont by Phillips and Cohen LLP.

The whistleblowers, Elizabeth Ringold and Toby Markowitz, brought the case while working as clinical providers with NextGen systems at the South Carolina Department of Corrections.

"It is critically important that electronic health record systems reliably place orders for medications, labs, and other diagnostic tests, and maintain accurate and complete patient records," said Ringold in a statement provided by Phillips and Cohen.

"This is especially important in large institutional settings like prisons where patients often require coordinated care to deal with serious, and even life-threatening, illness and conditions," she added. "I felt compelled to bring my concerns to the United States to ensure the health and safety of my patients."

For its part, the company "denies that any of its conduct violated the law," and notes that "the settlement agreement does not include any admissions of wrongdoing," said a NextGen Healthcare spokesperson.

"This agreement relates to claims from more than a decade ago," they added. "The settlement resolves the matter without monitoring or changes to NextGen Healthcare’s products or compliance policies. To avoid the distraction and expense of litigation, we believe it is in the best interest of the company to put this historical matter behind us and keep our attention focused on innovating solutions that enable better healthcare outcomes for all."

The NextGen case is only the most recent in a long line of False Claims Act settlements from EHR vendors in recent years.

Back in 2017, eClinicalWorks paid $155 million to the government to resolve allegations of falsely obtaining meaningful use certification and "flouting the certification requirements" of its EHR products.

Soon after, the DOJ promised it would probe more EHR vendors for false claims – and that's exactly what it has done over the past six years.

Other big settlements include $145 million paid by Allscripts in 2019 to resolve potential liability in connection to the business practices of Practice Fusion, which it had acquired the year before. Greenway Health was also hit with a $57 million penalty to settle similar allegations in 2019.

And just this past year, Modernizing Medicine paid $45 million to resolve its own alleged FCA and Anti-Kickback violations with the DOJ.

"Electronic health records play a pivotal role in the provision of safe, effective health care, and the testing and certification process of the EHR Incentive Program was intended to provide assurances to providers that their EHR can perform certain important functions," said U.S. Attorney Nikolas P. Kerest for the District of Vermont, in a statement about the NextGen case. "With this settlement, our office has now resolved five investigations into misconduct by EHR companies, demonstrating our commitment to ensuring that EHR companies are held responsible for their misrepresentations."

"Medical providers must be able to rely on electronic health records systems to correctly document and process important health data for continuity of patient care," said Special Agent in Charge Maureen R. Dixon for the Office of the Inspector General in the U.S. Department of Health and Human Services. "We will continue to work with our valuable law enforcement partners to evaluate allegations brought under the False Claims Act and ensure the integrity of Medicare programs."

Mike Miliard is executive editor of Healthcare IT News
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Healthcare IT News is a HIMSS publication.

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