NextGen Healthcare to Pay $31M to Settle False Claims Act Allegations

The company is accused of misrepresenting the capabilities of certain versions of its electronic health care software.

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NextGen Healthcare, an electronic health record (EHR) technology vendor, has agreed to pay $31 million to resolve allegations that NextGen violated the False Claims Act (FCA) by misrepresenting the capabilities of certain versions of its EHR software and providing unlawful remuneration to its users to induce them to recommend NextGen’s software. 

“Electronic health records are an essential part of our health care system” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. “Every day, millions of patients and health care providers across the country rely on such records to accurately identify and transmit vital health information. 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 American Recovery and Reinvestment Act of 2009 established the Medicare and Medicaid EHR Incentive Program to encourage health care providers to adopt and demonstrate their “meaningful use” of EHR technology. Under the program, the U.S. Department of Health and Human Services (HHS) made incentive payments to eligible health care providers that adopted certified EHR technology and met certain requirements relating to their use of the technology. To obtain certification for their product, companies that develop and market EHR technology are required to demonstrate that their product(s) satisfies all applicable HHS-adopted certification criteria; the company must also identify any software components on which their EHR relies to perform the criteria. Developers must first pass testing performed by an independent, accredited testing laboratory authorized by HHS, and then obtain and maintain certification by an independent, accredited certification body authorized by HHS.

In a complaint filed in conjunction with the settlement, the United States contends that NextGen falsely obtained certification for its software in connection with the 2014 Edition certification criteria published by HHS’s Office of the National Coordinator. Specifically, the government alleges 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. The government alleges that, consequently, the EHR that NextGen ultimately released to its users lacked certain required functionalities, including the ability to record vital sign data, translate data into required medical vocabularies, and create complete clinical summaries. 

In its complaint, the government also alleges that NextGen violated the Anti-Kickback Statute, which prohibits anyone from offering or paying, directly or indirectly, any remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. In its complaint, the government contends that, notwithstanding this prohibition, NextGen knowingly gave credits, often worth as much as $10,000, to current customers whose recommendation of NextGen’s EHR software led to a new sale. The government alleges that other remuneration, including tickets to sporting events and entertainment, was also provided to induce purchases and referrals.

“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. “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 HHS, Office of the Inspector General (HHS-OIG). “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.”

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