United States: False Claims Act Settlement With eClinicalWorks Raises Questions For Electronic Health Record Software Vendors


On May 31, 2017, the US Department of Justice announced a Settlement Agreement under which eClinicalWorks, a vendor of electronic health record software, agreed to pay $155 million and enter into a five-year Corporate Integrity Agreement to resolve allegations that it caused its customers to submit false claims for Medicare and Medicaid meaningful use payments in violation of the False Claims Act.

In Depth

The US Department of Justice (DOJ) announced on May 31, 2017, an agreement (Settlement Agreement) settling allegations in the DOJ's Complaint-in-Intervention (Complaint) that eClinicalWorks (ECW), a vendor of electronic health record (EHR) software, caused its health care provider customers to submit false Medicare and Medicaid claims for meaningful use payments in violation of the False Claims Act (FCA). Under the Settlement Agreement, ECW agreed to pay approximately $155 million to resolve the allegations without admitting liability and an ECW software developer and two project managers agreed to pay additional amounts. ECW also entered into a five-year Corporate Integrity Agreement (CIA) with strict compliance oversight and reporting obligations and costly obligations to provide the latest version of ECW's EHR software (including related implementation and training services) to each of ECW's current customers free of charge. 

The groundbreaking settlement has sent shockwaves through the health information technology (HIT) industry and may be a sign of increasing FCA actions against vendors of EHR technology (CEHRT) certified through the HIT certification program of the Office of the National Coordinator of HIT (ONC). HIT vendors should review, and consider improvements to, their systems and other procedures for identifying, responding to and correcting software design and quality issues that call into question EHR software's conformity to applicable EHR certification criteria or present patient safety or clinician usability risks. HIT vendors should also review existing customer referral and marketing arrangements compliance with the Anti-Kickback Statute.

The following sections of this On the Subject discuss the key elements and implications of the Complaint, Settlement Agreement and CIA.


The DOJ's Complaint included two categories of allegations. The predominate allegations concerned false statements concerning ECW's EHR software, but also included certain allegations regarding improper payments (i.e., kickbacks) to referral sources in violation of the Anti-Kickback Statute. 

False Statements

First, the DOJ (and the whistleblower) allege that ECW made material false statements and concealed material facts from its certifying body about the extent to which ECW's EHR software met the 2011 Edition and 2014 Edition of the ONC's EHR certification criteria. For example, according to the Complaint, to pass certification testing related to implementation of the RxNorm standardized drug vocabulary in the EHR software's e-prescribing functionality, ECW modified its EHR software by hardcoding only the RxNorm standardized drug codes for the 16 drugs tested by the certification body's publicly available test scripts and not any other drugs.

The EHR software needed to be certified as CEHRT under the criteria in order for ECW's physician practice customers to properly achieve meaningful use under the Medicare and Medicaid EHR Incentive Programs, commonly known as the "Meaningful Use Programs." Physician practices cannot earn incentive payments for using paper medical records or legacy EHR systems that are not CEHRT. By achieving meaningful use of CEHRT, physician practices could receive Medicare EHR Incentive Payments of up to $43,720 per physician or other Medicare eligible professional, or up to $63,750 of Medicaid EHR incentive payments per Medicaid eligible professional. 

In addition, after earning incentive payments, practices could subsequently avoid reimbursement penalties under the Medicare Physician Fee Schedule by achieving meaningful use of CEHRT. However, the Complaint did not address any Medicare reimbursement penalties that were not applied because of providers' false meaningful use attestation. Currently, physicians participating in Medicare may use CEHRT to avoid reimbursement penalties under the Medicare Merit-Based Incentive Payment System (MIPS) launched this year by the Centers for Medicare and Medicaid Services and other Medicare Quality Payment Programs. 

As a result, the DOJ alleges that ECW caused its customers to receive unearned EHR incentive payments by submitting false attestations of meaningful use of CEHRT. Based on the Complaint, it appears that the DOJ did not pursue ECW's physician practice customers for the unearned incentive payments, in part, because ECW's customers "unknowingly" submitted false attestations (reasonably believing that the ECW EHR software was properly certified as reported on the ONC's website) and the FCA requires the government (or the whistleblower) to establish that false claims were submitted knowingly.


While the Complaint spends over eight pages detailing conduct involving certification of ECW's EHR software and meaningful use incentive payments to providers, DOJ only spent one page describing certain marketing arrangements for which ECW allegedly kickbacks to influential customers to induce them to recommend ECW's EHR software in violation of the Anti-Kickback Statute. ECW paid the purported kickbacks through a referral program, site visit program and a reference program.

According to the Complaint, under the referral program, ECW paid current customers as much as $500 for each provider they referred who executed a contract with ECW with payments to customers totaling almost $144,000. Under the site visit program, ECW paid customers to host prospective customers and payments varied based on the number hosted and whether the hosted prospect licensed ECW's software. The Complaint stated that under the reference program, ECW paid current customers as much as $250 to serve as references for the ECW software and speak to prospects. The reference fees varied based on number of references spoken to and whether the prospect licensed the ECW software.

Based on the scant details about the three ECW programs included in the Complaint, it is unclear exactly what DOJ's objections were to these arrangements. In particular, the site visit and reference programs could be viewed as typical and commercially reasonable marketing arrangements for information technology that involve customers providing actual marketing services in exchange for the payment. In addition, the Complaint seems to indicate that DOJ included the allegations about these programs because they resulted in more customers submitting claims for meaningful use incentive payments related to EHR software that did not meet the certification criteria, which was the main focus of DOJ's Complaint. 

In addition, the Office of the Inspector General (OIG) of the US Department of Health and Human Services has for years consistently stated that marketing payments technically implicate the Anti-Kickback Statute, but has also recognized that payment for marketing services are commonplace, and in fact, unavoidable without banning marketing activities entirely. Various advisory opinions and other guidance set forth a multi-factored facts-and-circumstances analysis for distinguishing between proper and improper marketing activities outside the Anti-Kickback Statute safe harbors. The analysis examines the nature of the payment, the type of marketing activity (i.e., active or passive), the type of item or service marketed, the intended audience, and the identity of the marketer and his or her relationship with the intended audience. However, the presence or absence of any of these factors does not necessarily mean that an arrangement violates the Anti-Kickback Statute. 

Ongoing CIA Requirements

In addition to the large monetary settlement payment, ECW agreed to comply with novel requirements in the CIA, which are discussed below, for a five-year term. These significant CIA requirements appear based on modifying the "independent monitor" model typically used in quality of care CIAs. 

Free Upgrades

The CIA requires ECW to provide, without charge, to current customers the latest version of the ECW EHR software that includes software updates that correct noncompliance with EHR certification criteria and the latest updates to any drug database supported by the EHR software used by the customer without charge. ECW is also not permitted to charge for implementation and training services for the updated version.

Free Data Transfer

The CIA requires ECW to transfer an existing customer's data without penalties or service charges to the customer or the customer's designated successor vendor.

Corporate Compliance Program

Like CIAs required as part of other FCA settlement agreements, the CIA with ECW requires ECW to implement an effective corporate compliance program that includes a full-time compliance officer, compliance committee, code of conduct, written compliance policies and procedures, a training program and a compliance hotline or other disclosure program. 

The written policies must address a wide range of topics, including, without limitation: compliance with EHR certification criteria and other federal health care program requirements applicable to HIT; compliance with the Anti-Kickback Statutes; software standards and practices (which are discussed below); development and implementation of software modifications to address patient safety issues; adhering to "all applicable aspects of the ONC Safety Assurance Factors for EHR Resilience (SAFER) guides;" staffing of an EHR usability team to address screen and workflow design and other EHR usability issues, an EHR patient safety team and an EHR certification compliance team; and notifying customers of patient safety and certification issues.

Quality Assurance Program with Software Standards and Practices

The CIA requires the compliance program to include a quality assurance program with software standards and practices, which are "professionally recognized software development, quality assurance, and risk management standards and practices appropriate to the nature and purposes of EHR systems (including supporting clinical decision-making and the provision of medical care to patients)." As part of the quality assurance program, ECW must proactively monitor information about potential software defects, usability problems and other issues that may present patient safety or EHR certification issues.

Health Care Provider Payment Sunshine 

The CIA requires ECW to post on its website reports of the cumulative value of payments by ECW to health care providers after the effective date of the CIA.

Retention of SQOO

The CIA requires ECW to engage an independent Software Quality Oversight Organization (SQOO) to develop the software standards and practices in consultation with ECW and assess the "effectiveness, reliability and thoroughness of" ECW's: internal quality control systems designed to address patient safety, certification, usability and other EHR issues; policies, procedures and practices for addressing EHR issues; adherence to software standards and practices and other requirements; other quality assurance program requirements of the CIA; and policies, procedures and practices to ensure that ECW customers are notified of their rights under the CIA. In contrast to OIG's past approach in selecting the "independent monitor," here, ECW is required to "seek input" from OIG on selecting an appropriately qualified SQOO within 60 days. If ECW is unable to retain an SQOO that OIG approves of within this time, OIG will select the SQOO. 

Retention of Independent Review Organization

ECW must retain an independent review organization (IRO) to conduct an arrangements review, which includes a review of (1) ECW's systems, processes, policies and procedures relating to arrangements involving the offer, payment, solicitation or receipt of anything of value between ECW and any actual or potential source of health care business or referrals (Systems Review) and (2) a review of 50 randomly selected "Focus Arrangements," which are arrangements between eCW and any actual source of health care business or referrals to eCW that involves, directly or indirectly, the offer, payment or provision of anything of value (Transactions Review). As part of the Transactions Review, the IRO will assess whether ECW has complied with certain procedures and other requirements of the CIA for Focus Arrangements. 

Implications for HIT Vendors

The settlement amount and extensive CIA requirements provide a clear signal that CEHRT vendors may experience increased scrutiny by the government, as well as whistleblowers, for compliance with the EHR certification criteria because CEHRT may enable health care providers to earn incentive payments or other enhanced reimbursement (or avoid decreased reimbursement) under federal health care programs. The CIA makes clear that the government is not only concerned about improper reimbursement to health care providers, but also patient safety issues caused by defective software and poor usability as well as kickbacks to referral sources. Vendors should consider the following responsive steps:

  • Development and implementation of a compliance program that reflects the elements of an effective corporate compliance program set forth in DOJ and OIG compliance program guidance for the health care industry;
  • Development and implementation of policies, procedures and practices for addressing EHR certification criteria, patient safety and EHR usability considerations into the ongoing software development and design process;
  • Development and implementation of procedures for employees, customers and other persons to report patient safety, usability and compliance issues to vendor management and procedures for promptly tracking, monitoring and resolving the issues;Identification, review and prompt resolution of any currently known or suspected EHR certification criteria compliance issues and patient safety issues;
  • Evaluation of current showcase or reference site arrangements, referral arrangements and other marketing arrangements outside the Anti-Kickback Statute safe harbors with persons in a position to generate new customers and new business to determine whether they reasonably comply with OIG guidance regarding marketing arrangements;
  • Development and implementation of policies, procedures and practices for complying with the Anti-Kickback Statute, including policies for evaluating whether marketing arrangements with referral sources comply with the Anti-Kickback Statute; and
  • Implementation of a comprehensive training program to address the range of health care regulatory compliance matters addressed by the CIA and foster a culture of health care regulatory compliance.

False Claims Act Settlement With eClinicalWorks Raises Questions For Electronic Health Record Software Vendors

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.