On January 27, 2020, the Department of Justice (DOJ) announced a $145 million settlement with Practice Fusion Inc., an electronic health records (EHR) software company, that resolves parallel criminal and civil investigations involving allegations of kickbacks, false claims, and non-compliance with federal EHR program requirements. We previously discussed a preliminary settlement in this case here, and in announcing the finalizing of that settlement DOJ has shed more light on the allegedly improper conduct at issue. According to DOJ, this is the first criminal action ever brought against an EHR company, and the “unique” deferred prosecution agreement (DPA) imposed by DOJ against Practice Fusion that seeks “to ensure acceptance of responsibility and transparency as to” underlying conduct may reflect a new approach to settlements with corporate health care defendants.

According to the DOJ, the settlement resolves allegations that Practice Fusion solicited and accepted sponsorship payments from pharmaceutical companies in exchange for programming clinical decision alerts in its EHR software to influence physician prescribing of opioids. Among other allegations, DOJ claims that Practice Fusion involved pharmaceutical companies in the design of certain clinical decision support (CDS) alerts – including by selecting the guidelines used to develop the alerts – in a manner that allowed the companies to increase sales of their products. DOJ further alleges that Practice Fusion accepted payments to create CDS alerts that increased the prescription of extended release opioid medications.

As part of the settlement, Practice Fusion agreed to enter into a DPA in response to a criminal information that charges it with two felony counts of violating the Anti-Kickback Statute (AKS) and for conspiring with a pharmaceutical company to violate the AKS. The DPA requires payment of a fine of $25,398,300, forfeiture of nearly $1 million in proceeds, ongoing cooperation with further investigations, and that Practice Fusion publicize documents relating “to its unlawful conduct” online and engage an independent monitor to review and approve any sponsored CDS alerts. Practice Fusion also entered into a civil settlement that includes payment of $118.6 million to resolve allegations that it caused the submission of false claims in violation of the False Claims Act (FCA), including by falsely certifying compliance with federal health IT certification programs and the EHR incentive program (formerly meaningful use).

The terms extracted by DOJ as part of this settlement indicate heightened scrutiny of EHR companies. Additionally, the link drawn by DOJ between the alleged noncompliance and increased opioid prescribing, amidst a nationwide opioid crisis, may have provided the basis for DOJ to undertake a criminal action against an EHR company for the first time. Regardless, EHR companies would be well-advised to review the allegations and settlement terms closely and assess their own compliance with the requirements highlighted by DOJ. This settlement also represents another reminder to all health care organizations of DOJ’s continued scrutiny of marketing practices within the pharmaceutical industry, and how those arrangements have evolved along with new technologies.

This post was co-authored by Michael Lisitano, legal intern at Robinson+Cole. Michael is not yet admitted to practice law.