Vermont-Based Feds Pursue Fraud Claims Against Health Records Company | Off Message

Vermont-Based Feds Pursue Fraud Claims Against Health Records Company

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U.S. Attorney for Vermont Nikolas Kerest - U.S. DEPARTMENT OF JUSTICE
  • U.S. Department of Justice
  • U.S. Attorney for Vermont Nikolas Kerest
Federal prosecutors in Vermont are pursuing yet another electronic health records company for false claims related to its medical records software.

Newly unsealed court records show that a former executive of Modernizing Medicine filed a whistleblower lawsuit against the Boca Raton, Fla., company and its cofounders, Daniel Cane and Dr. Michael Sherling, in 2017. Earlier this month, the U.S. Attorney’s Office informed the court that it would take up the whistleblower’s case.

The complaint alleged that ModMed’s patient records software didn’t work as purported, the company cheated federal certification tests and created incentives for doctors in ways that violated federal anti-kickback laws.



The District of Vermont has been at the forefront of investigating electronic health records companies that tapped federal incentives as part of an Obama administration effort to modernize health care. The industry, however, has been rife with problems.
Federal prosecutors in Vermont began investigating after an assistant U.S. attorney noticed that a software error may have contributed to the death of a Vermont woman. A $155 million settlement with eClinicalWorks followed, then a $57.25 million settlement in 2019 with Greenway Health. In 2020, another vendor, Practice Fusion, agreed to pay a total of $145 million to resolve civil and criminal investigations, including a criminal probe into a kickback scheme with Purdue Pharma designed to boost opioid prescriptions.
The whistleblower complaint against ModMed alleges that its software, used by providers in Vermont and around the country, had persistent bugs that the company, in particular CEO Cane, was slow to acknowledge or address despite complaints from users.

The software sometimes recorded incorrect times and dates of patient office visits and even placed patient notes in the wrong chart. Following one such mixup, according to the complaint, a physician couldn’t determine to which patient a biopsy result belonged.
The complaint also alleges that some errors were baked into the software so ModMed could make more money. One way electronic health records vendors win clients is by offering algorithms that can code patient visits in ways that maximize reimbursements. But ModMed’s software used incorrect codes that yielded higher fees, a technique the complaint refers to as “upcoding.” The practice drew complaints from physicians who worried that the errors would put them at risk of federal audits.

“No major modifications were made to correct the upcoding errors on the assumption that any billing problems would be attributed to providers as they could override claims,” the complaint alleges.

In a statement, ModMed denied the allegations and said it plans to “defend vigorously against them.”

“At ModMed, we stand behind the integrity of our products and our people,” the statement read. “We remain steadfast in our mission to place doctors and patients at the center of care through an intelligent, specialty-specific cloud platform.”

The U.S. Attorney’s Office will file a new complaint in the coming weeks outlining which of the whistleblower allegations the federal prosecutors intend to pursue. The office declined to comment on the pending litigation.

The whistleblower, former ModMed vice president of product management Amanda Long, is represented locally by former U.S. Attorney for the District of Vermont Tristram Coffin.

“I am pleased the Justice Department recognizes the seriousness of this matter and is intervening in the case after investigating my allegations,” Long said in a statement.

Read the whistleblower's complaint below: