Feds join lawsuit against EHR vendor ModMed

March 25, 2022


The federal government will intervene in a False Claims Act lawsuit against electronic health records vendor Modernizing Medicine and its co-founders that became public Friday.

The lawsuit alleges the company falsely attested to complying with certification requirements for its EHR products, provided illegal kickbacks to doctors and upcoded diagnoses entered into its EHRs.

The Justice Department notified the U.S. District Court for the District of Vermont that it will partially intervene in the case and intends to file its own complaint within 90 days.

ModMed, founded in 2010, offers a cloud-based, specialty-specific EHR system. The software is used by physicians such as orthopedists, otolaryngologists and dermatologists.

Former ModMed executive Amanda Long sued the company as a whistleblower in 2017. Her complaint, unsealed Friday, alleges the company made false statements to obtain certification and to market its software. software. One allegation is that the company switched back and forth between different versions of its software during remote certification testing to complete certain tests.

Employees manually changed the computer display so the software appeared to perform functions it didn’t have the capacity to do, Long alleges. She claims the software had many ongoing issues as of 2017 that rendered it unreliable and created patient safety risks.

Long also says ModMed inappropriately influenced provider customers to prescribe certain drugs based on recommendations from e-coupon firms. These companies and ModMed earned money from increased prescriptions for those medicines. ModMed also allegedly made medical specialists paid consultants for promoting its EHRs and compensated them several hundred dollars per successful customer referral.

Providers using ModMed’s EHRs have also found that the software uses billing codes for procedures and office visits that generate higher billing revenue, including for Medicare claims, the complaint says.

ModMed denies the accusations and will defend vigorously against them, a spokesperson said in a statement. “We stand behind the integrity of our products and our people. We remain steadfast in our mission to place doctors and patients at the center of care through an intelligent, specialty-specific cloud platform,” the spokesperson said.

Long is represented by lawyers who’ve worked with whistleblowers in three other cases against EHR companies, including a False Claims Act case against eClinicalWorks that settled for $155 million in 2017.

The federal government has intervened in five other false claims lawsuits against EHR companies, including the eClinicalWorks case. Previous suits have ended in settlements. Most recently, Athenahealth agreed to pay $18.25 million to settle a lawsuit claiming it paid unlawful kickbacks to boost sales.