Massachusetts-based electronic health records (EHR) vendor eClinicalWorks (ECW) and several of its employees will pay nearly $155 million to settle allegations that it violated federal law by misrepresenting its software’s capabilities and paying kickbacks to customers. The U.S. Department of Justice (DOJ) announced the settlement with ECW, one of the largest ECR vendors in the U.S., on May 31.

The settlement resolves a lawsuit brought by a whistleblower under the False Claims Act, as well as allegations that ECW paid kickbacks to customers in exchange for promoting its product. The whistleblower will personally receive about $30 million out of the settlement.

Under the Electronic Health Records Incentive Program to encourage healthcare providers to adopt and demonstrate “meaningful use” of EHR certified technology, the U.S. Department of Health and Human Services (HHS) offers incentive payments to healthcare providers that adopt EHRs and meet certain requirements regarding their use. EHR vendors obtain certification for their products by attesting that the products satisfy specific criteria adopted by HHS and pass testing by an HHS-approved certifying entity.

HHS’s complaint-in-intervention alleged that “ECW falsely obtained certification for its EHR software when it concealed from its certifying entity that its software did not comply with the requirements for certification. For example, in order to pass certification testing without meeting the certification criteria for standardized drug codes, the company modified its software by “hardcoding” only the drug codes required for testing. In other words, rather than programming the capability to retrieve any drug code from a complete database, ECW simply typed the 16 codes necessary for certification testing directly into its software. ECW’s software also did not accurately record user actions in an audit log and in certain situations did not reliably record diagnostic imaging orders or perform drug interaction checks.”

By misrepresenting its software’s capabilities, ECW caused providers to submit false “meaningful use” incentive payment claims, making the False Claims Act applicable. In addition, ECW allegedly paid customers up to $500 each to recommend its software to potential customers, which violated the federal Anti-Kickback Statute.

In the settlement, ECW and three of its founders will be jointly and severally liable for the payment of $154.92 million to the federal government and three other company employees will pay a total of $80,000. ECW also entered into a five-year Corporate Integrity Agreement imposing numerous ongoing obligations regarding to the quality control, marketing, and capabilities of its EHR software.