In February of 2018, electronic health records giant Allscripts Healthcare Solutions Inc. (Allscripts) acquired Practice Fusion, a San Francisco-based electronic health record company for $100 million. While Practice Fusion had had some previous trouble with the Department of Justice (DOJ), Allscripts probably thought that they had made a pretty good deal. Given recent disclosures in Allscripts’ SEC filings, however, that deal may no longer look so great.

On August 8, Allscripts announced that it had reached an agreement in principle with the DOJ to resolve civil and criminal investigations into Practice Fusion for $145 million. 

Prior to the time at which Allscripts had inked the deal on the Practice Fusion acquisition, DOJ had apparently initiated investigations into the company on issues related to its compliance with the Anti-Kickback Statute and HIPAA, with a particular focus on the certification that Practice Fusion obtained through the Department of Health and Human Services’ HER Incentive Program. Allscripts President Rick Poulton recently noted during a conference call with industry analysts that the investigations, “…have many similarities to investigations that have either been settled or remain active with many of our industry competitors.” 

Allscripts’ quarterly report to the SEC, however, makes it clear that not all aspects of the deal have been finalized, stating, “[A] variety of material issues remain subject to further negotiation and approval by us and the government before the agreement in principle can be finalized, and the terms described above may change following further negotiation. We cannot provide assurances that our efforts to reach a final settlement with the DOJ will be successful or, if they are, the timing or final terms of any such settlement.”

Those final terms are likely to include other material non-financial terms and conditions, including a deferred prosecution agreement and a civil settlement agreement. Absent a final agreement, Practice Fusion will likely face one (or more) DOJ enforcement actions.