Community Health Systems, Medhost: Twin Targets of Whistleblower Lawsuit

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Original story posted on: March 27, 2019

CHS and Medhost have categorically denied all of the allegations in the complaint.

As the use of electronic health records (EHRs) has expanded at a rapid pace, so too has the fraud associated with these systems.

An EHR is a digital version, or database, of a patient’s paper charts. The systems allow for real-time sharing of patient-centered records, better recordkeeping, and the ability to make information easily shareable. However, last week we learned of yet another whistleblower lawsuit accusing an EHR company of defrauding the U.S. Department of Health and Human Services (HHS).

A recently unsealed complaint in the Southern District of Florida alleges that Community Health Systems (CHS), which operates 127 hospitals in 20 states, and its EHR provider, Medhost, violated the False Claims Act when they collected HHS incentive payments that were meant to encourage healthcare providers to implement EHRs that met certain “meaningful use” requirements. To receive the payments, a provider must attest to HHS that the criteria are being met. CHS received over $500 million in incentive payments.

According to the whistleblowers, two former IT executives at CHS, these requirements were not met, and thus the hospitals did not qualify for the incentive payments. The complaint specifically alleges that the EHR software led to doctors ordering incorrect medications or dosages, risking catastrophic patient harm.

CHS and Medhost have categorically denied all of the allegations in the complaint and claimed to be unaware of any instances of patient harm. The Department of Justice has not intervened in this case, noting that it has not yet completed its investigation and is not yet able to decide on a course of action. According to the government’s filings, it will continue to investigate the allegations brought forth in the whistleblowers’ complaint.

This suit is just one in a recent string of whistleblower cases claiming fraud associated with the HHS incentive program. In May 2017, eClinicalWorks (ECW) settled a False Claims Act case for $155 million. In that case, ECW allegedly misrepresented the capabilities of its software when its EHR was being tested for Centers for Medicare & Medicaid Services (CMS) certification, which comes with its own incentive payments. Instead of developing software that met the relevant requirements, ECW allegedly designed software to pass the test without actually meeting the underlying certification criteria. Similarly, in November 2017, an unsealed suit against EPIC, another EHR provider, alleged that the company designed software that double-billed Medicare for anesthesia services.

For those in the healthcare field, EHR programs are an increasingly prevalent part of the business, and unfortunately so too is the potential for fraud associated with the software. In this case, the two CHS whistleblowers were exceedingly well-placed to spot the alleged fraud. One was responsible for managing EHR implementation at CHS, and the other oversaw the building of EHR systems for hospitals CHS acquired.

Vigilant eyes of IT professionals, doctors, nurses, coders, and hospital employees will be essential in combating the increasing number of alleged frauds involving EHRs.

Mary Inman, Esq. and Max Voldman, Esq.

Mary Inman is a partner in the London office of Constantine Cannon, where she specializes in representing whistleblowers from the United States, Europe, and around the world under the various American whistleblower reward programs, including the False Claims Acts and the SEC, CFTC, IRS, and DOT whistleblower programs.

Max Voldman is an associate in Constantine Cannon’s Washington D.C. office.

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