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Catch of the Week: EHR Vendor Athenahealth Settles Kickback Cases Brought by Whistleblowers

Posted  January 29, 2021

Athenahealth Inc. agreed to pay $18.25 million to resolve allegations that the electronic health records company violated the False Claims Act by paying unlawful kickbacks to potential customers and others.  The government’s investigation was prompted by two whistleblower actions filed in 2017; the actions were consolidated and the government filed a complaint in intervention immediately prior to the settlement.

Athenahealth’s Marketing Programs

The whistleblowers and government alleged that Athena engaged in a number of marketing programs that resulted in unlawful remuneration under the Anti-Kickback Statute:

  • Between 2014 and 2018, Athena ran a “Concierge Events” program, allegedly inviting decision-making executives at target providers – as well as spouses and guests – to all-expenses-paid “bucket list” trips to sporting, entertainment and recreational events including the Masters Tournament, the Kentucky Derby, New York Fashion Week, and the World Series, complete with luxury accommodations, meals and alcohol. The Concierge Events had different tiers of cost and luxury depending on the value of the prospect or client.  Internally, Athena tracked the outcomes of these events, attributing sales and client retention to the events.  Athena ran the Concierge program even though its own written policies barred the lavish gifts or gifts that were “likely or intended to influence a specific decision or deal,” and even though some of those invited declined, saying that their own company’s policies barred attendance at events without an educational or business purpose.
  • Between 2014 and 2020, Athena operated a “Client Lead Generation” program that paid existing clients for referrals to new clients, based on the volume and value of business those clients referred. In 2018, Athena internally changed the name of the program to the “Introductions” program; this action was taken after EHR vendor eClinicalWorks faced False Claims Act liability for running a referral program that was substantially similar.  Despite the name change, the substance of the program allegedly remained identical.
  • Athena allegedly paid money to competitors that were terminating their EHR offerings to cause those competitors to refer clients to Athena. Under these “conversion deals,” Athena would obtain an advantage over competitors, and the parties allegedly entered into a confidentiality agreement so that customers of the competitor did not know that it was getting paid to refer clients to Athena.

Acting Assistant Attorney General Brian Boynton for the Department of Justice’s Civil Division noted that “EHR technology plays an important role in the provision of medical care, and it is critical that the selection of an EHR platform be made without the influence of improper financial inducements.”  Phillip M. Coyne, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, added that “If the benefits of Electronic Health Records are to be fully realized, patients must be confident providers have selected the most effective system – not the one paying the largest kickbacks.”

False Claims Act Liability for EHR Vendors Paying Unlawful Remuneration

The Anti-Kickback Statute, in relevant part, imposes liability on anyone who offers or pays any remuneration to induce the purchase of any good or service for which payment will be made, in whole or in part, under a Federal healthcare program.  A claim to the government for payment for that kickback-tainted good or service violates the False Claims Act.

In this case, the healthcare providers initially pay for Athena’s EHR systems.  However, federal programs provide incentive payments to healthcare providers for adoption and “meaningful use” of EHR technology.  Athena knew that its marketing programs and alleged payment of illegal remuneration to hundreds of clients and several EHR vendors would result in the healthcare providers submitting claims for those incentive payments.  The U.S. argued, therefore, that Athena knowingly caused the submission of false claims.

Blowing the Whistle on Unlawful EHR Marketing Programs

The Athena settlement resolved two qui tam cases.  The first was brought by Geordie Sanborn, who filed his action in October, 2017; the second was brought by Cheryl Lovell and William McKusick, who filed their action in December, 2017.  Under the False Claims Act, whistleblowers in intervened cases are entitled to between 15% and 25% of the amount recovered by the government.  However, a government press release states that the whistleblower shares to be awarded in connection with the Athena settlement is not yet determined.

It is not uncommon for decisions about whistleblower shares to follow some time after a defendant reaches a settlement in principle with the government.  Attorneys for whistleblowers play a critical role in negotiating the award for their clients.

This settlement may also implicate the “first-to-file” provisions of the False Claims Act, which generally provide that if multiple whistleblowers file related actions, only the first whistleblower can proceed. However, the rule only bars later-filed actions that are based on the same “facts underlying the pending action.” As detailed above, Athena allegedly engaged in several different unlawful kickback schemes. Later-filing whistleblowers who report different unlawful activity can argue that their later-filed actions are not based on the same facts, and therefore are not barred by the first-to-file rule.  Nevertheless, the presence of two whistleblower cases filed within months of each other demonstrates the importance of prompt action by potential whistleblowers.  If you have knowledge of fraud, you should speak with experienced qui tam counsel as soon as possible.

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Tagged in: Anti-Kickback and Stark, Catch of the Week, Electronic Health Records, FCA Federal, Healthcare Fraud, Whistleblower Case,


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