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Analysis

Allscripts Reaches $145M Settlement Over Subsidiary's HIPAA, Kickback Investigations

By Steven Porter  
   August 09, 2019

Practice Fusion, which is now known as Veradigm, had been under investigation for nearly a year when Allscripts acquired it in March 2018.

Allscripts and the U.S. Department of Justice have reached an agreement in principle to end civil and criminal investigations involving subsidiary Practice Fusion, the company announced Thursday.

Allscripts said in a press release with its latest financial reports that it has accounted for a second-quarter charge of $145 million that it believes will be enough to cover all potential civil and criminal liability under the deal, which hasn't been finalized.

"We expect that a final settlement with the DOJ, if it were to be completed, would include other material non-financial terms and conditions, including a deferred prosecution agreement and a civil settlement agreement," Allscripts said in a filing with the Securities and Exchange Commission on Friday, adding that there are still multiple material issues to be hammered out during negotiations.

Practice Fusion, which now goes by the name Veradigm, is an electronic health records company that has been subject to investigations regarding its certification through the Health and Human Services Electronic Health Record Incentive Program and its compliance with the Anti-Kickback Statute and HIPAA, as Allscripts revealed in an SEC filing last May.

Below is a timeline of key dates in the investigation, as outlined in Allscripts' latest SEC filing:

  • March 2017: Practice Fusion received a request for documents and information from the U.S. Attorney's Office for the District of Vermont, pursuant to a civil investigative demand (CID).
     
  • February 2018: Allscripts acquired Practice Fusion.
     
  • April 2018 to June 2019: Practice Fusion received from the DOJ seven more requests for documents and information through four more CIDs and three HIPAA subpoenas.
     
  • March 2019: Practice Fusion received a grand jury subpoena related to a criminal investigation into its compliance with the Anti-Kickback Statute.
     
  • August 6, 2019: Allscripts reached an agreement to resolve all of the DOJ's outstanding civil and criminal investigations, including the one in Vermont.
     

If the settlement isn't finalized, the DOJ will likely bring one or more enforcement actions against the subsidiary, which could result in substantial fines and penalties or other sanctions, Allscripts said. There's also concern that other investigations or proceedings, including those brought by private parties, could follow this DOJ settlement, the company noted.

"We may also be subject to negative publicity related to these matters that could harm our reputation, reduce demand for our solutions and services, result in employee attrition and negatively impact our stock price," Allscripts said.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

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