EHR Vendor to Pay $3.8M to Settle Kickback Allegations

CareCloud Health said it "admitted no wrongdoing in this matter and has accepted settlement in an effort to move forward ... and avoid costly litigation."

CloudCare Health Inc. will pay $3.8 million to settle whistleblower allegations that the Miami-based electronic health records vendor offered cash bonuses and other kickbacks to clients who recommended the vendor's software to prospective clients, the Department of Justice said.

According to federal prosecutors, violations of the False Claims Act and the Anti-Kickback Statute occurred between January 2012 and March 2017, when CloudCare launched a marketing referral initiative called the "Champion Program."

Prosecutors said that CareCloud paid existing clients cash equivalent credits, cash bonuses and percentage success payments to recommend CareCloud's EHR products to prospective clients.

"Existing clients who participated in the Champions Program ("participants") executed written agreements prohibiting them from providing negative information about CareCloud's EHR products to prospective CareCloud clients," DOJ said. "Prospective CareCloud clients were not told about this referral-kickback arrangement or about the contract that prohibited participants from sharing negative company information with them."

Prosecutors alleged that CareCloud's kickbacks rendered false the claims submitted by CareCloud for federal incentive payments under the Medicare and Medicaid Electronic Health Records Incentive Programs and the Merit-Based Incentive Payment System. 

"Product functionality, reliability, and safety should drive a medical software company's success, not illegal kickbacks paid to promote its products," Acting United States Attorney Juan Antonio Gonzalez said. "There is simply no place for kickbacks in our country's healthcare system. Companies who ignore this will be held accountable."  

CareCloud was acquired by publicly held MTBC, Inc., in January 2020. The Champion Program was ended as part of the DOJ settlement.

CloudCare Responds

CloudCare offered the following response on Wednesday:

"On January 8, 2020, CareCloud, Inc. acquired the company now known as CareCloud Health, Inc. (formerly CareCloud Corporation). The acquired company was, at the time of the transaction, subject to a civil investigation, which began with the filing of a sealed complaint in 2017. CareCloud Health has admitted no wrongdoing in this matter and has accepted settlement in an effort to move forward, focusing its efforts fully on the vital support and services it provides to its clients, and avoid costly litigation."

"This settlement is in response to government allegations that certain elements of CareCloud Health’s client reference program violated the Federal Anti-Kickback Statute several years prior to acquisition. The US government declined to intervene on and pursue any claims regarding CareCloud’s EHR product, Charts.  The investigation was considered as an element of the acquisition, and adequate reservations were made."  

The whistleblower in the settlement, identified as Ada De La Vega, will get $803,000 from the settlement.