Practice Fusion to pay $145M settlement for taking kickbacks aimed at increasing opioid prescriptions

Department of justice
The case represented the largest criminal fine in federal court history in Vermont and it was the first-ever criminal action against a vendor of electronic health records. (William_Potter/Getty Images)

Editor's Note: This story has been changed to clarify the specific timeline of the case. 

Web-based electronic health record company Practice Fusion will pay $145 million to resolve criminal and civil charges it engaged in a kickback scheme aimed at increasing opioid prescriptions, federal prosecutors in Vermont said Monday.

As part of the criminal resolution, the San Francisco-based company admitted that it solicited and received kickbacks from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications, according to the U.S. Attorney's Office for the District of Vermont in a press release.

"Practice Fusion’s conduct is abhorrent. During the height of the opioid crisis, the company took a million-dollar kickback to allow an opioid company to inject itself in the sacred doctor-patient relationship so that it could peddle even more of its highly addictive and dangerous opioids,” Christina Nolan, U.S. Attorney for the District of Vermont, said in a statement.

The case represented the largest criminal fine in federal court history in Vermont and it was the first-ever criminal action against a vendor of electronic health records, the U.S. Attorney's office said in a statement.

RELATED: Allscripts reports $145M settlement agreement with DOJ

The criminal Information charges the healthcare technology company with two felony counts for violating the Anti-Kickback Statute and for conspiring with its opioid company client to violate that statute.

Practice Fusion, founded in 2005, is now owned by healthcare technology company Allscripts, which acquired the company for $100 million in January 2018, a year after the company received an inquiry from the U.S. Attorney’s Office for the District of Vermont examining the company’s compliance with the EHR certification program as part of a criminal investigative demand. 

tentative agreement between Practice Fusion and federal prosecutors was reached in August, and the U.S. Attorney's Office released details on Monday.

Practice Fusion has since been rebranded as Veradigm with a focus on the payer and life sciences markets.

Brian Farley, Allscripts executive vice president, general counsel and chief administrative officer, said in a statement on Monday that the conduct predated Allscripts' acquisition of Practice Fusion.

"Allscripts recognizes the devastating impact that opioids have had on communities nationwide, and we are using our technology to fight this epidemic. We remain committed to Practice Fusion and believe this matter should not overshadow the important and valuable work it is currently performing," Farley said.

Since learning of the matter, Allscripts has taken steps to further strengthened Practice Fusion’s compliance program, Farley said.

Federal prosecutors allege that Practice Fusion extracted unlawful kickbacks from pharmaceutical companies, including a payment of nearly $1 million from an unnamed opioid company, in exchange for implementing clinical decision support (CDS) alerts in its EHR software designed to increase prescriptions for their drug products.

Conversations for a deal between Practice Fusion and a pharmaceutical company identified as “Pharma Co. X” began in 2013, according to the statement of facts (PDF) agreed to by Practice Fusion under a deferred prosecution agreement.

The companies signed a contract for the pain CDS alerts in March 2016, according to court documents, and they agreed to provide healthcare providers who utilize Practice Fusion’s solution with a CDS program “directed at chronic pain management treatment with immediate release opioids and chronically used NSAIDS (nonsteroidal anti-inflammatory drugs)."

The pain CDS alert was live on the Practice Fusion platform from early July 2016 to the spring of 2019, with the alert going off about 230 million times.

Company founder and former CEO Ryan Howard told FierceHealthcare he was not in charge of the company when the opioid contract was signed.

RELATED: Allscripts' Practice Fusion receives grand jury subpoena related to EHR certification, anti-kickback concerns

"The companies illegally conspired to allow the drug company to have its thumb on the scale at precisely the moment a doctor was making incredibly intimate, personal, and important decisions about a patient’s medical care, including the need for pain medication and prescription amounts," Nolan said.

The criminal Information charges Practice Fusion with two felony counts for violating the Anti-Kickback Statute (AKS).

Practice Fusion has executed a deferred prosecution agreement and agreed to pay over $26 million in criminal fines and forfeiture.  

The deferred prosecution agreement imposes stringent requirements on Practice Fusion to ensure acceptance of responsibility and transparency as to its underlying conduct, and to invest heavily in compliance overhauls and an independent oversight organization, the DOJ said.

EHR fraud allegations

In separate civil settlements, Practice Fusion has agreed to pay approximately $118.6 million to the federal government and states to resolve allegations that it accepted kickbacks from the opioid company and other pharmaceutical companies and also caused its users to submit false claims for federal incentive payments by misrepresenting the capabilities of its EHR software.

In the civil settlement (PDF), the DOJ alleges that Practice Fusion had similar deals with other drug companies. Between November 2013 and August 2017 the company struck 14 similar deals with pharmaceutical companies, the government claimed in its civil case.

Practice Fusion admitted only to the opioid agreement. The civil claims resolved by the settlement are allegations only, and “there has been no determination of liability as to such civil claims,” the Justice Department said in its statement.

Of that $118.6 million, $113.4 million will be paid to the federal government and up to $5.2 million to states that opt to participate in separate state agreements.

The EHR company also falsely obtained certification from the Office of the National Coordinator for Health IT for several versions of its EHR software that did not comply with all of the applicable requirements for certification, according to allegations from the HHS Office of Inspector General.

As a result of the EHR fraud, from 2014 to 2016, healthcare providers using certain versions of Practice Fusion's 2014 edition EHR to falsely obtained incentive payments from Medicare and Medicaid.

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