Feds levy $155M fine against software vendor for faulty patient records

Acting U.S. Attorney for Vermont Eugenia Cowles announces a $155 million settlement to be paid by one of the country's largest electronic health records vendors to resolve allegations it misrepresented the abilities of its software and paid kickbacks. eClinicalWorks of Westborough, Massachusetts has denied wrongdoing. (AP Photo/Lisa Rathke)

Acting U.S. Attorney for Vermont Eugenia Cowles announces a $155 million settlement to be paid by eClinicalWorks to resolve allegations it misrepresented the abilities of its software and paid kickbacks. | AP Photo

A leading electronic health records maker and its founders will pay $155 million to resolve a lawsuit that accused the company of selling faulty software and defrauding the program that subsidized doctors to computerize their patient records, the Justice Department announced Wednesday.

The settlement, the first of its kind involving a health IT company, also states that Massachusetts-based eClinicalWorks paid kickbacks in exchange for promoting its product, which had flaws that may have exposed millions of patients to potential safety risks.

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The defects reported in the settlement are familiar to anyone who has listened to doctors complain about their electronic records systems since the government started a $34 billion subsidy program in 2011 to get doctors to abandon paper records. Many of the records are clunky and invite mistakes that could imperil patients, doctors say.

Safety experts who worry that the computerized records have introduced new dangers to health care said they hoped the harsh remedy would focus industry and Congress on the need for a health IT safety center and stronger supervision of IT products by HHS’s Office of the National Coordinator for Health IT, or ONC.

In a news release, the company denied any wrongdoing. It said the claims settled by the agreement “are allegations only and there has been no determination of liability.” The company decided to settle only to avoid the cost and uncertainty of protracted litigation, it said.

“We are pleased to put this matter behind us and concentrate all of our efforts on our customers and continued innovations to enhance patient care delivery,” Chief Operating Officer Mahesh Navani said in the release.

The action against eClinicalWorks has its roots at Rikers Island jail in New York City, where in 2010, doctors, pharmacists and nurses started complaining that the software used by the women’s hospital was malfunctioning dangerously.

Patient records often overlapped on their computer screens, making it easy to mistake one patient’s diagnosis or drug for another. Medication lists were error-prone. Patients left the jail without proper prescriptions or lab results. One patient’s HIV drugs weren’t listed on his medical report. Another’s tapering methadone dosage was inaccurate.

The complaints came to Brendan Delaney, who worked on implementing eClinicalWorks at Rikers, and later at more than 30 other hospitals and clinics in New York City and Massachusetts.

In a whistleblower lawsuit that he filed in May 2015 on behalf of the federal government, Delaney charged that the software “failed reliably” to document and display medications and laboratory tests, resulting in “serious patient safety issues.”

What’s more, he charged, corporate managers at eClinicalWorks were aware of the flaws but failed to fix them because fixes would require addressing problems in the company’s core software and all of its modules, and admitting the defects “would put eCW at severe competitive disadvantage.”

The case marks the first time the government has held an electronic health records vendor accountable for major meaningful use shortcomings by applying federal anti-kickback laws, said Colette G. Matzzie, a whistleblower attorney and partner at Phillips & Cohen.

The settlement is the largest False Claims Act recovery in the District of Vermont and apparently the largest financial recovery in the state’s history, said Eugenia Cowles, acting U.S. Attorney for the district. “This resolution demonstrates that EHR companies will not succeed in flouting the certification requirements.”

Privately held eClinicalWorks claims to be the leading cloud-based EHR, with 4,500 employees and more than 850,000 medical professionals — including 125,000 doctors and nurse practitioners — using its software. It claimed 2016 revenues of $440 million.

The government charged that eClinicalWorks falsely obtained certification for its software by concealing faults in compliance. For example, the company entered in its programs only the limited number of drug codes required for testing rather than programming the capability to retrieve any drug code from a complete database, according to the Justice Department.

The company’s software also did not accurately record user actions in an audit log, and in certain situations did not reliably record diagnostic imaging orders or perform drug interaction checks, according to the release. As a result, users submitted false claims for incentive payments. These errors may also have posed safety risks for patients, the release said.

Under the settlement, the corporation and its founders — CEO Girish Navani, Chief Medical Officer Rajesh Dharampuriya and Chief Operating Officer Navani — are liable for the penalty. In addition, developer Jagan Vaithilingam will pay $50,000. Project managers Bryan Sequeira and Robert Lynes will each pay $15,000, the release said.

In a news release, the company denied any wrongdoing. It said the claims settled by the agreement “are allegations only and there has been no determination of liability.” The company decided to settle only to avoid the cost and uncertainty of protracted litigation, it said.

“We are pleased to put this matter behind us and concentrate all of our efforts on our customers and continued innovations to enhance patient care delivery,” Navani said in the release.

As part of the settlement, the company entered a five-year agreement with HHS’ inspector general requiring it to retain an independent overseer and provide regular reports on its compliance. The company must also provide free updates of its software, take steps to mitigate any safety-related risks and inform customers of the risks.

The agreement requires the company to let customers transfer their data to another EHR provider, free of charge. If many customers take that step, it could represent a devastating financial blow to eClinicalWorks.

The government’s complaint alleged that eClinicalWorks failed to adequately test its software or to fix bugs for “months or even years” after they were detected, while paying at least $392,000 to influential customers to recommend eClinicalWorks products to prospective customers.

In a news release from Phillips & Cohen, which represented his lawsuit, Delaney said New York City health officials ignored his reports about the software’s defects. He thanked federal attorneys who “recognized the seriousness of my charges and dug into the matter quickly and thoroughly.”

Some doctors said they hoped the suit would lead to more focus on safety in health IT.

“This unfortunate event highlights the need for a National Health IT Safety center with investigational capabilities,” said Hardeep Singh of the Houston VA’s Research Center of Innovation. “This also underscores the need for supporting ONC’s [October] Enhanced Oversight and Accountability of Health IT Certification Program.”

Although eClinicalWorks has alerted users and repaired defects since the lawsuit was filed, some smaller providers may still be using unpatched versions, said Andrew Gettinger, director of ONC’s Office of Clinical Quality and Safety.

Over time, eClinicalWorks’ processes have improved, he said. Still, “the magnitude of this, and extent of the allegations are really substantial. In my mind they stand out dramatically from what we’ve known and come to expect from the health IT development industry.”

With Darius Tahir and David Pittman


Trump is poised to withdraw from Paris climate pact — unless he changes his mind

Indications from White House officials that President Trump was heading toward pulling the U.S. out of the Paris accord on climate change set off a worldwide reaction Wednesday, continuing the public drama around a decision that has been agonized and untidy even by the standards of a White House known for palace intrigue.

The day began with officials telling news organizations that Trump had settled on pulling out of the climate agreement, generating a reaction in which people around the world jumped in to try to influence or spin his decision, from European leaders to the coal industry to the state of California.

That offered a foretaste of the reaction Trump likely will receive if he does follow through on his vow to pull the United States out of the 197-party- pact, which President Obama hailed in 2015 as one of his major achievements.

Already, other nations have moved to take over the leadership role on climate that the United States would be abandoning. Some states have followed suit, promising they would break with Washington to work with other countries in their efforts to contain global warming.

Democrats and environmentalists warned that an exit from the Paris accord would be reckless and ultimately hurt the U.S. Some noted that no other country has said it would join the U.S. in withdrawing or reducing its commitment. Only two nations, Nicaragua and Syria, have declined to join the Paris agreement.

“Breaking our commitment to the Paris climate agreement will leave our country isolated and ill-prepared for the challenges we face,” Democratic Sen. Dianne Feinstein of California said in a statement.

The process of fully leaving the agreement is complicated and could take several years. It would not be until October 2020, near the end of Trump’s current term, that the United States could fully withdraw under the terms of the deal.

An alternative, more drastic, route would be to pull out of the United Nations Framework on Climate Change, which the Paris agreement is built on top of. The U.S. joined the framework in 1992. Withdrawing from it could be difficult, however, because, unlike the Paris agreement, the framework was considered a treaty and was ratified by the Senate.

As Trump mulls what to do, California and several other states with robust clean energy policies are putting out word they will only intensify their climate efforts, which combined would have more impact on climate change than the steps taken by most of the nations that have signed the Paris accord.

That is a point not lost on European nations.

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“If they decide to pull out, it would be disappointing, but I really don’t think this would change the course of mankind,” said European Commission Vice President Maros Sefcovic. He noted that city, state and business leaders across the U.S. recognize the economic opportunities presented by increasing production of renewable energy and transitioning economies to cleaner technologies.

Gov. Brown, who is leading a large coalition of countries, states and cities that have pledged to confront climate change even more aggressively than is called for by the Paris accord, has repeatedly emphasized that economic case for combating climate change. He will cement his role as the de facto leader of U.S. climate efforts while in China next week to attend the coalition’s summit.

And even as the White House mapped out its possible exit strategy Wednesday, the California state Senate was passing a bill that would move the state to 100% renewable energy by 2045.

“Trump is going against science. He’s going against reality,” the governor said. “We can’t stand by and give aid and comfort to that.”

Times staff writer John Myers in Sacramento contributed to this report.


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Biden launches PAC, keeping options open

Former Vice President Joe Biden is pictured.

Former Vice President Joe Biden has been critical of his own party’s failings since leaving office. | Getty

Former Vice President Joe Biden will launch a new PAC on Thursday, American Possibilities, giving him a way of supporting candidates and keeping his own options open for a potential 2020 presidential run.

Officially, the group will be “dedicated to electing people who believe that this country is about dreaming big, and supporting groups and causes that embody that spirit,” according to the PAC’s launch materials

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Biden has hired Greg Schultz, his political director during his second term as vice president, as the executive director of the PAC.

“Thinking big is stamped into the DNA of the American soul,” Biden wrote in a post that will go live on Medium in the morning. “That’s why the negativity, the pettiness, the small-mindedness of our politics today drives me crazy. It’s not who we are.”

Though he repeatedly bashed Donald Trump on the campaign trail last year and again at an appearance in New Hampshire in late April, Biden has been just as critical of his own party’s failings.

“I’m absolutely positive they want to be with us, but we have to prove again that we understand that hopelessness,” he said in New Hampshire. “We have to show them, we have to be the source of their hope.”

And he’s made clear in private, and to an extent in public, how disappointing he found Hillary Clinton’s campaign, and his problems with her as a messenger of the Democratic Party.

Though the PAC is geared toward helping other candidates, the website launching with it is centered on photos of Biden: holding a baby on the campaign trail, sitting in front of a giant American flag and waving, and locking arms with Rep. John Lewis and others in a commemorative march across the Edmund Pettus Bridge in Selma, Ala.

The email to supporters and donors ends on a tantalizing note: “See you out there.”


GOP budget woes leave lawmakers in the dark

The federal budget process is so broken that lawmakers are now preparing to write spending bills without even knowing how much total cash they’ve got to play with.

It’s a new level of dysfunction for Capitol Hill and undermines GOP leaders’ promises to return to “regular order,” where spending measures are carefully considered and funding the federal government is a priority.

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And without clear spending targets, federal agencies are left in the dark, with only a vague idea of how to plan their budgets. The uncertainty also could complicate plans by Speaker Paul Ryan and Senate Majority leader Mitch McConnell to avoid a government shutdown showdown in the fall.

“It’s a puzzling year. It’s going to be a very difficult year,” said Rep. Mike Simpson (R-Idaho), who oversees spending for energy and water programs.

Under the law governing the fiscal calendar, the House and Senate are supposed to pass budgets by April 15 that establish a total federal spending level. That figure is then divvied up between 12 appropriations subcommittees, which draft bills to fund the federal government and which must be passed by Sept. 30.

Congress hasn’t finished its spending work on time in two decades, but this year’s effort stands out for its struggles, and longtime budget watchers are surprised by how Republicans are moving forward.

Lawmakers are in session for just three more months before the September funding deadline, but Republican leaders are likely still weeks away from releasing a budget. So GOP appropriators say they’ve been left to guess how much money they’ll have for each bill.

“If we can get anything like a notional number, we can get started on next year’s [appropriations],” Sen. Roy Blunt, chairman of the subcommittee that funds the Labor, HHS and Education departments, told POLITICO recently.

The slapdash start to this year’s appropriations process is leading to informal budget-writing, where lawmakers are working mostly behind closed-doors. The first set of public budget hearings are now kicking off across Capitol Hill, but GOP leaders still haven’t given committee leaders a clear picture of their spending levels.

Simpson, echoing other anxious Republican appropriators, said GOP leaders “needed to make that decision in March.”

“There’s a lot of major decisions that have to be made,” said Rep. Tom Cole (R-Okla.), a senior member of the Budget and Appropriations Committees. “I’m very worried with the truncated process we’ve got for appropriations.”

Neither the House nor the Senate passed a budget on time last year, but Congress had a total spending level to adhere to when drafting bills because of a bipartisan 2015 budget law. This year, stiff spending caps for defense and domestic programs return if Congress does nothing to ease the bite of sequestration.

One option for the GOP is to stick to the current caps when writing spending bills, though bipartisan opposition to those lower levels suggests those bills would likely need to be completely rewritten at the last minute in the fall.

Or lawmakers could decide to ignore those limits entirely. “They could come up with any number they want,” said Stan Collender, a veteran Democratic budget aide now at Qorvis MSLGROUP.

In past years when Congress hasn’t passed a budget, the House and Senate have typically deployed a procedural maneuver to “deem” a top-line spending level. That may be the likeliest course if the fractious GOP is unable to agree on a budget. In the meantime, President Donald Trump’s Cabinet members are hamstrung as they try to plot out their policy agenda.

House Appropriations Committee Chairman Rodney Frelinghuysen said last week he doesn’t yet have a timeframe for dividing up spending levels for his 12 subcommittees.

“We’ll cross that bridge when we come to it,” the New Jersey Republican said. “We’re going to do our job as we always have.”

There’s no guarantee the process will go smoothly even after appropriators get their formal spending allocations.

Republican leaders are already strategizing to avoid a shutdown, but punting on some of the thorniest spending decisions may not prevent a massive political brawl in the fall.

Conservatives feel emboldened by Trump’s proposed cuts to domestic spending and are pushing the same kind of austerity in Congress’s budget. Defense hawks want to raise military spending even above the levels in Trump’s proposal, which called for a Pentagon budget boost. And without having held a floor vote on the budget, GOP leaders lack a key litmus test for what spending levels the rank-and-file will support.

Democrats, meanwhile, are eager to shield domestic programs from the sequester. They also are frustrated that the spending process is stalled at least in part because Republicans are using budget reconciliation procedures to try to repeal Obamacare.

“Republicans are playing politics with the budget,” said Sen. Chris Murphy (D-Conn.), an Appropriations Committee member. “They’re not doing an honest budget because they want to use the budget process to jam though health care, and one of the consequences is it makes it very hard to write appropriations bills.”

Sen. John Hoeven (R-N.D.), who oversees agriculture spending, said he will probably start writing his bill soon at the budget sequestration level — a figure that would require some cuts compared to current spending.

“We’ve talked about some hearings… I’m not sure, we’ll have to see. I have to get a sense of what that top-line is,” Hoeven said. “We want to get going, no doubt about it, because we’d like to go through regular process.”


Betsy DeVos, family members, donated to Trump judicial nominee

Betsy DeVos.

During her confirmation hearing, Betsy DeVos said it was “possible” that her family has made $200 million in campaign contributions over time. | AP Photo/Carolyn Kaster

Betsy DeVos and extended members of the Education secretary’s wealthy family have contributed at least $22,500 to one of President Donald Trump’s judicial nominees for the judge’s campaign for a state Supreme Court seat, according to a review of campaign finance records.

Michigan Supreme Court Justice Joan Larsen, whom Trump has nominated to the U.S. 6th Circuit Court of Appeals, collected $2,500 each from DeVos and eight relatives on Aug. 9, 2016, according to Michigan records. The donations were made several months before Trump nominated DeVos to be Education secretary. Larsen was appointed to the state’s high court in 2015 and was formally elected last November.

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But Larsen’s profile rose nationally well before her victory to the Michigan court last fall, when then-candidate Trump named her to his shortlist of potential Supreme Court nominees during his presidential campaign.

Members of the DeVos family who contributed to Larsen’s judicial campaign in Michigan included DeVos; her husband Dick, the president of the investment firm The Windquest Group; Dick DeVos’s parents, Richard and Helen; Dan DeVos, the secretary’s brother-in-law and his wife, Pamella; Doug DeVos, another brother-in-law of the secretary and his wife, Maria; and sister-in-law Suzanne Cheryl DeVos. The family’s patriarch, Richard DeVos, co-founded Amway, the global direct sales company.

“Betsy DeVos and her family’s donations to fellow far-right Republicans like Joan Larsen are a bright flashing sign to Donald Trump that Larsen is a hard-line conservative who will back Trump’s extreme policies from the bench,” said Kevin McAlister, a spokesman for the Democratic opposition research group American Bridge, which flagged the donations to POLITICO.

“DeVos’ donations to Senate Republicans helped grease the wheels to her confirmation and now, the DeVos family contributions to Trump’s judicial pick are helping to get her one step closer to a lifetime seat on the 6th Circuit that will be dangerous to working families.”

Officials at the White House and at Education Department did not return requests seeking comment.

Betsy DeVos’ deep well of campaign contributions to Republican candidates and conservative causes became one of several flash points during her contentious confirmation battle. During her hearing, DeVos said it was “possible” that her family has made $200 million in campaign contributions over time, while liberal groups pressured GOP senators who had gotten checks from the DeVos clan to recuse themselves from voting on her confirmation.

None did, but DeVos was narrowly confirmed to lead the Education Department only after Vice President Mike Pence cast a tie-breaking vote. Two Senate Republicans — Susan Collins of Maine and Lisa Murkowski of Alaska — opposed DeVos in her confirmation vote in February.

The battle over Larsen has yet to begin in earnest in the Senate, which handed Trump an early win with the confirmation of Neil Gorsuch to the Supreme Court in April and installed Amul Thapar, the first of Trump’s nominees to the lower courts, just last week. Larsen was among 10 judicial nominees announced by the White House earlier this month.

Democratic senators actually have more leverage against Larsen’s nomination than other judicial candidates, since she hails from a state represented by two Democrats who could try and block her confirmation proceedings through the so-called blue-slip rule. The Senate Judiciary Committee has traditionally not scheduled hearings for judicial nominees until both home-state senators return a blue slip to the committee — giving the in-state duo effective veto power.

But that may change. Senate Republicans this year have already signaled that they are less willing to abide by the blue-slip rule for circuit court nominees, who would sit on a court that spans several states, rather than for district court candidates who represent a single state. Larsen has been nominated for the 6th Circuit, which is based in Cincinnati.

Whether the two Senate Democrats from Michigan — Sens. Debbie Stabenow and Gary Peters — will try and block proceedings for Larsen is to be determined. An aide to Stabenow said the senator has not received Larsen’s paperwork, while a Peters spokeswoman said the senator had not made any decision.

Larsen, who clerked for former Justice Antonin Scalia, has also served as an adjunct professor at the University of Michigan law school and at the Office of Legal Counsel at the Justice Department under former President George W. Bush.