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EHR vendor CareCloud pays $3.8M to settle whistleblower case alleging kickbacks

CareCloud Health Inc., a Miami-based healthcare technology company, has agreed to pay $3.8 million to the federal government to settle a “qui tam” lawsuit filed on behalf of a whistleblower represented by Phillips & Cohen LLP that alleged CareCloud paid kickbacks to healthcare providers to boost sales of its electronic health records products.

The US Department of Justice intervened in the kickback claims against CareCloud in the lawsuit, which was filed “under seal” in 2017 in federal district court in Miami and announced today after the court unsealed the case.

The qui tam complaint also alleged that CareCloud’s EHR software had flaws “that not only rendered the system unreliable and unable to meet Meaningful Use [federal] standards, but the flaws also created a risk to patient health and safety.” DOJ did not intervene in those particular claims.

CareCloud was acquired last year by MTBC, headquartered in Somerset, NJ. MTBC renamed the entire company CareCloud.

According to the qui tam complaint, CareCloud paid kickbacks to customers who participated in its “Champions Program.” Existing customers signed written agreements with CareCloud to recommend its EHR products to potential customers in exchange for cash payments and cash credits and were prohibited from saying anything negative about CareCloud’s EHR products.

“The written agreements CareCloud had with customers blocked candid discussion between healthcare providers about potential problems,” said Colette Matzzie, a whistleblower attorney and partner with Phillips & Cohen.

During most of the time that CareCloud allegedly paid kickbacks, 2012 to 2017, Albert Santalo, its founder and a high-profile South Florida entrepreneur, ran the company. Ken Comee replaced him as CEO in 2015, but Santalo remained as board chairman and chief strategy officer until 2016.

The whistleblower lawsuit named Santalo and Comee as defendants. Today’s settlement is with CareCloud. No additional litigation is expected.

The whistleblower, Ada de la Vega, was a senior manager at CareCloud who has left the company.

“I filed the qui tam lawsuit because I was hearing concerns from doctors, so I wanted the government to investigate,” de la Vega said. “I was worried about patient safety and believe it is important that companies follow the rules.”

After the 2017 settlement of a whistleblower case against EHR vendor eClinicalWorks, she saw that qui tam lawsuits are an effective way to report concerns about EHR systems.

Phillips & Cohen represented the whistleblower in that case, which alleged eCW misrepresented its software’s capabilities and paid kickbacks. eCW paid $155 million to the government to settle the case.

The whistleblower lawsuit against CareCloud alleged the company violated the Anti-Kickback Statute and the False Claims Act.

The False Claims Act allows whistleblowers to file qui tam lawsuits against companies that are defrauding the government and grants them rewards and protection against job retaliation. The government has awarded de la Vega $803,269.

Larry Zoglin, of counsel to Phillips & Cohen, also represented de la Vega.

Phillips & Cohen and de la Vega expressed their thanks to the government team for its work on the case, particularly Assistant US Attorney Matthew J. Feeley of the Southern District of Florida and DOJ Trial Attorney Kelley C. Hauser. WFMZ-TV


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