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Former NYC software technician earns $30 million from false claims settlement

A software technician who worked for the City of New York's health care division was awarded $30 million for filing a whistleblower lawsuit that alleged a software vendor misrepresented what its product could do and paid kickbacks to some customers.

Brendan Delaney filed the qui tam lawsuit against eClinicalWorks, one of the biggest vendors of electronic health records software.

Massachusetts-based eClinicalWorks and three founders will pay a total of $155 million to resolve the allegations. Delaney's share of the settlement is $30 million.

He filed the lawsuit in federal court in Vermont under the False Claims Act. It permits private individuals to sue on behalf of the government and share in any recovery. The government can intervene and take over qui tam suits, as it did in this case.

According to the lawsuit, Healthcare providers can earn federal incentives for using electronic records systems that meet certain technical requirements.

eClinicalWorks allegedly misrepresented what its sytems could do. That caused its users to submit false claims for the federal incentive payments.

The lawsuit also alleged that eClinicalWorks paid kickbacks to certain customers in exchange for promoting its product.

According to eClinicalWorks' website, more than 850,000 healthcare professionals use its software in 70,000 facilities. Users pay about $500 a month for the basic service.

The firm has about 4,500 employees. Revenues last year were $440 million.

Under the settlement, eClinicalWorks and three of its founders -- CEO Girish Navani, chief medical officer Rajesh Dharampuriya, M.D., and COO Mahesh Navani -- are jointly and severally liable to pay the United States about $155 million.

Separately, software developer Jagan Vaithilingam will pay $50,000 and project managers Bryan Sequeira and Robert Lynes will each pay $15,000.
eClinicalWorks also agreed to a five-year Corporate Integrity Agreement that gives customers the option to transfer their data to another software provider without penalties or service charges.

The integrity agreement requires an independent group to assess software quality control and give customers "prompt notice" of safety-related problems.

The DOJ said the $155 million settlement resolved "allegations only, and there has been no determination of liability."
The case is United States ex rel. Delaney v. eClinialWorks LLC, 2:15-CV-00095-WKS (D. Vt.).


Richard L. Cassin is the publisher and editor of the FCPA Blog.