Legal Risks of Health Care Technology: Learning from the $18.25M Athenahealth, Inc. settlement

This article was originally published in the March 2021 edition of the New England Administrator. 

Upset you didn’t get taken to the Super Bowl by your vendors this winter? Maybe you should be glad you didn’t.

Long term care facilities and their owners and managers face risks when accepting gifts, trips, benefits, or other perks from current or potential vendors.

The January 2021 settlement of $18.25 million paid to the federal government by Athenahealth, Inc. (the “Vendor”), a Massachusetts-based electronic health records(“EHR”) developer, is one of the more recent examples of how sales and marketing arrangements can be viewed negatively by enforcement authorities. While this case was brought against a health care information technology vendor (thus coming within the scope of this issue of New England Administrator), the case offers a broader cautionary tale for providers entering into business arrangements with third-party vendors and of when sales strategies can get parties in trouble.

The allegations against the Vendor involved three marketing arrangements in which the company allegedly engaged between January 2014 and September 2020. These schemes, detailed below, allegedly involved illegal kickbacks paid to potential clients, existing clients, and competitors in exchange for referrals to and/or continued business with the Vendor. These allegedly illegal kickbacks were alleged to have resulted in false or fraudulent claims (because they were tainted by the kickbacks) that were ultimately submitted by the Vendor’s clients to federal health care programs—specifically, the EHR incentive programs provided under Medicare and Medicaid.