The Computer Made Me Do It: Is There a Future for False Claims Act Liability Against Electronic Health Record Vendors?

34 Pages Posted: 16 May 2018

See all articles by Deborah Farringer

Deborah Farringer

Belmont University - College of Law

Date Written: 2018


Since the advent of the movement toward the use of electronic medical records, an axiom in the promotion of electronic health records (EHRs) has been the idea that the use of EHRs will reduce medical errors. Certainly, there are countless examples of how technology can improve the health care experience and aid providers in reducing medical errors, including errors of medication administration, medication management, access to decision support tools, telemedicine, immediate access to diagnostic tests and other clinical information and treatment results—just to name a few. Even with such improvements, however, EHRs have not entirely eliminated medical errors and new technology has in fact created its own challenges and issues that might lead to liability in a different way. As the use of EHRs proliferates, so too does the reliance of healthcare workers on the systems themselves and the inevitable blame game wherein an individual claims that whatever errors occurred were the result of “the computer” or the “system” that dictated the manner in which the care was provided or the manner in which the services were reimbursed. Ultimately, this “blame game” leads all to ask the question—whose fault is that? Can one blame the EHR vendor? To the extent that the answer may in fact be “Yes,” and the EHR vendor is at fault, are such claims easy to maintain? Historically, providers and other purchasers of EHRs have had little leverage against EHR vendors. One of the primary challenges arises out of the contract between the provider-purchaser and the EHR vendor. Ultimately, the purchase or licensing of an EHR system is actually just the purchase or licensing of software and, as such, the contracts resemble standard software licensing agreements, replete with disclaimers of implied and express warranties and “hold-harmless” or indemnification clauses that protect the vendor from third party liability. Recent litigation—including one particular case involving the federal government’s allegations of fraud—has started to erode the disconnect between the potential responsibility of the EHR vendor and the ability to hold the vendor actually liable for its actions related to its software.

On May 31, 2017, the United States Department of Justice (DOJ) entered into a $155 million settlement with eClinicalWorks (eCW), one of the nation’s largest electronic health records vendors, to resolve a False Claims Act (FCA) lawsuit in which the DOJ alleged that eCW caused the submission of false claims for federal incentive payments made under the Electronic Health Records (EHR) Incentive Program. This settlement is unique not only because of the rarity of settlements or judgments against an entity based on an allegation that the falsity was in causing another to submit a false claim—as opposed to an action against an entity that has falsely filed its own claim and received payment directly—but also because it is one of the first of its kind against an EHR vendor. Following this case, many are wondering whether this settlement with eCW stands alone as an example of the government simply snaring one “bad actor,” or if this settlement is indicative of what might lie ahead for EHR vendors under the FCA. Will the FCA be a new tool under which EHR vendors are going to be held responsible for the role that their software might play in the delivery of care or the billing and collection of services rendered? Indeed, many in the information technology industry took note of this settlement and have speculated that this may not be a singular incident. Farzad Mostahsari—former National Coordinator for Health IT—stated, “Let me be plain-spoken. eClinicalWorks is not the only EHR vendor who flouted certification/misled customers[.] Other vendors better clean up.”

Is Mr. Mostahsari correct and this could be a sign of things to come if EHR vendors are not careful about their actions? This Article will examine the existing eCW settlement agreement, along with other case law against EHR vendors, to determine whether this settlement is simply an outlier among FCA cases, meant only to punish particularly egregious behavior, or the beginning of a new era of FCA activity akin to other industries, like the pharmaceutical industry. Part II of this Article will provide a brief history of the FCA and the instances in which the DOJ has utilized provisions under the law against entities that or individuals who cause another to submit a false claim or make a material, false record. It will further review the types of cases outside of the FCA context that have been filed against EHR vendors since providers began more widespread adoption of EHR systems, especially after the enactment of the Health Information Technology for Economic and Clinical Health Act (HITECH) and the EHR Incentive Program. Part III will then study the eCW case in more detail, examining the actions that led to the settlement and determine whether such actions are an indication of a new era of FCA cases and EHR vendor liability. Part III will additionally examine existing case law against EHR vendors to determine whether any patterns can be gleaned from the cases that will predict the continued use of the FCA as an enforcement tool against EHR vendors. In Part IV, this Article will argue that, although the eCW case is based on unique facts, it is likely that EHR vendors will face other FCA cases as the healthcare industry places increasing responsibility and reliance on electronic systems. These suits will likely include allegations of fraud arising not only out of the EHR Incentive Program but also the submission of claims more generally. Unlike in other FCA cases involving entities that do not contract directly with the federal government, however, it is unlikely that the federal government will be able to realize as much success or generate the same type of monetary rewards against EHR vendors as it has against the pharmaceutical industry because of the distinctions between these two disparate sectors of the health care industry. Finally, the Article will conclude by providing some thoughts on the impact of the eCW settlement agreement, which puts the EHR industry on notice regarding the potential for future liability.

Keywords: electronic health records, false claims act, health information technology for economic and clinical health, hitech, meaningful use, EHR Incentive Program, eClinicalWorks, Department of Justice, settlement agreement, electronic medical record, liability, products liability, pharmaceutical industry

Suggested Citation

Farringer, Deborah, The Computer Made Me Do It: Is There a Future for False Claims Act Liability Against Electronic Health Record Vendors? (2018). Nevada Law Journal, Vol. 18, p. 735 (2018), Belmont University College of Law Research Paper No. 2018-2, Available at SSRN:

Deborah Farringer (Contact Author)

Belmont University - College of Law ( email )

1900 Belmont Boulevard
Nashville, TN 37212
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics