BURLINGTON, Vt., March 25, 2022 /PRNewswire/ -- The US Department of Justice has filed notice that it intends to join a whistleblower lawsuit filed by Phillips & Cohen LLP against Modernizing Medicine and a co-founder alleging serious violations of the False Claims Act involving the company's electronic health records (EHR) software and illegal kickbacks to physicians.

ModMed sells a cloud-based electronic health records (EHR) system, through subscription services, to specialty medical practices, including, gastroenterology, orthopedics, ophthalmology, otolaryngology, pain management, plastic surgery, rheumatology, urology and dermatology practices. Medical practices use the software for clinical documentation, prescribing medications, telemedicine, billing and more.

The "qui tam" (whistleblower) complaint was filed under seal in 2017 by Phillips & Cohen LLP on behalf of a former ModMed executive. The case became public yesterday when a federal district court in Vermont lifted the seal. DOJ filed a notice of partial intervention on March 15 and is continuing to investigate the allegations. The government is expected to file its complaint against ModMed, specifying what charges it is making against the EHR company, in the next 90 days or so.

The whistleblower complaint is posted here.

The complaint names as defendants ModMed, based in Boca Raton, Florida, and its CEO Daniel Cane. A founder of ModMed, Cane previously founded the educational software company, Blackboard.com, which he later sold.

The "relator," or whistleblower, in the False Claims Act case is Amanda (Mandy) Long. She was recruited as a product director by Cane in 2014 and was promoted multiple times, eventually becoming Vice President of Product Management. She resigned in 2017.

"I am pleased the Justice Department recognizes the seriousness of this matter and is intervening in the case after investigating my allegations," said Long.

The False Claims Act and the government's investigation

The False Claims Act empowers whistleblowers to file qui tam lawsuits to sue entities that are defrauding the government. The law requires that the cases be filed under seal. The government then investigates the allegations and decides whether to join the case before it is made public. Whistleblower rewards under the False Claims Act range from 15% to 25% of any recovery resulting from allegations in which the government intervenes and 25% to 30% of any recovery resulting from allegations in which the whistleblower pursues without government intervention.

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