The U.S. Department of Justice recently announced that CareCloud Health, a Florida-based developer of electronic health records software, agreed to pay $3.8 million to resolve a whistleblower’s allegations that it paid illegal kickbacks to generate sales of its products. CareCloud’s marketing referral program called the “Champions Program” allegedly violated the federal Anti-Kickback Statute (AKS) and False Claims Act (FCA) by paying clients to recommend the company’s EHR products to prospective clients.

The alleged kickback scheme was in operation from 2012 to 2017. A former CareCloud manager filed a qui tam (whistleblower) lawsuit disclosing the scheme and will receive about $800,000 of the settlement amount. The United States intervened in the suit, alleging that CareCloud’s payments violated the AKS and, because the kickbacks rendered false certain claims that were made under federal incentive payment programs, the FCA was triggered as well.

CareCloud did not admit wrongdoing but accepted the settlement in order to “avoid costly litigation.” The company has discontinued the offending marketing referral program.