eClinicalWorks Lawsuit: $155M Settlement, Fraud, and Fallout

The eClinicalWorks lawsuit was a federal False Claims Act case that ended in a $155 million settlement in May 2017, resolving allegations that the electronic health records vendor faked its software certification and paid kickbacks to customers who steered new business its way. The case was brought by a whistleblower who first spotted the software’s defects while installing it at New York City’s Rikers Island jail, and it became the first major federal enforcement action against an EHR vendor.¹

What the Government Accused eClinicalWorks of Doing

The complaint set out two separate schemes.

The first was certification fraud. Under the HITECH Act’s EHR Incentive Program, healthcare providers could only claim federal incentive payments if they used software certified as meeting HHS technical standards. eClinicalWorks obtained that certification, the government alleged, by concealing that its software did not actually work as required.¹

The clearest example involved drug codes. Certification testing required the software to retrieve standardized drug codes from a complete database, a basic function for safe e-prescribing. Instead of building that capability, eClinicalWorks hardcoded only the 16 specific drug codes needed to pass the test, typing them directly into the software so it looked functional during the exam.² The government also alleged the software failed to accurately record user activity in audit logs, could not reliably capture diagnostic imaging orders, could not dependably run drug interaction checks, and did not meet data portability requirements meant to let providers move records to other systems.¹

The second scheme was kickbacks. Prosecutors said eClinicalWorks paid influential customers at least $329,000 in speaking fees, consulting fees, and similar arrangements to steer new buyers to the company, in violation of the federal Anti-Kickback Statute.³ Some referral rewards reportedly came as $500 in cash or iPads.⁴

The legal theory tying it all together was novel. Providers, not eClinicalWorks, submitted the incentive claims to Medicare and Medicaid. But because those claims depended on using certified technology, and because eClinicalWorks had obtained certification fraudulently, the government argued the vendor “caused” thousands of providers to submit false claims.⁵

How the Case Started at Rikers Island

Brendan Delaney was a software technician for the New York City Division of Health Care Access and Improvement, tasked with implementing eClinicalWorks at Rikers Island for prisoner healthcare. What he found alarmed him. Patient records overlapped on screen at the women’s hospital, creating the risk that one patient’s diagnosis or medication could be confused with another’s. One patient’s HIV drugs failed to appear on his medical report. Methadone tapering dosages were inaccurate. Patients were being discharged without proper lab results or prescriptions.⁶

Delaney documented the defects and brought them to senior city health officials, but he later described the response as “indifference.”⁷ He left his government job in 2011 and on May 1, 2015, filed a qui tam lawsuit under the False Claims Act in the U.S. District Court for the District of Vermont. The case was captioned United States ex rel. Delaney v. eClinicalWorks LLC, No. 2:15-CV-00095-WKS.⁸

The $155 Million Settlement

On May 31, 2017, eClinicalWorks agreed to pay $155 million to resolve the allegations, the largest False Claims Act recovery in the District of Vermont’s history at the time.⁵

The company and its three founders — CEO Girish Navani, Chief Medical Officer Dr. Rajesh Dharampuriya, and Chief Operating Officer Mahesh Navani — were jointly and severally liable for $154.92 million. Three employees paid smaller amounts individually: developer Jagan Vaithilingam paid $50,000, and project managers Bryan Sequeira and Robert Lynes each paid $15,000.⁹

Delaney received approximately $30 million as his whistleblower share.¹⁰

eClinicalWorks admitted no wrongdoing. The settlement expressly stated that the claims were allegations only, and it reserved the government’s right to pursue criminal charges, administrative exclusion from federal health programs, and other liabilities beyond the covered conduct.¹¹

The Five-Year Corporate Integrity Agreement

The money was only half of it. eClinicalWorks also signed a five-year Corporate Integrity Agreement with the HHS Office of Inspector General, running from May 30, 2017 through November 30, 2023. The Justice Department called it “novel and innovative,” and it set the template for how the government would police EHR vendors going forward.⁴

The agreement required eClinicalWorks to:

Retain an Independent Software Quality Oversight Organization — ultimately Quandary Peak Research — to assess quality control and submit semi-annual reports.¹²
Report software-related patient deaths or serious harm to the DOJ within 48 hours, and other patient safety concerns to the OIG within seven days.¹³
Provide customers with the latest versions of the EHR software and drug databases at no additional charge.⁹
Allow customers to transfer their data to a competing EHR vendor without termination fees, break fees, or service charges, if the customer exercised the right within one year of notification.¹⁴
Stop using contracts to prevent customers from publicly discussing software problems.¹⁵
Retain an Independent Review Organization to audit its financial relationships with healthcare providers.⁹

eClinicalWorks did not fully comply. In July 2018, the OIG fined the company $132,500 for failing to report patient safety issues within the required seven-day window; the agreement allowed penalties of up to $2,500 per day for each day a violation continued. The OIG marked the CIA closed after its full term expired in November 2023.¹⁶

What It Meant for Providers Using the Software

The settlement created immediate uncertainty for the thousands of practices that had used eClinicalWorks to attest to meaningful use. Because those attestations were the basis of their federal incentive payments, providers faced audit risk and the possibility of having to return incentive money if their claims were later found inaccurate.¹⁷

The software itself remained certified at the time of the settlement; the Drummond Group, the certifying body, did not revoke certification.¹⁷ For customers who wanted out, though, the CIA’s penalty-free data transfer provision removed a barrier that had previously cost practices tens of thousands of dollars to overcome.¹⁵

Private Lawsuits That Followed and Failed

The federal settlement drew private plaintiffs, but they hit a wall on standing.

In November 2017, Kristina Tot, on behalf of the estate of her husband Stjepan Tot, who died of cancer, filed a class action in the Southern District of New York seeking $999 million. The complaint alleged the software “failed to accurately display his medical history on progress notes,” preventing reliable tracking of when his cancer symptoms first appeared. That case was voluntarily dismissed without prejudice on February 13, 2018.¹⁸

A related case was refiled in the District of Massachusetts, Tot v. eClinicalWorks, LLC (No. 18-11658-RGS), seeking over $5 million to cover investigating and remediating inaccurate records. Judge Richard G. Stearns dismissed the case on March 27, 2019, finding the plaintiffs lacked Article III standing because the deceased patients faced no future risk of harm and the existence of unreliable records was not a concrete injury.¹⁹

The First Circuit reached the same result on March 27, 2020, in Amrhein v. eClinicalWorks, LLC (No. 19-1429). The estates of two deceased patients alleged software bugs caused misdiagnoses and improper treatment, but the appeals court held the patients faced no imminent future harm, the plaintiffs had not shown a direct causal link between defects and death, and inaccurate records alone were not an actionable “informational injury.”²⁰

The Permenter Case: A Second False Claims Act Suit Still Pending

A separate False Claims Act case remains active. In United States ex rel. Permenter v. eClinicalWorks, LLC (No. 5:18-cv-382), filed in the Middle District of Georgia, IT professionals Alex Permenter, Eric Rodighiero, and Chris Wheeler allege the software contained security vulnerabilities the company misrepresented to the federal government.²¹

Discovery has been contentious. As of June 2026, Judge Marc T. Treadwell had sanctioned eClinicalWorks four times for withholding evidence and discovery abuse.²² The relators filed a third motion for sanctions seeking case-ending penalties, including default judgment, alleging concealed documents and expert testimony contradicted by later-produced discovery.²³

On the merits, in July 2025 the court granted in part and denied in part eClinicalWorks’ motion for summary judgment, rejecting the argument that the claims were barred by prior public disclosure. The court noted the case involves reports from Quandary Peak Research — the same firm that acted as the independent oversight organization under the 2017 CIA — detailing alleged software security vulnerabilities, while emphasizing these remain unproven allegations.²⁴ The case appears headed toward jury trial, though no trial date has been publicly confirmed.

Why the Case Reshaped EHR Enforcement

The eClinicalWorks settlement was a starting gun. HHS-OIG Special Agent in Charge Phillip Coyne warned that vendors who “engage in fraud that undermines the goals of EHR or puts patients at risk can expect a thorough investigation and strong remedial measures.”⁴

The DOJ has since reached False Claims Act settlements with at least five additional EHR vendors, including Greenway Health, Practice Fusion, athenahealth, CareCloud Health, and Viztek. The Greenway case involved strikingly similar allegations of hardcoding software to pass certification tests.²⁵

The “causing” theory the DOJ pioneered against eClinicalWorks has outlasted the meaningful use program itself. The requirement for certified EHR technology carries into the Merit-Based Incentive Payment System that succeeded the older Medicare physician fee schedule, so the same enforcement framework applies to current federal payment programs.⁵

1
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2
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3
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Healthcare Dive. eClinicalWorks False Claims Settlement Could Kick Off More EHR Investigations
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