S.F. firm settles in kickbacks case involving opioids

San Francisco electronic health records company Practice Fusion has agreed to pay $145 million to resolve charges that it took kickbacks from an opioid maker that used the company’s software to prod doctors to prescribe more opioid painkillers to patients, according to the Department of Justice.

The department said the settlement, which followed from civil and criminal investigations, is the first criminal action against an electronic health vendor.

Practice Fusion agreed to pay $118.6 million to the federal government and states and $26 million in criminal fines and forfeiture.

Practice Fusion accepted “sponsorship” payments from an opioid maker and other drug

companies and, in exchange, allowed the drug companies to influence the design and implementation of an alert system in its electronic health records software aimed at increasing sales of the companies’ drugs, according to the Justice Department. Between 2014 and 2019, health care providers using the software wrote many prescriptions after receiving the alerts that the opioid company and other drug firms helped design, the department said.

Practice Fusion solicited and received $1 million from the opioid maker’s marketing department to create an alert that would cause doctors to provide more extendedrelease opioids, according to the department. A spokesman for the U.S. Attorney for the District of Vermont, which handled the criminal investigation and resolution, did not provide the name of the opioid company because prosecutors did not indict it.

“Practice Fusion’s conduct is abhorrent,” said Christina E. Nolan, U.S. Attorney for the District of Vermont, in a statement. “During the height of the opioid crisis, the company took a milliondollar kickback to allow an opioid company to inject itself in the sacred doctorpatient relationship so that it could peddle even more of its highly addictive and dangerous opioids.”

Prescription opioids are the leading cause of opioid overdose deaths, according to the California Department of Public Health. In 2018, nearly 45% of total opioid overdose deaths in the state — 1,091 out of 2,428 — were attributed to prescription opioids, which include oxycodone and hydrocodone.

Practice Fusion was founded in 2005 and acquired by the Chicago company Allscripts in 2018 for $100 million, a fraction of its previous valuation of $1.5 billion. Allscripts in August recorded a $145 million charge related to the Justice Department investigations, saying at the time that an agreement had been reached in principle that, if finalized, would resolve civil and criminal liability in connection to the Practice Fusion investigations.

“We are pleased to complete the settlement of these legacy matters,” Brian Farley, Allscripts’ executive vice president and general counsel, said in a statement. “As a company, we are committed to maintaining the highest levels of professionalism and integrity, and since learning of this matter we have further strengthened Practice Fusion’s compliance program. Allscripts recognizes the devastating impact that opioids have had on communities nationwide, and we are using our technology to fight this epidemic.”

An Allscripts spokesman did not respond to a question about whether the company admits to wrongdoing as part of the agreement, but the Justice Department said the settlement requires Practice Fusion to “admit to its wrongs.”

Ryan Howard, a former CEO and founder of Practice Fusion, stepped down as chief executive in 2015. He said he was not contacted as part of the investigation and that the deal with the pharmaceutical company was executed in 2016, after he left the company.