Tech company pays $1.7 million in restitution for defrauding hospital electronic records programs

CINCINNATI – An Anaheim, Calif. technology company was sentenced in U.S. District Court today and was ordered to pay nearly $1.7 million in restitution to federal and Ohio state programs it defrauded.

According to court documents, KPMD, Inc., through its contract with the Southwest Regional Medical Center in Georgetown, Ohio, defrauded a Medicaid program that was established as part of the 2009 American Recovery and Reinvestment Act.

As part of the Recovery Act, the Health Information Technology for Economic and Clinical Health Act (HITECH Act) established incentive payments to eligible hospitals for using certified electronic health records technology. Ohio also implemented a state incentive for hospitals, consistent with the federal HITECH Act.

In September 2011, KPMD entered into a contract with Southwest Regional Medical Center and agreed to implement the KPMD software program for electronic health records. KPMD agreed to implement the software program for electronic health records. In exchange, the hospital assigned its government incentive payments to KPMD. KPMD’s CEO later purchased the hospital. 

Thereafter, KPMD falsely attested to the federal and state medical incentive programs that Southwest Regional Medical Center emergency room had met the criteria for incentive payments, even as the hospital was in the process of closing down. As a result, payments totaling nearly $1.7 million was wired to KPMD.

As part of its plea, KPMD agreed to pay restitution in full, including nearly $1.3 million to Medicare and approximately $380,000 to Medicaid, prior to today’s sentencing. The restitution payments by KPMD have already been deposited with the Court.

The company was charged and pleaded guilty in December 2018 to two counts of filing a false claim.

David M. DeVillers, United States Attorney for the Southern District of Ohio; and Lamont Pugh III, Special Agent in Charge, United States Health and Human Services Office of Inspector General, announced the sentence imposed by U.S. District Court Judge Michael R. Barrett. Assistant Deputy Criminal Chief Timothy S. Mangan is representing the United States in this case.