Healthcare information technology company IDX Systems Corp. disclosed Tuesday that it is the subject of a federal investigation into possible fraud on the company's application for a U.S. Department of Commerce contract.
IDX already faces a civil suit by a physician executive alleging that the company falsified documents in bidding for the contract though the National Institute for Standards and Technology.
In its quarterly 10-Q report to the Securities and Exchange Commission, South Burlington, Vt.-based IDX says a federal prosecutor is "investigating whether the company, made false statements in connection with the application for the project award from NIST."
IDX spokesperson Margo Happer confirms it was the office of U.S. Attorney John McKay in Seattle that requested information from the company.
IDX states in the SEC filing that it intends to cooperate with the investigation.
Happer says the federal probe is related to a qui tam, or whistleblower, suit that IDX believes was filed in 2002 by Mauricio Leon, M.D., onetime senior director of medical informatics for the Seattle-based Carecast division of IDX. Leon says he remains suspended without pay.
Because any qui tam suit must be kept under court seal until the government investigates the charges, neither Leon nor McKay may comment on the IDX statement or even the existence of any whistleblower case.
IDX had sued Leon April 25 in U.S District Court in Seattle, asking the court to declare that the company would not be in violation of the federal False Claims Act or the Sarbanes-Oxley corporate governance law for retaliation against a whistleblower should IDX decide to terminate Leon.
Leon filed a countersuit in May, accusing IDX of falsifying documents submitted to NIST, of lying about plans to carry out an $18 million contract to develop a clinical decision support system and of defrauding joint-venture partners, including Stanford University, the Mayo Clinic, the University of Nebraska Medical Center and technology companies IHC Health Services and Apelon.
Leon also filed a HIPAA privacy complaint with the HHS Office of Civil Rights and a wrongful termination complaint with the Labor Department under the Sarbanes-Oxley Act.
The physician alleges that IDX violated HIPAA in the April 25 suit by disclosing personally identifiable health information. The IDX filing does list a specific medical condition the company says Leon used as justification for an additional leave of absence.
Last month, a federal judge in Seattle consolidated the two lawsuits, making Leon the plaintiff and giving IDX the opportunity to air its charges against the physician as part of its defense.
Happer today reiterated IDX's denial of the charges and said that NIST recently approved funding for the third year of the clinical decision support project, known as the Standards-Based Active Guideline Environment, or SAGE.