Semler Scientific Agrees to $29.75M Fine in DOJ Fraud Settlement

Semler Scientific, a healthcare technology firm, has agreed to pay a $29.75 million fine to settle a fraud investigation conducted by the U.S. Department of Justice (DOJ). The settlement is related to potential violations of a federal anti-fraud law concerning the marketing of QuantaFlo, the company's flagship product. This disclosure was made in a Tuesday filing by Semler Scientific.

Last month, Semler Scientific revealed that it had received a civil investigative demand, or CID, from the DOJ back in 2017. This CID is essentially a subpoena from a federal agency that typically precedes a lawsuit. The company complied with several subsequent subpoenas over the following years and began initial settlement discussions with the DOJ in February. The investigation into Semler Scientific’s marketing of QuantaFlo is unrelated to its bitcoin holdings.

In its Tuesday 8-K filing with the U.S. Securities and Exchange Commission (SEC), Semler Scientific, which is a large corporate holder of bitcoin, stated that it had inked an agreement with a crypto exchange allowing it to borrow both cash and digital assets, using its bitcoin holdings as collateral. If the company’s settlement agreement with the DOJ is approved, it intends to borrow under the master loan agreement and use such proceeds, along with its cash on hand, to pay the proposed settlement with the DOJ.

The settlement agreement with the DOJ is in principle, meaning that it is not yet finalized. In its Tuesday filing, the company warned investors that if the parties are unable to come to a final agreement, there is still a risk that the DOJ could file charges against the company seeking damages in excess of the agreed settlement amount. Semler Scientific stated that it intends to vigorously defend itself in any such action if the parties are unable to reach a settlement and the DOJ files a complaint.

Semler Scientific currently holds 3,192 bitcoins, a stockpile worth approximately $267 million at today’s price. The company's decision to use its bitcoin holdings as collateral for the loan highlights its strategic approach to managing its financial obligations while navigating the complexities of regulatory investigations.