Sutter Health settles Medicare overbilling claims for $ 90 million

(Reuters) – California hospital operator Sutter Health has agreed to pay $ 90 million to settle claims it overcharged the federal government by distorting the health of patients enrolled in private Medicare Advantage plans.

The regulation, announced Monday by the US Department of Justice, resolves a 2015 whistleblower lawsuit filed under federal misrepresentation law by Kathy Ormsby, a former employee of Sutter’s affiliate, the Palo Alto Medical Foundation , in federal court in San Francisco.

According to Ormsby’s attorneys, this is the largest settlement of an FCA case against a hospital system for alleged Medicare Advantage fraud, and the second-largest Medicare Advantage fraud settlement ever reported overall.

“This case is an important example of whistleblowers and their lawyers partnering with the government to bring additional expertise and legal firepower to the fight against fraud,” said Mark Kleiman of Kleiman Rajaram, one of the lawyers. , in a press release.

“Today’s result sends a clear message that we will hold healthcare providers accountable if they knowingly provide or correct false information,” said Assistant Deputy Attorney General Sarah Harrington of the civil division of the Department of Justice, in a statement.

Sutter, who is represented by Katherine Lauer and Amy Hargreave of Latham & Watkins, said the agreement put “the closure of a long-standing dispute, allowing Sutter to avoid the uncertainty and additional expense of a protracted litigation “.

Medicare Advantage, also known as Medicare Part C, is a program where patients enroll in private managed care plans to receive benefits.

The Federal Centers for Medicare and Medicaid Services pay these plans a fixed amount per patient adjusted for individual patient risk factors, which is determined based on diagnostic codes submitted by providers. For example, diagnoses of diabetes or congestive heart failure would result in higher payments.

Ormsby and the government alleged that, around 2010, Sutter knowingly submitted unsupported diagnostic codes for some patients, resulting in inflated payments, and failed to take sufficient corrective action after becoming aware of the codes not taken. in charge.

In addition to the payment, the settlement includes a five-year corporate integrity agreement under which Sutter is to institute a centralized risk assessment program and hire an outside organization to annually review a sample of its patient diagnostic data. .

Ormsby is expected to get 15-30% of the settlement under the FCA, although the exact share has yet to be determined.

The deal comes a month after the federal government joined a similar Medicare Advantage overcharging lawsuit against hospital giant Kaiser Permanente.

This is the United States ex rel. Ormsby, US District Court, Northern District of California, # 15-cv-01062.

For Ormsby: Kathleen Scanlan and Jeffrey Keller of Keller Grover; Gordon Schnell of Constantine Cannon; and Mark Kleiman from Kleiman Rajaram

For the government: Olga Yevtukhova, Jennifer Koh, Thomas Morris and Lyle Gruby of the Civil Division of the US Department of Justice; and Assistant U.S. Attorney Benjamin Wolinsky of the Northern District of California

For Sutter: Katherine Lauer and Amy Hargreave of Latham & Watkins

Read more:

Federal government joins overcharging lawsuit against Kaiser Permanente