Sutter Health to pay $90 Million to Settle Medicare whistleblower, false claims civil lawsuit

 Sutter Health to pay $90 Million to Settle Medicare false claims civil case

Sutter Health will pay $90 million to settle a whistleblower civil lawsuit accusing the company of knowingly submitting wrong or inaccurate diagnosis codes for some federal Medicare payments.

The U.S. Department of Justice filed the agreement with the Sacramento-based hospital operator and its affiliates on Monday in a San Francisco federal court.

The lawsuit — United States ex rel. Ormsby, U.S. District Court, Northern District of California, No. 15-cv-01062 — alleged that the medical care services provider violated the False Claims Act. Sutter Health reportedly overcharged the federal government. It allegedly “misrepresented the health of patients enrolled in privately administered Medicare Advantage plans,” Reuters said.

Also, the settlement resolves a 2015 whistleblower case filed by Kathy Ormsby. She is a former employee of Sutter affiliate Palo Alto Medical Foundation. Her attorney filed a claim under the federal False Claims Act in San Francisco federal court.

Related: Who are whistleblowers?

Medicare Advantage fraud

The case is one of the largest settlement of a False Claims Act case against a hospital system for allegations of Medicare Advantage fraud. Also, it’s the second-largest Medicare Advantage fraud settlement ever.

Specifically, the company allegedly submitted unsupported diagnosis codes for some patients under its care in 2010 that they knew were fraudulent at the time. This led to inflated payments from the government Medicare Advantage plans to Sutter Health. When the hospital operator learned of the mistake, they failed to fix it.

“Health care providers who flout the law need to know that my office will hold (them) accountable,” said U.S. Attorney Stephanie Hinds.

In addition to the multi-million dollar settlement, Sutter Health must hire an independent reviewer for the next five years to to monitor its future medical billing records.

Meanwhile, officials at Sutter Health did not admit liability, but wanted to “bring closure to a long-running dispute.”

Finally, to reward the whistleblower for bringing this to the attention of the federal government, Ormsby is expected to receive 15% to 30% of the settlement. This reward is outlined under rules established by the FCA.

California Employment Law Attorney

James Johnson - California Employment Law

Johnson Attorneys Group can help you pursue a California whistleblower claim. Our law firm has extensive experience handling these complex legal matters. For example, there are both federal and state whistleblower laws and programs that have different rules and procedures.

Furthermore, iIf you would like to pursue a whistleblower claim, we urge you to speak to a qualified employment law attorney about your rights. You may contact Johnson Attorneys Group to request a free consultation at 855-918-2240.