The case started after New York auditing firm Rockville Recovery Associates noted irregularities with Sutter’s anesthesia billing between 2002 and 2008 while auditing claims for one of Sutter’s insurance payers, Guardian Life Insurance Company of America. State Insurance Commissioner Dave Jones joined the lawsuit as a plaintiff April 13 and said the case could extend to hundreds of other providers and payers that employ similar billing procedures.
Rather than using the federal False Claims Act, the whistle-blower lawsuit was filed under the California Insurance Frauds Prevention Act, which carries similar penalties to the federal act: $10,000 per incident and the specter of triple damages.
“We believe the amount of the fraudulent charges is in the hundreds of millions of dollars, if not more,” Jones said in a news release.
Sutter Health defended its practices and pricing, saying in an e-mailed statement from a spokesman that its negotiated prices “reflect Sutter’s significant financial commitments” in meeting the state’s seismic regulations, buying expensive new medical technology and caring for growing numbers of nonpaying patients.
“Sutter Health is committed to compliant billing and charging practices,” spokesman Bill Gleeson said in an e-mail. “Our charges are transparent and available to the public, and our contracts with health insurance plans are thoroughly negotiated with these sophisticated companies. Since these rates are negotiated, they cannot be fairly characterized as false after the fact.”
MultiPlan acts as an intermediary between Sutter and the payers and is accused of preventing commercial payers from meaningfully auditing Sutter’s claims. Susan Mohler, vice president of marketing for MultiPlan, said the firm denies that its work in verifying negotiated rates between providers and payers has the effect of disallowing “meaningful auditing” of claims data. “We deny any part in the scheme to commit fraud,” Mohler said.
Rockville Recovery presented its concerns to Sutter early on and even did an on-site inspection at Sutter’s 798-bed California Pacific Medical Center in San Francisco in 2007. Jones announced his involvement in a news conference outside the medical center last week.
Gleeson said the litigants have never presented Sutter with evidence of wrongdoing by the health system or its payers. “Since the outset of this case, Sutter has asked the plaintiffs to provide us with any evidence to support their claims of billing improprieties,” Gleeson wrote. “To date, they have produced nothing to suggest that any bills submitted by any Sutter hospitals were false or fraudulent.”