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California-based Sutter Health Will Pay $45.6 Million To Resolve Allegations of Medicare Fraud and Stark Law Violations

The DOJ has announced that Sutter Health will pay $30.5 million to settle a lawsuit filed by a former Sutter compliance officer, Laurie Hanvey. The California health system has also agreed to pay $15.1 million to resolve allegations of self-disclosed Medicare fraud.  

California-based Sutter Health Will Pay $45.6 Million To Resolve Allegations of Medicare Fraud and Stark Law Violations

According to Hanvey’s complaint, Sutter Memorial Center Sacramento had an illegal arrangement with Sacramento-based group practice Sacramento Cardiovascular Surgeons (“Sac Cardio”). The whistleblower alleges that Sac Cardio’s surgeons received millions of dollars from Sutter Health in exchange for patient referrals. 

Hanvey’s lawsuit was filed in 2014 and unsealed in November 2019. Filed under the False Claims Act, it states that Sutter “knowingly submitted thousands of false claims to the United States and the state of California which resulted in millions of dollars of government reimbursement that would not have been paid but for defendant’s misconduct.”

The whistleblower suit revealed that Sutter Health maintained illegal kickback arrangements with doctors and practices all over California’s Bay Area, Sacramento, Modesto, and beyond. Hanvey claims she discovered suspicious payments to Sac Cardio while working at Sutter’s compliance department in 2013. She allegedly tried to raise concerns internally, but they were ignored.

Sac Cardio’s now suspended website stated that their team of surgeons, Michael T. Ingram, M.D., Robert Kincade, M.D., James Longoria, M.D., were “trained and experienced in treating patients of all ages,” and highlighted the practice’s “strong affiliation with Sutter Medical Center.”  

The site described Ingram, Kincade, and Longoria as “nationally acclaimed [surgeons] for their work with the holmium laser for patients with inoperable coronary arteries”  and “acknowledged leaders in the minimally invasive surgical treatment of atrial fibrillation.”

Though Sac Cardio prided itself on its ‘affiliation’ with Sutter, the connection was the beginning of the end for the now-defunct practice group. The whistleblower lawsuit states that Sutter paid the salaries of Ingram, Kincade, and Longoria’s assistants, at $170,000 each. In return, the surgeons were expected to refer as many patients as possible to Sutter hospitals. 

At a certain point, Hanvey attempted to halt a suspicious $900,000 payment to Sac Cardio, Still, Dr. Longoria “threatened to shut down the operating rooms,” and Sutter decided to let the payment go through. 

For her role in exposing Medicare and Medicaid fraud in California, Hanvey has been awarded $5.8 million from the $30.5 million settlement. The whistleblower will also receive nearly $100,000 from a $500,000 settlement with Sacramento Cardiovascular Surgeons Group. That brings her whistleblower award to a sizable $5.9 million.

The $15.1 million settlement, on the other hand, resolves allegations of Stark Law violations,  which Sutter Health self-disclosed to the DOJ. The Stark Law prohibits hospitals from billing Medicare “for certain services referred by physicians with whom the hospital has a financial relationship.” 

Earlier this year, Sutter Health agreed to pay $30 million to resolve allegations of Medicare fraud involving the Medicare Advantage program. That brings the total paid by the health system over healthcare fraud allegations in 2019 to over $75 million. Additionally, Sutter has recently settled an antitrust lawsuit filed by California’s Attorney General for an undisclosed amount.

Sutter Health’s network of hospitals and affiliates comprises Sutter Gould Medical Foundation, Sutter Pacific Medical Foundation, Palo Alto Medical Foundation, Sutter East Bay Medical Foundation, and Sutter Medical Group of the Redwoods as well as various hospitals in Sacramento, Berkeley, Santa Rosa, Yuba City, Castro Valley, Hawaii, Oakland, San Francisco, Menlo Park, Crescent City, Antioch, Lakeport, and Santa Cruz. The health system has over 53,000 employees and operates dozens of surgery, trauma, and cancer centers, maintaining over 4,000 acute care beds.  

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