Reaching out to Sutter Health Whistleblowers

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Hochfelsen & Kani wants to speak with current and former employees of Sutter Health. We are in the process of investigating several Medicare and Medicaid fraud cases. 

The federal False Claims Act and the California False Claims Act provide that insiders with information about fraud against Medi-Cal, Medicare, and TRICARE are eligible to receive cash awards. As a rule, only whistleblowers who file a successful lawsuit can receive an award, calculated as a percentage of the government’s recoveries.

Under federal and state False Claims Acts, healthcare providers that knowingly submit false claims for payment to Medicare, Medi-Cal, and other government programs are liable for damages and penalties, which often range in the millions of dollars. The False Claims Act has been implemented to enable private citizens to sue fraudsters on behalf of the government.

Sutter Health is one of the most controversial healthcare providers in California. It has faced numerous False Claims Act lawsuits including allegations of overbilling, upcoding, and billing for medically unnecessary services. Sutter Health has also been investigated for antitrust violations. 

Whistleblowers who provide information that leads to monetary recoveries can receive up to 30 percent of the amount recovered. Over the last few years, Sutter Health whistleblowers have received several multimillion-dollar awards for their key role in recovering taxpayer funds. 

About Sutter Health  

Sutter Health is a “nonprofit public benefit corporation that provides healthcare services through affiliated entities, including hospitals and medical foundations,” in the words of the Department of Justice. Headquartered in Sacramento, the health system comprises physicians, hospitals, and other medical providers, mainly located in Northern California. According to one pending FCA complaint, “Sutter has an empire of medical facilities, surgical centers, imaging facilities, and more than 30 major hospitals spanning the U.S. from Northern California to Illinois, Hawaii, and Alabama. Sutterhealth.org lists a total of 636 Sutter facilities.”

According to its own website, Sutter Health enhances “the well-being of people in the communities [it serves] through a not-for-profit commitment to compassion and excellence in healthcare services,” leading “the transformation of healthcare to achieve the highest levels of quality, access, and affordability.” 

Some of the medical centers in the Sutter Health network include Palo Alto Medical Foundation, Sutter East Bay Medical Foundation, Sutter Gould Medical Foundation, Sutter Pacific Medical Foundation, and Sutter Medical Group of the Redwoods. The conglomerate also has hospitals in Berkeley, Oakland, San Francisco, Castro Valley, Ewa Beach (Hawaii), Menlo Park, Crescent City, Antioch, Lakeport, Santa Cruz, Sacramento, Santa Rosa, and Yuba City. 

This giant network comprises over 12,000 doctors, more than 53,000 employees, 36 ambulatory surgery centers, five trauma centers, eight behavioral health centers, nine cancer centers, and a total of 4,188 licensed general acute care beds.

In October 2019, the Associated Press reported that Sutter Health was “facing a trial over accusations that it has used its market dominance to snuff out competition and overcharge patients for medical bills.” The company’s present situation is a far cry from its website’s philanthropic promises.

A number of employers and unions have sued Sutter Health for its role in raising the cost of healthcare in California. The antitrust lawsuit, settled in October 2019, dates back to 2014. In 2018, Xavier Becerra, the Attorney General for the state of California, filed a lawsuit containing similar allegations. Becerra said at the time that Sutter Health Systems offers “care at a higher price and perhaps even [undermines] quality by the way it goes about doing its business."  The Attorney General went as far as to say that "the public is being ripped off." The plaintiffs in the more recent antitrust suit sought $900 million in damages.

The cost of healthcare in Northern California is higher than in other parts of the state, and the plaintiffs in the antitrust suit believe Sutter Health is to blame. A study found that the same medical procedure can cost 70 percent more in Northern California than in Southern California.

The plaintiffs in the antitrust case come out victorious. As wrongdoers facing potential billion-dollar verdicts usually do, Sutter decided to settle. The amount of the settlement they reached is confidential. 

Though the company claims that it “[delivers] healthcare efficiently by using resources responsibly,” it has settled numerous whistleblower lawsuits. Sutter Health has not only been accused of conspiring to increase healthcare costs in California, and it has been exposed on many occasions for putting profits before patients.

Sutter Health has settled several lawsuits to resolve allegations of Medicare fraud. The company has been investigated many times in connection with overbilling. Insiders have a long history of denouncing these practices, and several among them have received whistleblower awards amounting to millions of dollars.

Our whistleblower attorneys are concerned that Sutter Health may be engaging in Medicare and Medicaid fraud in California and elsewhere. When this occurs, patients often receive substandard care or have to undergo unnecessary procedures recommended only for the sake of profits.  

If you have information about wrongdoing at a facility associated with Sutter Health, it is likely that the misconduct has spread throughout the network, or even beyond the state. As a whistleblower, you can be eligible for rewards in each state that has been affected by an instance of healthcare fraud. As a Sutter Health whistleblower, you could potentially receive awards from California, Hawaii, and the federal government.

Sutter Health’s Multimillion-dollar Fraud Settlements

Sutter Health’s healthcare fraud settlements have often made headlines. Besides increasing the cost of healthcare for consumers, Sutter has been known to overbill Medicare and Medicaid, and it has paid tens of millions of dollars to settle FCA cases.

Sutter Health Fraud in California

In April 2019, Sutter agreed to pay $30 Million to resolve allegations that it provided inaccurate information about Medicare Advantage enrollees, which resulted in overpayment of Medicare Advantage funds.

The Sutter Health affiliates allegedly involved in the wrongdoing were: Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation. 

According to the DOJ, “Sutter Health. . . contracted with certain Medicare Advantage Organizations to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans. In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care. . . Sutter and its affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries under their care. These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the MAO plans being overpaid.”

The Medicare Advantage program is a fertile ground for fraud because patients receive a risk score, and the government pays a fixed amount per patient, based on that score, regardless of the cost of the specific services they may require. If you are aware of false claims violations involving Medicare Advantage Fraud, contact our whistleblower attorneys today; you may be eligible for an award.

Another Medicare Advantage fraud case against Sutter Health is still ongoing as of October 2019. Kathy Ormsby, a former employee of Sutter affiliate Palo Alto Medical Foundation filed a whistleblower lawsuit in 2015 alleging both entities defrauded the government by inflating the risk scores of Medicare Advantage plan enrollees.  

The complaint, which has been joined by the government, alleges that the defendants caused false claims for payment to be submitted to government healthcare programs. The fraudulent claims allegedly included:  

  • inaccurate diagnoses 
  • diagnoses for more severe conditions than the MA enrollees had
  • diagnoses for which enrollees had been treated at some point, but not during the relevant period for billing 

The whistleblower lawsuit describes a Sutter-wide culture of fraud, including the alleged suppression of internal auditors’ corrective efforts. According to the allegations, one audit found a 95 percent error rate in Sutter’s Medicare Advantage-related claims.

In 2013, Sutter Health paid $46 million to settle a health insurance fraud suit filed under the California Insurance Frauds Prevention Act (IFPA). According to the lawsuit, various Sutter hospitals across California systematically submitted fraudulent bills for anesthesia services to private insurers. 

The $46 million settlement led to a number of transparency reforms at Sutter Health, and it was the largest until that date in a case of fraud against private insurers. In California, not only Medicare and Medi-Cal whistleblowers can receive awards -- if you have information about fraud against private health insurers, you can sue wrongdoers and secure an award under the IFPA.

$38 Million Whistleblower Award  

In 2015, Sutter was one of several hospital systems that paid $250 million to resolve Medicare fraud allegations involving cardiac implants. The devices were allegedly implanted in patients who were ineligible for the procedure. HCA, Ascension Health, and Community Health Systems paid a total of about $44 million. Twelve Sutter hospitals paid a collective $3 million to avoid going to trial. 

Although there is a mandatory waiting period to implant certain cardiac devices in patients who have had a heart attack or undergone bypass surgery, the complaint stated that hundreds of hospitals implanted these devices during prohibited periods. The two Florida whistleblowers who filed the suit, Leatrice Ford Richards, a nurse, and Thomas Schuhmann, a reimbursement consultant, split a $38 million award.

The Sutter Health affiliates charged were Alta Bates Summit Medical Center, Alta Bates Summit Medical Center, California Pacific Medical Center, Marin General Hospital, Mills-Peninsula Medical Center, Memorial Medical Center, Sutter Delta Medical Center, Sutter Memorial Hospital, Sutter Roseville Medical Center, Sutter Santa Rosa Regional Hospital, and Sutter Solano Medical Center.

Breast Surgery Upcoding Allegations 

In 2018, Sutter Health was hit with another False Claims lawsuit. The complaint denounces alleged “upcoding” and “unbundling” billing practices by Sutter Health surgeons. After analyzing thousands of claims for payment submitted to Medicare, a whistleblower (filing under the pseudonym Judy Jones) found that “Sutter and its surgeons freely took advantage of a flawed medical payment system by regularly upcoding and unbundling major surgical codes for breast cancer surgery, and coding ‘first- | time’ immediate mastectomy reconstruction codes multiple times in the same patient,” according to the lawsuit.

Medicare and Medicaid reimbursement for mastectomy reconstruction in cancer patients is much lower than the cost of self-pay, elective breast surgery. In order to “subvert these lower rates... Sutter surgeons knowingly billed Medicare, Medicaid, and private insurance carriers higher ‘first-time’ reconstruction codes twice in the same patient.”  

Judy Jones’ complaint states that, “Sutter's Medicare payment ledgers for thousands of breast surgeries show that such upcoding and unbundling was routine. A typical Sutter plastic surgeon billed Medicare approximately $1.5 million over a five-year period. Approximately 40-50% of that amount was for breast surgery.” If the False Claims Act lawsuit is successful, Jones could receive a multimillion-dollar whistleblower award. 

In 2019, patients of Sutter Health filed a complaint alleging the company systematically shared private patient information with Facebook and Google. According to the lawsuit, Sutter Health “added source code to its website that can control patients' web browsers, without their consent, and capture their private health information when individuals perform site functions.” This information was later shared with the Internet companies, which proceeded to target ads for the patients. This constitutes a breach of confidentiality that could lead to a harsh verdict or a substantial settlement.

With a lengthy track record of False Claims Act violations, Sutter Health has an arsenal of strategies to avoid fraud investigations and litigation. They have massive resources and an army of lawyers, and only a seasoned whistleblower attorney can help you successfully navigate the complex process of filing a successful FCA suit and securing an award. 

Is Sutter Health Truly a Nonprofit? 

In late 2018, Berkeley Major Jesse Arreguín reportedly asked, “is it time to rethink whether the massive, not-for-profit Northern California health system [Sutter Health] deserves its tax-exempt status?” The question was put forward at a time when Sutter was planning to close its Berkeley hospital to avoid spending required to comply with the state’s seismic regulations.  

“We want to better understand, 'What community benefits are they providing?'. . .  'How do they benefit the people of Berkeley?'. . . 'Is the level of community benefit commensurate to their tax-exempt status?' ” the Major asked. 

Though Sutter maintains facilities for homeless patients and food banks, the rising prices of its services and its cost-cutting practices have raised concerns. While its community benefit expense reports make the healthcare system look good, they cannot be taken at face value. According to the company’s tax forms, $334 million of the total community benefit expense Sutter reported in 2017 was a noncash expense.

While a giant like Sutter should improve disease prevention and health for the populations it services, the company has a reputation for lack of transparency. When upgrades are required, Sutter has been known to close hospitals to avoid the expense. On the other hand, overcharging lawsuits have plagued the healthcare system over the last ten years. In Crescent City, for example, residents have often complained about the local Sutter hospital’s “exorbitant” costs.

In 2013, in a move to try to boost Medicare revenue, the company attempted to convert its Crescent City facility into a critical-access hospital, thus reducing the number of available beds by half. Protests in the community caused Sutter Health to back down. 

In 2017, Sutter’s net income amounted to $958 million, while its broader community benefits spending was a mere $124 million. The picture the company presents before the IRS may add up, but Sutter appears to be making too much money to be considered a nonprofit.

Sutter Health Whistleblowers May Be Eligible for Cash Awards

During the 2018 fiscal year, federal healthcare fraud recoveries totaled $2.3 billion. Hundreds of insiders came forward with information about unlawful practices that abused the Medicare, TRICARE, and Medicaid programs. For their role in securing taxpayer fund recoveries, many of these whistleblowers received multimillion-dollar awards.  

Lawsuits filed under the False Claims Act encourage transparency and deter fraud. Medicare, Medicaid, and other taxpayer-funded healthcare programs were created to provide much-needed services to vulnerable populations. When hospitals, doctors, and other providers defraud these programs, they struggle to cover critical treatments and procedures. From antitrust cases to overbilling and Medicare Advantage-related suits, Sutter Health has settled all manner of fraud allegations.  

The U.S. healthcare industry is almost too big to control. It would take hundreds of millions of dollars to implement sufficient oversight mechanisms, and though the Medicare Fraud Task Force and other law enforcement organizations invest heavily in fraud prevention, they usually fall short. Government investigators rely on whistleblowers to provide tips and evidence to uncover fraudulent schemes in the industry.   

Under the federal and California False Claims Acts, individuals who provide tips that lead to a favorable verdict or settlement may receive between 15 and 30 percent of the total amount recovered. To boost your chances of securing this type of whistleblower awards, it is important to work with an experienced whistleblower attorney.   

The focus of healthcare providers should be on public health and the well-being of patients. But this is not always the case. Every day, companies, doctors, managers, and healthcare workers make thousands of decisions aimed not at providing the best care but at increasing Medicare and Medicaid billings. 

Patient recruiting, illegal kickbacks, overbilling, billing for unnecessary services, and upcoding are rampant in California. Patients are often subjected to unnecessary procedures to boost profits, and billings for unrendered services are frequent. All of these practices can be grounds for a False Claims Act lawsuit.

Are you aware of FCA violations by Sutter Health, its affiliates, or its employees? Our attorneys can help you file a lawsuit that checks all the boxes. We know what prosecutors expect from a False Claims Act case, and we can instruct you as to how to gather sufficient evidence and protect your privacy. If you speak out about healthcare fraud, you can help save taxpayer money and save lives. Call us today for a complimentary consultation. 

Call for Sutter Health Whistleblowers

If you are a Sutter Health insider or have information about healthcare fraud and FCA violations, please contact us. It is illegal to overbill and otherwise defraud Medi-Cal, Medicare, TRICARE, and other government programs. If you know of any practice at Sutter Health or another provider that resulted in the submission of false claims to the government, call us for a confidential consultation. Your identity can be kept confidential through the process of filing your lawsuit and waiting for the government to investigate. The False Claims Act also includes anti-retaliation provisions, and you may sue your employer if they have retaliated against you for blowing the whistle.  

Whistleblowers embark on a unique journey whose final destination could be a more transparent healthcare industry and a much-deserved cash award. Our firm has built teams of experienced investigators, litigators, and expert witnesses who can help you hold fraudsters accountable and protect taxpayer funds. We are investigating fraud allegations involving Sutter Health; if you have any information about misconduct in the sector, call us today.

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David Kani

David Kani is a Southern California based trial lawyer with a focus on premises liability (injury on the property of another) cases.
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David Kani & Steve Hochfelsen are represented by Elite Lawyer Management, managing agents for America's best attorneys.
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