Sacramento-based Sutter Health Agrees to $45.6 Million Medicare Fraud and Stark Law violations settlement, Whistleblower Receives $5.9 Million

Sacramento-based Sutter Health Agrees to $45.6 Million Medicare Fraud and Stark Law violations settlement, Whistleblower Receives $5.9 Million

Sutter Health has just agreed to pay a total of $45.6 million to settle two separate lawsuits alleging illegal kickbacks and Medicare fraud. 

Sutter Health whistleblowers have received many multimillion-dollar awards, and the former compliance officer who initiated the Illegal kickbacks case won’t be the exception. For her assistance in the recovery of taxpayer funds, the whistleblower, Laurie Hanvey, will receive a $5.9 million award. 

To resolve Hanvey’s allegations, Sutter Memorial Center Sacramento and Sacramento Cardiovascular Surgeons Medical Group (a practice run by three cardiovascular surgeons) agreed to pay the government $30.5 million and $506,000 respectively. The whistleblower received a share of both awards. 

According to Hanvey’s allegations, between 2012 and 2014, Sutter Memorial Center Sacramento entered into a series of illegal compensation agreements with Sacramento Cardiovascular Surgeons (Sac Cardio). 

The whistleblower complaint states that Sutter hospitals billed Medicare for services referred by Sac Cardio’s surgeons while they were receiving kickbacks to incentivize referrals. Hanvey was in an ideal position to detect wrongdoing, as she was a compliance officer at Sutter.   

Sutter separately agreed to pay $15.1 million to resolve related misconduct, which it self‑disclosed to the federal government. According to a DOJ press release, the underlying Stark Law violations included:

  • Compensation arrangements with professionals exceeding the fair market value
  • Office space leased to professionals at rates significantly below market value
  • Overpayment for physician-recruitment expenses 

The DOJ alleges Sutter Health used some of the arrangements listed above to disguise kickback payments to physicians and other healthcare professionals.

The Stark Law provides that hospitals cannot bill Medicare “for certain services referred by physicians with whom the hospital has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions,” the DOJ explained. “It is intended to ensure that medical decision-making is not influenced by improper financial incentives and is instead based on the best interests of the patient.”

U.S. Attorney for the Eastern District of California McGregor W. Scott said in a statement that his office “is committed to pursuing enforcement actions that will ensure the integrity of federal health care programs.”

Laurie Hanvey filed a whistleblower lawsuit under the False Claims Act, which allows insiders to file a complaint on behalf of the government and to receive a share of any resulting recovery. Whistleblowers typically receive between 15 and 25 percent of the total settlement or judgment.

A Sacramento-headquartered health system, Sutter has been described as an “empire.” It operates several major hospitals, mainly in Northern California, but also in other regions of the state as well as in other states like Illinois and Hawaii. 

Sutter Health comprises nearly 700 facilities. Its affiliates include Sacramento’s Sutter Medical Foundation, Sutter East Bay Medical Foundation, Sutter Gould Medical Foundation, and Sutter Pacific Medical Foundation.

In April 2019, Sutter agreed to pay $30 million to settle a Medicare Advantage fraud lawsuit. Initiated by whistleblower Kathleen Ormsby, who received an undisclosed award (likely close to $5 million), the underlying complaint alleged that Sutter routinely overcharged Medicare for services provided to Medicare Advantage members.  

If you are a compliance officer or an employee of Sutter or any of its affiliates, and you have original information about Medicare and Medicaid fraud, you may be eligible for a multimillion-dollar whistleblower award. We are currently investigating several fraud allegations involving Sutter Health and its associates. 

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.


David Kani

David Kani is a Southern California based trial lawyer with a focus on class actions and whistleblower (False Claims Act, SEC and others) cases.

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