California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Jones Joins Suit Charging Sutter Health With Fraudulent Billing

On Wednesday, California Insurance Commissioner Dave Jones (D) filed a motion to intervene in a whistle-blower lawsuit alleging that Sutter Health had falsely billed insurers for anesthesia services, the Sacramento Bee reports.

In filing the motion, Jones joins a 2009 lawsuit filed by health care auditor Rockville Recovery Associates, the whistle-blower in the case. The auditor investigated billing practices at Sutter and other health systems at the request of Guardian Life Insurance of America.

The lawsuit also names Multiplan -- an intermediary between insurers and hospitals -- as a codefendent in the case (Smith, Sacramento Bee, 4/14).

Lawsuit Details

Hospitals typically charge about $150 to $250 for anesthesia services, which generally covers the cost for a technician to prepare the operating room. Anesthesiologists typically are not employed by hospitals and charge insurers separately for their services.

However, the lawsuit alleges that Sutter routinely billed insurers $3,000 to $5,000 for anesthesia services. According to the plaintiffs, Sutter charged insurers even if the anesthesiologist had charged a separate fee and in some cases when no anesthesia had been used (Allday, San Francisco Chronicle, 4/14).

In a release, Jones said, "We believe the amount of the fraudulent charges is in the hundreds of millions of dollars, if not more" (Carlson, Modern Healthcare, 4/13).

Jones' Intervention

Jones used his authority under the California Insurance Frauds Prevention Act to intervene in the lawsuit on behalf of the state.

The insurance commissioner is seeking:

  • Triple damages for each claim;
  •  $10,000 in civil penalties per violation;
  • Attorneys' fees;
  • Court costs; and
  • An award for Rockville Recovery Associates (Robertson, Sacramento Business Journal, 4/13).

Sutter's Response

Sutter released a statement denying the lawsuit's allegations and vowing to "vigorously defend this matter." The health system said it is "committed to compliant billing and charging practices."

In addition, Sutter said the lawsuit has "produced nothing to suggest that any bills submitted by any Sutter hospitals were false or fraudulent."

Sutter officials said the health system's prices reflect the costs of meeting California's seismic safety requirements, improving technology and providing uncompensated care (Sacramento Bee, 4/14).

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