On August 30, 2021, the Department of Justice announced that it had reached a $90 million settlement with Sutter Health and its affiliates to resolve allegations that Sutter Health had overcharged the Medicare Advantage Program.  The government alleged that Sutter Health had violated the False Claims Act by knowingly submitting inaccurate information about the health status of Medicare Advantage Plan beneficiaries receiving services from Sutter Health.  Because Medicare Advantage Plans pay a per-person amount to provide benefits to beneficiaries based on the health status and demographic information of the beneficiaries, false information concerning the health status of beneficiaries can lead to improperly inflated payments.

As a health care services provider contracted to provide services to Medicare beneficiaries in California, Sutter Health received payments for treating Medicare Advantage Plan beneficiaries.  Sutter Health allegedly reported beneficiary diagnoses without the necessary supporting documentation, leading to increased payments to Sutter Health, and once the conduct was identified by Sutter Health, it failed to correct the issue.  Pursuant to the settlement, Sutter Health and its affiliates entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General.  Among other things, Sutter Health is required to engage an independent entity to review its Medicare Advantage patients’ medical records on an annual basis. 

In its announcement, DOJ stated that the investigation and eventual settlement was the result of a qui tam complaint filed by a former employee of one of the Sutter Health affiliates.  The government relies heavily on relators to reveal potential fraud to the government.  Fraud, by its nature, is concealed from the prying eyes of regulators and government investigators.  The government believes that relators are crucial in pealing back the shades and revealing fraud, and it rewards relators with a portion of any recovery against individuals and entities that the relator has reported on; however, DOJ did not announce the amount that the relator against Sutter Health would be awarded.  There are also protections in place to prevent retaliation and ensure that previous employees are not hampered in bringing fraud to the attention of the government.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and qui tam litigation.  If you need assistance with such a matter, please contact us today.