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Sutter Health, Stark Law Violations, California 2023
California-based healthcare services provider Sutter Health and Sacramento Cardiovascular Surgeons Medical Group Inc. (Sac Cardio) have agreed to pay the United States a total of $46,123,516 to resolve allegations arising from claims they submitted to the Medicare program, the federal government announced today.
The Physician Self-Referral Law, commonly known as the Stark Law, prohibits a hospital from billing 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. 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.
As part of the settlements announced today, one of Sutter’s hospitals, Sutter Memorial Center Sacramento (SMCS), has agreed to pay $30.5 million to resolve certain allegations that, from 2012 to 2014, it violated the Stark Law by billing Medicare for services referred by Sac Cardio physicians, to whom it paid amounts under a series of compensation arrangements that exceeded the fair market value of the services provided. Relatedly, Sac Cardio has agreed to pay $506,000 to resolve allegations that it knowingly submitted duplicative bills to Medicare for services performed by physician assistants that it was leasing to SMCS under one of those compensation arrangements.
“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” said Assistant Attorney General Jody Hunt of the Civil Division. “The Department is committed to taking action to eliminate improper inducements that can impact physician decision-making.”
Separately, Sutter has agreed to pay $15,117,516 to resolve other conduct that it self-disclosed to the United States, principally concerning additional violations of the Stark Law. Specifically, Sutter hospitals submitted Medicare claims that resulted from referrals by physicians to whom those hospitals (1) paid compensation under personal services arrangements that exceeded the fair market value of the services provided; (2) leased office space at below-market rates; and (3) reimbursed physician-recruitment expenses that exceeded the actual recruitment expenses at issue. Additionally, several Sutter ambulatory surgical centers double-billed the Medicare program by submitting claims that included radiological services for which Medicare separately paid another entity that had performed those services.
Certain allegations relating to SMCS and Sac Cardio were originally brought by whistleblower Laurie Hanvey in a lawsuit filed under the False Claims Act, which allows private parties to bring suit on behalf of the federal government and to share in any recovery. The whistleblower will receive $5,891,140 as her share of the federal government’s recovery in this case.
The case is captioned United States ex rel. Hanvey v. Sutter Health et al., Civil Action No. 14-4100 (N.D. Cal.). These matters were handled on behalf of the government by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Northern District of California, and the U.S. Attorney’s Office for the Eastern District of California.
“Providers must rigorously comply with the law and Medicare requirements,” said U.S. Attorney McGregor W. Scott for the Eastern District of California. “This office is committed to pursuing enforcement actions that will ensure the integrity of federal health care programs.”
U.S. Attorney David L. Anderson for the Northern District of California said, “This office will continue to take all appropriate action to help ensure that the beneficiaries of federal health care programs receive services untainted by improper financial incentives.”
Key Facts
- State: California
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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