Sutter Health Pays $46M to Settle Stark Law Violation Claims
The settlement will resolve allegations that the California-based provider violated the Stark Law by paying kickbacks to cardiologists and billing Medicare for those services.
Source: Thinkstock
By - Sutter Health and Sacramento Cardiovascular Surgeons Medical Group Inc. (Sac Cardio) they reached a settlement with the Department of Justice to resolve allegations that they violated the Stark Law and submitted claims to Medicare for those specialty services, according to a recent announcement.
The organizations agreed to pay over $46 million, the announcement from the Department of Justice stated.
“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” stated Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department is committed to taking action to eliminate improper inducements that can impact physician decision-making.”
As part of the settlement, one of Sutter’s hospitals, Sutter Memorial Center Sacramento (SMCS), agreed to pay $30.5 million to settle allegations that it billed Medicare for services referred by Sac Cardio physicians from 2012 to 2014. The hospitals allegedly paid kickbacks to the physicians that exceeded the fair market value of services provided, according to the announcement.
Sac Cardio also agreed to pay $506,000 to resolve claims that it knowingly billed duplicative claims to Medicare for services rendered by physician assistants it was leasing to the Sutter hospital under one of the compensation agreements.
In a separate but related settlement, Sutter also agreed to pay $15,117,516 concerning additional violations of the Stark Law, the announcement stated.
Specifically, Sutter hospitals submitted Medicare claims for services resulting from referrals by physicians to whom those hospitals paid compensation that exceeded the market price of the service provided. The hospitals also allegedly leased office space at below market rates and reimbursed physician recruitment expenses that exceeded the actual recruitment expenses at issue.
The additional settlement also resolves claims that several Sutter ambulatory surgical centers sent duplicate bills to Medicare by submitting claims that included radiological services that Medicare had already paid for as part of another service.
Sutter was also in the news in 2018 over another legal issue. California’s Attorney General Xavier Becerra announced in April of that year that he filed a lawsuit against the health system because of accusations that it engaged in anticompetitive behavior that resulted in higher healthcare costs.
The lawsuit claimed that the healthcare provider intentionally set high prices for hospital services and products that were far above the market price, as well as increased and maintained market power to control healthcare prices and exclude competition.
At the beginning of October of this year, it was announced that Sutter Health was facing a trial over the allegations. Opening arguments started just a few weeks ago, and the trial was expected to last months.
“We’re alleging that Sutter Health Systems is offering care at a higher price and perhaps even undermining quality by the way it goes about doing its business,” Becerra told reporters ahead of the trial. “And that’s not fair. Bottom line, the public is being ripped off.”
Most recently, the California Department of Justice announced last week that it had reached a definitive agreement with Sutter Health, abruptly ending the much-anticipated legal trial.
A spokesperson for the California DOJ said that they “cannot comment further until the final agreement is approved by the court.”
The agreement is expected to get approved within the next few days, with Sutter maintaining that the allegations were misguided. Becerra is standing by his claims, adding that he and his team intend for good outcomes for the people of Northern California.
“This is a lawsuit that has been watched by hospital chains nationally, and I think it will make health care providers think twice about some of these anti-competitive practices,” Anthony Wright, leader of Health Access California, said in a statement. “A lot depends on the details of the settlement, which we won’t know for months, but even just the fact that the lawsuit was brought by Attorney General Becerra, by the union and plaintiffs, that sends a really important signal, not just to Sutter but nationwide to the health care industry.”
