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LEGAL UPDATE
$46 MILLION WHISTLEBLOWER LAWSUIT
Calif. Health System Settles Anesthesia Billing Lawsuit
Sutter Health, a not-for-profit network that operates 24 hospitals in northern California, has agreed to pay $46 million to settle a whistleblower lawsuit that accused it of misconduct in its dealings with patients and insurers, according to an announcement issued by the state's Department of Insurance last month (tinyurl.com/pvky7c4).
In the lawsuit, filed in 2011, Rockville Recovery Associates, the billing auditor that filed the lawsuit, and the insurance commissioner alleged that Sutter falsely and misleadingly double-dipped when billing for surgical anesthesia. Patients and insurers were charged 3 times: once for the anesthesia contractor's services, once for the OR facility fee and once for "Code 37x Anesthesia."
The lawsuit's plaintiffs found that the services for which "Code 37x" billed — fees that often totaled thousands of dollars per patient — were covered by the OR facility fee. They also argued that Sutter often billed for anesthesia contractors' services based on the time they spent on the case, even though they were not Sutter employees. The settlement requires Sutter to bill a fully disclosed flat fee.
Besides the payment — which will be divided between Rockville and the state of California — the settlement also requires Sutter Health to:
• itemize its anesthesia billing charges;
• list what these anesthesia services cost it, by posting (and annually updating) this information on a public website and sending it to insurers and the state's insurance commissioner;
• explain the process by which the amounts on its charge master schedule are calculated into patients' bills and insurers' claims; and
• let insurers contest bills, which the lawsuit claimed Sutter's contracts had previously restricted.
Sutter Health did not admit to
wrongdoing in the settlement.
— David Bernard