A hospital system has been caught with its hand in the cookie jar –
and it was holding a pretty big cookie. A California health system has
agreed to pay California’s Department of Insurance a whopping $
46 million to resolve allegations that it overbilled for anesthesia services.
The claims stem from a 2009 False Claims Act lawsuit filed by a whistleblower
against Sutter Health, a company based in Sacramento that has hospitals
and facilities all over the North Bay area in California. The whistleblower
(also known as a relator) was a billing auditor, Rockville Recovery Associates.
Rockville filed suit under California’s False Claims Act statute,
alleging that the hospital system was triple billing for anesthesia services
at its hospitals and facilities. Sutter operates 24 acute-care facilities
throughout the northern part of California.
What is it about anesthesia services that makes them such a hotbed for
Medicare fraud? I am losing count of how many whistleblower blog entries
I have written on anesthesia fraud.
But despite the big payout, the hospital system does not seem particularly
remorseful. Neither does the California Hospital Association.
In a press release,
Settlement Agreement Reached in Case Involving Anesthesia Billing Methodology, Sutter claimed it “followed the law and hospital industry practice.”
So why is Sutter paying so much to the State of California? They paid
$ 46 million because it was in “the best interests of our charitable
assets” to avoid “the significant human and financial resources
associated with a lengthy trial.”
And far from being outraged Sutter’s overbilling, the president and
CEO of the California Hospital Association (CHA) expressed his dismay
that Sutter was settling. “More than 90 percent of California hospitals”,
including state hospitals, “bill for anesthesia services in this
same manner,” he moaned.
Sounds like what every parent in the world has heard: “But Mom, ALL
the kids are doing it.” And you already know the traditional counter
by heart: “What if everyone was jumping off a cliff? Would you do
If what Sutter did was wrong, then it doesn’t matter whether everyone
else was doing it, too. Everybody needs to cut it out, Sutter included.
And does anyone seriously believe that Sutter would pay $46 million to
settle a case if it really believed that it had been billing the way it
was supposed to?
And if CHA really does know that some of its other members are violating
the law, too, I would say the CHA has a duty to come forward with that
Until then, we will have to hope that other whistleblowers will come forward
with information that shows particular hospitals are doing the same thing.
If your daughter told you “everybody’s doing it,” you’d
hardly march down to the school and turn your daughter’s best friend
in – on the assumption she must be the “everybody” who
had been reported to you. You’d look pretty crazed if you called
the friend’s parents to complaint about the friend’s behavior,
when you did not have one bit of information to make you connect the behavior
to that particular friend.
The state and federal governments are in the same position. They cannot
march down to the courthouse and start filing suit against every hospital,
assuming that the CHA meant that particular hospital was the “everybody”
in “everybody’s doing it.”
In the suit against Sutter, California got its information from Rockville
Recovery Associates, which had audited Sutter. According to an article
by ABC affiliate News10, Sutter Health anesthesia suit settlement should
benefit consumers, Rockville uncovered the triple billing during its audit.
The whistleblower it found that the hospital was billing for an outside
anesthesiologist, and it also was billing a second – and overlapping
charge “for the operating room and a charge under a Code 37x. Anesthesia.”
The 37x code implied that Sutter had an employee in the room and could
charge by the hour, when in fact the services were being performed by
the outside anesthesiologist, and already were being billed separately.
The audit found that in some cases the hospital system also was billing
separately for anesthesia medications (gasses) that were included in the
other charges being sent to Medicaid.