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Sutter Health To Pay $30M To Settle Kickback Lawsuit

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San Mateo County Photos
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Flickr / Creative Commons
Sutter Health Hospital

Sutter Health has agreed to pay more than $30 million to the U.S. government to settle a lawsuit that accused it of paying doctors in exchange for patient referrals.

The agreement involves a 2014 secret lawsuit filed by the government and Laurie Hanvey, a whistleblower who once worked for Sutter as its compliance officer.

The suit remained sealed until Thursday, the Sacramento Bee reported.

Hanvey’s attorney, Michael Hirst, said the government will pay $5.8 million to Hanvey and her attorneys from the settlement amount as a result of her bringing her claims to the attention of officials.

“When kickbacks are paid and received, patients are right to worry whether recommended procedures at recommended hospitals are reasonable and necessary,” Hirst said.

Sutter officials said in a statement the settlement resolves overpayments that Sutter had received from the government. They said the company did not concede any wrongdoing as part of the settlement.

Hanvey joined Sutter in 2012 and within 13 months began to question payments and timesheets that were brought to her attention by a specialist in accounts payable, the lawsuit said.

The lawsuit alleges a pattern of wrongdoing involving Sutter and a number of medical practices in Sacramento, Modesto, the San Francisco Bay Area and elsewhere.

Among them was the Sacramento Cardiovascular Surgeons Medical Group Inc., a group of three surgeons accused of cutting a deal with Sutter starting in 2006 that provided free physician assistants to the group in exchange for the surgeons referring patients to Sutter hospitals.

Sutter agreed to pay the $170,000 salary of each assistant while the surgeons’ group “did in fact bill third-party payers, including Medicare,” for some of the assistants’ services, the lawsuit says.

The group did not immediately respond to a request for comment.

Hirst said It reached a settlement agreement — without admitting liability — that calls for it to pay the government $506,000, with $96,140 of that to go to Hanvey.