Healthcare giant pays $46 million to settle Stark Law case

Sutter Health and a surgical group have agreed to pay the federal government more than $46 million to settle allegations rising from claims made to Medicare, according to a news release from the U.S. Department of Justice.

The allegations are tied to the Stark Law that bans hospitals from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital unless that relationship falls under a number of exceptions.

Sutter Memorial Center Sacramento (SMCS) agreed to pay $30.5 million to resolve allegations that from 2012 to 2014 the hospital violated the Stark Law by billing Medicare for services referred by physicians with the Sacramento Cardiovascular Surgeons Medical Group Inc. that exceeded the fair market value of the services provided. The surgeons group has also agreed to pay $506,000 in order to resolve allegations the it knowingly double-billed Medicare for services provided by physician assistants leased to SMCS, the release says.

“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” Assistant Attorney General Jody Hunt, of the Department of Justice’s Civil Division, says in the release.  “The Department is committed to taking action to eliminate improper inducements that can impact physician decision-making.”

Sutter Health has separately agreed to pay more than $15 million to resolve other self-reported conduct that violated Stark Law. The healthcare giant submitted Medicare claims for referrals from physicians who had paid compensation under personal services arrangements that exceeded the fair market value of the services, leased office space at below market rates, and reimbursed physician-recruitment expenses that exceeded the actual recruitment expense, according to the release.

Also, several Sutter ambulatory surgical centers double billed Medicare by submitting claims that included radiological services which Medicare had already paid another entity, which had performed the services.

“Providers must rigorously comply with the law and Medicare requirements” McGregor W. Scott, U.S. Attorney for the Eastern District of California, says in the release.  “This office is committed to pursuing enforcement actions that will ensure the integrity of federal health care programs.”

Some of the allegations brought against SMCS and the surgical group were originally brought to light in a lawsuit filed under the whistleblower provisions of the False Claims Act that allows private parties to bring a suit on behalf of the government. The whistleblower will receive nearly $5.9 million payment, the release says.