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Nov 22, 2013 by |

Sutter Health Settles Whistleblower Case for $46 Million


Sutter Health recently announced that it intends to pay $46 million to settle a whistleblower lawsuit.  The lawsuit alleged that Sutter Health engaged in double billing practices with regard to anesthesia services provided to patients.  California Insurance Commissioner Dave Jones stated that the settlement is the largest out of court settlement ever received by his office.  Sutter Health is one of the largest hospital chains in California.  By settling out of court, Sutter Health will be avoiding a potentially expensive trial that was scheduled to begin in November of 2013. California whistleblower attorneys remind the public that tips provided by whistleblowers helps to save taxpayers millions of dollars every year.

Sutter Health has not admitted any wrong doing, however, they did not dispute or object to details of the case.  The case began when Rockville Recovery Associates, a billing auditor, filed a whistleblower lawsuit in 2009.  In 2011, the California Department of Insurance joined the lawsuit.

According to a Sutter Health spokesman, company billing practices for anesthesia adheres to industry standards and is used by approximately 90 percent of California hospitals.  The spokesman also stated that the billing methods follow federal and state rules.  The California Insurance Commissioner thinks that the new method of billing will be clearer and more predictable to consumers.  According to the Sutter Health spokesman, the company agrees with the Insurance Commissioner.  California whistleblower attorneys think that any practice that increases transparency in the hospital billing process is a good idea.

The main issue in the whistleblower lawsuit revolves around what is called chronometric billing.  That means that the bill is based on the amount of time it takes to complete the procedure.  According to allegation in the lawsuit, Sutter Health layered this charge on top of a separate charge for use of the operating room.  Then there was another bill for the anesthesiologist and sometimes another bill for the medication.  That amounts to four bills for one process.  According to the California Insurance Commissioner, there was double billing and a lack of transparency in the billing process.

The lawsuit also alleged that Sutter Health also included another misleading charge in its surgery bills.  Utilizing the chronometric billing method, Sutter Health is alleged to have added thousands of dollars to the cost of an operation.  The services were allegedly already billed to the customer in the separate operating room fee.  California whistleblower attorneys say that double billing practices are unfair to consumers.

Beginning next year, Sutter Health will replace the chronometric method of billing with flat fees.  Additionally, Sutter Health will put explanations of their charges online so that patients are better informed about what is included in the fees.  This will allow consumers to shop around for the best price for hospital services.  According to the California Insurance Commissioner, another positive change will be the agreed upon elimination of any language that limits the payers ability to challenge charges as false or in error.

The settlement payment will be divided between whistleblower Rockville Recovery Associates and the state of California.  The portion going to the state includes $20 million for the investigation and prevention of insurance fraud.

Evans Law Firm, Inc. handles whistleblower/false claims, consumer fraud class actions, insurance and banking fraud, consumer product liability, elder abuse, and personal injury cases.  If you think that you have witnessed or are the victim of financial fraud by an insurance company, bank or individual then, contact Evans Law Firm, Inc. at (415) 441-8669 for a free and confidential consultation, or email

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