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Sutter Health, surgeon group to pay $46M+ for alleged Stark Law violations, double-billing by ASCs

Sacramento, Calif.-based Sutter Health and a three-surgeon cardiovascular group will together pay the government over $46 million to settle allegations that they violated Stark Law, the Department of Justice announced Nov. 15.

Several Sutter Health hospitals and Sacramento Cardiovascular Surgeons Medical Group allegedly billed Medicare for services referred by physicians with whom a hospital had improper financial arrangements.

The health system agreed to pay $15.1 million for conduct it disclosed to the U.S. government, including submitting Medicare claims that resulted from referrals by physicians who:

  • Were compensated by the hospital in excess of fair market value
  • Leased space at below-market rates
  • Were improperly reimbursed for physician-recruitment expenses

The settlement also covers allegations that several Sutter ASCs double-billed Medicare by submitting claims involving radiological services for which Medicare had already paid another entity.

Separately, Sutter Memorial Center Sacramento agreed to pay $30.5 million to resolve allegations that it paid Sacramento Cardiovascular physicians more than fair market value for their services, then billed Medicare for services referred by those physicians. The surgeon group will pay $506,000 in relation to those alleged arrangements.

Certain allegations against SMCS and the surgeon group arose from a whistleblower lawsuit brought by Laurie Hanvey, who will receive nearly $5.9 million from the settlement. There was no determination of liability.

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