On November 15, 2019, Sutter Health (“Sutter”) and Sacramento Cardiovascular Surgeons Medical Group Inc. (“Sacramento”) agreed to pay a total of $46 million to resolve FCA claims based on whistleblower allegations made by a former Sutter compliance officer that Sutter provided kickbacks to Sacramento physicians in exchange for referring patients to Sutter. The settlement also resolved Stark Law allegations relating to above fair market value payments made by certain of Sutter’s hospitals to Sacramento physicians. The underlying FCA complaint was filed in 2014 by a former Sutter compliance officer. The settlement only resolves some of the fraud allegations included in the former compliance officer’s complaint.
The settlement also separately resolved certain self-disclosed violations of the Stark Law by Sutter, including: 1) paying compensation under personal services arrangements that exceeded the fair market value of the services provided; 2) leasing office space at below-market rates; and 3) providing reimbursement for physician recruitment expenses that was greater than the physicians’ actual expenses. The self-disclosed conduct also included double-billing violations, in which Sutter submitted claims to Medicare for radiological services that Medicare had paid to another entity.
The settlement follows a number of recent settlements and ongoing enforcement actions against Sutter, and reflects DOJ’s enforcement efforts targeted at providers, even when conduct is self-disclosed. The fact that the complaint was filed by a former compliance officer also reinforces that providers should carefully consider and address concerns raised by compliance personnel.
A copy of the unsealed complaint can be found here.
