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Sutter Health Pays Millions to Settle Improper Billing Claims

by | Oct 19, 2022 | News, Open Content

The healthcare services provider will be on the hook for $13 million for alleged improper billing of lab tests.

In this week’s enforcement roundup, a healthcare services provider will be just over $13 million poorer after it agreed to settle False Claims Act (FCA) allegations related to improperly billing lab tests. According to an Oct. 17 statement from the U.S. Department of Justice, Sacramento-based Sutter Health and affiliate Sutter Bay Hospitals allegedly violated the FCA by billing government health programs for toxicology tests done by third-party labs.1

The billing in question related to a contract Sutter had signed with Navigant Network Alliance, LLC, where Navigant sent urine toxicology specimens that it had received from labs and doctors around the US to the healthcare provider. Sutter then billed for both quantitative and qualitative tests it had done on these specimens, the DOJ states. However, according to the DOJ, the US claims that outside labs performed the quantitative tests billed between August 1, 2016, and June 30, 2017, rather than Sutter, though the provider was reimbursed by TRICARE, Medicaid, Medicare, and the Federal Employees Health Benefits Program for these tests.

For billing for testing it allegedly did not perform, Sutter will now pay $13,091,452 to settle the FCA lawsuit brought by the US against the company. Of that amount:

  • More than $6.5 million has already been paid to the US
  • The remaining $6.5 million will be paid within 30 days

Other Key Healthcare-Related Enforcement Actions from Last Week

Oct. 17: The US filed an FCA-related lawsuit against Cigna Corporation and its subsidiary Medicare Advantage Organizations (MAOs), alleging that the company committed healthcare fraud by artificially inflating the Medicare Advantage payments it received. According to a DOJ press release, Cigna and its MAOs allegedly used “false and invalid patient diagnosis codes” to make patients they covered appear sicker than they actually were. That false information increased the amount of money the company received “for providing insurance coverage to its Medicare Advantage plan members.” As a result of the alleged deception, Cigna received “tens of millions of dollars in Medicare funding,” the DOJ states.2

Oct. 12: In the latest of a string of enforcement actions against durable medical equipment (DME) companies and owners, the owner of Florida-based DME company Always Medical Supply will see time behind bars for false billing. Ariel Madero Paez was sentenced to 55 months in prison, which will be followed by three years of supervised release, according to the DOJ. His company charged roughly $2.2 million to Medicare for DME that beneficiaries didn’t ask for and that wasn’t actually provided, leading Medicare to pay Always more than $1.4 million. In addition to the prison time, Madero must also pay almost $1.5 million in restitution to Medicare and forfeit the contents of his two bank accounts.3


  1. https://www.justice.gov/usao-ndca/pr/sutter-health-agrees-pay-13-million-settle-false-claims-act-allegations-improper
  2. https://www.justice.gov/usao-sdny/pr/united-states-files-civil-fraud-lawsuit-against-cigna-artificially-inflating-its
  3. https://www.justice.gov/usao-sdfl/pr/durable-medical-equipment-company-owner-sentenced-health-care-fraud