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DOJ Takes Aim at Sutter Health, Claiming Inflated MA Risk Scores

By Steven Porter  
   December 11, 2018

The government's participation in the False Claims Act case demonstrates its commitment 'to hold healthcare providers responsible if they fail to ensure that the information they submit is truthful,' a DOJ official said.

The federal government has intervened in a lawsuit against Sutter Health, taking the side of a whistleblower who claims the nonprofit health system inflated the risk scores of Medicare Advantage plan enrollees to secure higher risk-adjusted payments, the Department of Justice announced Tuesday.

The lawsuit alleges that Sutter Health, based in Sacramento, California, and its affiliated Palo Alto Medical Foundation knowingly submitted diagnosis codes that weren't supported by a patient's underlying conditions. Even after they became aware of the problem, they allegedly failed to make sufficient corrections.

Kathleen Ormsby, a former employee of Palo Alto Medical Foundation, brought the lawsuit in 2015 under whistleblower provisions of the False Claims Act. The DOJ opted to intervene after an investigation by the DOJ Civil Division's Commercial Litigation Branch, the U.S. Attorney's Office for the Northern District of California, and the Health and Human Services Office of Inspector General.

"Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that patients are afforded the appropriate level of care and that managed care plans receive appropriate compensation," Assistant Attorney General Jody Hunt of the DOJ's Civil Division said in the statement. "Today's action sends a clear message that we will seek to hold healthcare providers responsible if they fail to ensure that the information they submit is truthful."

Related: Sutter Health Sued for Anticompetitive Practices

A spokesperson for Sutter Health said in a statement released to HealthLeaders that the defendants are aware of the complaint and take its allegations seriously.

"The lawsuit involves an area of law that is currently unsettled and the subject of ongoing lawsuits in multiple jurisdictions," the spokesperson added. "We intend to vigorously defend ourselves against the allegations in the complaint."

Court filings remained under seal Tuesday following the DOJ's announcement, so details about the alleged conduct remain hidden from public view.

Editor's note: This story has been updated to include a statement from Sutter Health.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

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