The Federal Trade Commission and the Georgia Attorney General's Office jointly announced Wednesday that they are challenging as anticompetitive Phoebe Putney Health System, Inc.'s proposed $195 million acquisition of rival Palmyra Park Hospital, in Albany, GA from HCA.
In a complaint filed this week in U.S. District Court in Albany, the FTC and the Georgia AG also allege that Phoebe Putney constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law."
The Georgia AG and the FTC want a federal judge to delay the acquisition until the conclusion of the FTC's administrative proceeding and any subsequent appeals, the FTC and the Georgia Attorney General's Office said in a joint statement.
"We have challenged this transaction for one very simple reason," said Richard Feinstein, Director of the FTC's Bureau of Competition, in a media release. "By eliminating vigorous competition between Phoebe and Palmyra, this merger to monopoly will cause consumers and employers in the Albany region to pay dramatically higher rates for vital healthcare services, and will likely reduce the quality and choice of services available in the community as well."
Besides Phoebe and Palmyra, there is one other independently owned hospital within the six-county area around Albany. The merger would give Phoebe more than 85% of the market. By eliminating the direct and substantial competition between Phoebe and Palmyra, the transaction would give Phoebe the ability and incentive to increase reimbursement rates charged to commercial health plans and their members, leading to higher healthcare costs, the complaint said.
In addition, the complaint claimed that the deal will adversely impact the quality and breadth of services available in the Albany area. Phoebe and Palmyra have competed for patients in the general acute-care hospital services market. That competition has spurred each to increase the quality of its patient care; this "non-price" competition would be eliminated by the acquisition, the complaint said.
Phoebe's board approved a recommendation from its management that it make a formal offer to HCA for Palmyra on Oct. 7, 2010. However, instead of directly approaching HCA with its offer, Phoebe developed a plan under which the Authority would acquire Palmyra and then lease it to a non-profit corporation controlled by Phoebe.
The FTC contends this structure was arranged by Phoebe to avoid federal antitrust scrutiny. On Nov. 16, Phoebe made a formal offer to HCA for Palmyra, an offer that was not reviewed by the Authority. On Dec. 2, 2010, Phoebe's board approved the final terms of the deal, but the transaction still had not been presented to the Authority. The deal was presented to the Authority for the first time at a special meeting held on Dec. 21, 2010. At that meeting, the Authority approved the deal that would give Phoebe control over Palmyra immediately after the deal was closed, the complaint states.
Federal and state officials said they expect Phoebe, the Authority, and HCA to argue that the transaction is exempt from federal antitrust liability under the "state action" doctrine – which provides an exception for anticompetitive conduct if it is an act of government. In this case, the complaint alleges, the transaction was motivated and planned exclusively by Phoebe, acting in its own private interests.
And, rather than acting in the State of Georgia's interests, the complaint alleges that the Authority was a "straw man" used to shield an "overtly anticompetitive transaction from antitrust scrutiny." Even though it had no independent analysis of the deal, the Authority committed $195 million to the purchase without considering the adverse effects the deal would have on healthcare prices in the area, and played no supervisory role in connection with the transaction, the complaint states. The complaint states that since at least 1990, the Authority has not actively supervised Phoebe in any way, and has made no effort to review any of the hospital's recent price increases. Thus the "state action" doctrine cannot be used as a defense, the complaint alleges.
The FTC voted 5-0 to issue the administrative complaint and authorize staff to file a complaint for preliminary injunction in federal district court. The evidentiary hearing is scheduled before an administrative law judge at the FTC on Sept. 19.
In a statement issued late Wednesday, an HCA / Palmyra Medical Center spokesman said, "We are aware of the filing, and are awaiting judge’s decision."
Joel Wernick, President and CEO of Phoebe Putney Health System said in a statement, "In response to the FTC filing, we are currently awaiting the judge’s decision. The Hospital Authority of Albany-Dougherty County and Phoebe have cooperated 110% with FTC requests for information. The FTC’s attempt to block this transaction is disheartening because we remain confident, especially with the increasing demand for collaboration in health care delivery, this transaction will benefit the health of the citizens in our community."
Community Health Systems, Inc. has asked a federal judge in Dallas to throw out a "baseless lawsuit" brought by rival Tenet Healthcare Corp., alleging that CHS practices widespread and systematic overbilling of Medicare.
In a petition filed in U.S. District Court for the Northern District of Texas on Tuesday, Franklin, TN-based CHS said the Tenet suit is "entirely without merit and contains a number of fatal flaws."
CHS said that its move this week to reconfigure its Tenet buyout offer to $6 a share in cash – replacing a previous offer of cash and stock -- negates Tenet's primary basis for a federal securities lawsuit. "Now that the offer is all cash, and the stock component has been eliminated, so has Tenet's pretext for alleging a securities law violation. For this reason alone, Tenet's claim must be dismissed," CHS said in its filing.
Dallas-based Tenet issued a brief statement in response to the CHS filing, stating: "This changes nothing. We intend to vigorously prosecute our claims."
The CHS filing is the latest twist in a very public and very bitter battlebetween the rival for-profit hospital chains. Last November, Tenet's board rejected what it said was a "grossly undervalued" acquisition offer by CHS, of $6 per share, which included $5 per share in cash and $1 per share in CHS common stock. Scorned, CHS went public with its offer in December, alleging that the Tenet board was keeping its shareholders in the dark about the deal. CHS announced plans in January to pack the Tenet board with its own proxy candidates, who would approve the acquisition.
Earlier this month, Tenet filed the federal suit alleging that CHS overbilled Medicare by as much as $377 million using medically unnecessary admissions that improved its bottom line and appeal to investors. CHS has denied the allegations, but last week confirmed that it has received a subpoena, dated March 31, from the Office of Inspector General, related to an investigation of "possible improper claims submitted to Medicare and Medicaid."
In its motion on Tuesday to dismiss the suit, CHS also claimed that:
Tenet's suit attacks the ethics and professional judgment of thousands of attending physicians at CHS-affiliated hospitals, which has no basis and is not material to the proxy contest concerning the election of Tenet's directors.
Tenet is not seeking to compel CHS to disclose facts, but instead is attempting to compel CHS to confess some sort of culpability, which has no basis under the securities laws.
A ruling for CHS will dispose of this case in its entirety.
Saint Luke's Hospital of Kansas City has launched a partnership with Legal Aid of Western Missouri that puts an attorney and a paralegal inside the hospital to help indigent patients address legal issues adversely impacting their health.
Legal Aid began its first medical-legal partnership in Kansas City in 2007, but the Saint Luke's partnership is the first to use legal staff working full-time at a medical site. Amber Cutler, an attorney with Legal Aid, said that has been critical to the success of the four-month-old project.
"On site is best, not only because we are more accessible to the patients, but because we are more visible," Cutler says. "The referrers on staff forget we are here if we aren't on site. If they are seeing you, your presence reminds them 'Oh yeah, we have that resource that we can refer these people to.' It's a critical component."
Bonnie Johnson, RN, an attorney and director of risk management at Saint Luke's, said having an attorney or a paralegal inside the hospital walls also improves patient relations and expedites the discharge process.
"If they're here on staff, any time there is a consult for the medical-legal partnership, they can go directly to the patient's room, start building that trusting relationship during the intake interview and talk about what their obstacles and issues are," Johnson says. "That has been a great distinction from some of the other medical-legal partnerships that have popped up across the country."
Nationally, medical-legal partnerships for indigent patients have been around since 1993. MLPs integrate lawyers into the healthcare team to help patients deal with legal problems that directly or indirectly harm their health. The programs have been endorsed by the American Hospital Association, American Bar Association, American Medical Association and American Academy of Pediatrics. The Saint Luke's MLP is funded by a $150,000 annual grant awarded by the hospital's foundation.
Johnson says the Legal Aid staff handles a variety of concerns. That includes helping indigents sign up for Medicaid, establish legal guardians, find housing, and address safety issues such as domestic violence or mold in the home that could trigger adverse health events necessitating care in the emergency department.
"Our indigent patients often are uninsured or very under-insured, and are dealing with a lot of societal issues that affect their health," Johnson says. "The partnership makes great sense. If we can take some of the legal stresses off our patients they are going to be better patients who are more able to deal with their health issues if they aren't worrying about all of the other social barriers they face."
The Saint Luke's medical-legal partnership is based on the I-HELP model. I stands for income and insurance issues; H is for housing issues; E is for ensuring patient safety in domestic situations; L is for legal status; and P is for power of attorney and guardianship.
Cutler says she's done about 20-25 referrals a month since she started working as a contract vendor at Saint Luke's in January, and about half of the referrals have been housing-related.
She said the partnership takes a holistic view toward patients. "For example, we may agree to represent a disabled individual with an appeal for Social Security benefits," she said. "During the course of representation, we may also assist with an appeal for Medicaid health insurance. If we are successful, the patient gains an income source to secure stable housing and health insurance to obtain ongoing treatment improving his or her overall health. If we see a patient who's been referred to us by the social worker for one legal issue, we do a screening to see if there are other legal needs."
Johnson said having Legal Aid on site also has helped expedite guardianship and durable power of attorney procedures. "The financial impact is once you have a decision maker for the patient, we can act effectively and efficiently and provide timely care for the patient," she said.
"If they don't have a decision maker we don't know who to turn to so we make 500 phone calls. Maybe it's a family member that hasn't seen them in 20 years, and it takes longer to make decisions."
Once a decision-maker is appointed, Johnson said, a discharge plan can be built. "Nursing homes and long-term care facilities won't take a patient without a decision maker so they're here longer than they need to be while we are waiting for guardianship," she said.
The Centers for Medicare & Medicaid Services' "inconsistent payment guidance" erroneously allowed about $38 million for improperly documented imaging claims in hospital outpatient emergency departments in 2008, a Department of Health and Human Services Office of Inspector General audit has determined.
A breakdown of the erroneous payments included 19% of claims -- with a value of $29 million -- for interpretation and reports for computed tomography and magnetic resonance imaging and 14% of claims -- valued at $9 million -- for interpretation and reports for X?rays, the OIG audit found.
Of the allowed Medicare claims for CTs and MRIs in hospital outpatient EDs in 2008, the OIG audit found that:
12% ($18 million) did not have physicians' orders as part of the medical record
12% ($19 million) did not have documentation to support that interpretation had been performed
5% ($7.3 million) had overlapping errors
Of the allowed Medicare claims for X-rays in hospital outpatient EDs in 2008, the OIG audit found that
8.6% ($5.5 million) did not have physicians' orders as part of the medical record
8.2% ($5.4 million) did not have documentation to support that interpretation had been performed
3% ($1.9 million) of claims had overlapping errors
The audit also found that 12% ($19 million) of CT and MRI claims and 16% ($10 million) of X-ray claims were for interpretation and reports that, while not erroneous, were performed after beneficiaries left EDs, OIG said.
OIG blamed the overpayments on what it said was CMS' "inconsistent payment guidance on the timing for interpretation. In 2008, 71% of interpretation and reports for X?rays and 69% of interpretation and reports for CTs and MRIs did not follow one or more of the American College of Radiology-suggested documentation guidelines."
OIG recommended that CMS:
Educate providers on the requirement to maintain documentation on submitted claims,
Adopt a uniform policy for single and multiple claims for interpretation and reports of diagnostic radiology services to require that claimed services be contemporaneous or identify circumstances in which non-contemporaneous interpretations may contribute to the diagnosis and treatment of beneficiaries in hospital outpatient emergency departments
In its written response, CMS disagreed with the call to adopt a uniform policy for single and multiple claims, saying that it does not believe that a single billed interpretation must in all cases be contemporaneous with the beneficiary's diagnosis and treatment to contribute to that diagnosis and treatment.
However, OIG said a uniform policy requiring that the interpretation and report be contemporaneous with or contribute to the beneficiary's diagnosis and treatment could reduce unexplained complexity in what is already a complicated billing system for medical diagnostics.
CVS Pharmacy Inc. has agreed to pay the federal government and 10 states $17.5 million to settle False Claims Act claims that it overbilled Medicaid for prescription drugs, the Department of Justice said Friday.
CVS allegedly submitted inflated prescription claims to the federal government by billing Medicaid in Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada and Rhode Island for more than what CVS was owed for prescription drugs for so-called "dual eligible" Medicaid beneficiaries who were also eligible for benefits under a third-party insurance plan.
Rather than billing the government for what the insured would have been obligated to pay had the claims been submitted to a third-party insurer, CVS billed and was paid a higher amount by Medicaid, DOJ said in a media release.
CVS Pharmacy Inc., the retail division of Woonsocket, RI-based CVS Caremark Corp. operates more than 7,000 retail pharmacies in 41 states and the District of Columbia. The retailer issued a statement acknowledging the settlement, but "expressly" denied "engaging in any wrongful conduct and has settled the matter to avoid the expense and uncertainty of protracted litigation."
CVS said it did not intentionally overcharge any state Medicaid program. "The Company regularly receives reimbursement from Medicaid and believes it is in compliance with each state's billing requirements for dual-eligible patients. Dual-eligible patients with third-party insurance coverage comprise a small percentage of the Medicaid patient population and this matter involves only certain state Medicaid programs. The settlement involves the CVS/pharmacy retail business only and does not involve CVS Caremark's PBM or Medicare Part D businesses," the media release said.
Under the settlement, the retailer agreed to pay the United States $7.9 million and the states $9.5 million plus interest. CVS has also amended a corporate integrity agreement with the Department of Human Services, Office of Inspector General, which has been in effect since March 14, 2008, in connection with an earlier, separate settlement.
The amendment, which will be in effect for three years, will monitor CVS's implementation of correct billing procedures and the training and education of employees. An independent auditor will issue reports on CVS's compliance.
The allegations were brought to the government by Stephani LeFlore, a CVS pharmacist in St. Paul, MN, in a whistleblower lawsuit. LeFlore will receive a total of $2.5 million as her share of the settlement.
The Justice Department said it has used the False Claims Act to recover more than $5.5 billion since January 2009 in cases involving fraud against federal healthcare programs.
Everyone knows unhealthy behaviors can be costly. Now some of those costs have been calculated into dollars.
The Thomson Reuters Workforce Wellness Index estimates that employers spend an average of $670 annually per employee on medical care and pharmacy around six behavioral risk factors, with the top cost drivers identified as:
Obesity /body mass index ($400)
High blood sugar ($150)
Tobacco use ($100)
The remaining costs in the index were attributed to blood pressure, cholesterol, and alcohol use. Thomson Reuters tracked the behaviors from 2005-2009 using data from employer-sponsored health insurance plans. In 2009, about 14% of direct healthcare costs for the employed, privately insured population were associated with these six behavioral risk factors, the index showed.
Unfortunately, the index shows that the nation's workforce is not trending toward better health. Using a befuddling methodology that defies an easy explanation, Thomson Reuters said it fashioned an index where a score of 100 represents the "ideal state where there are no behavioral risk factors present in the population and no healthcare costs attributed to health risks." From 2005 to 2009, the index declined 2% from 86.4 to 84.4. Of course, the decline in overall health means an increase in health insurance costs for employers.
Despite the glum news, Raymond Fabius, MD, and CMO at Thomson Reuters, tells HealthLeaders Media he's "excited by the results."
"It actually shows that, for starters, there is a dollar cost related to unhealthy behaviors," Fabius says. "So this gives the HR directors some tangible figures to justify the investment of resources to reduce unhealthy behaviors in their workforce."
Fabius says he's also encouraged because the approximately 1.5 million employees at companies taking part in Thomson Reuters' MarketScan wellness promotion program are seeing improved health behaviors.
Using tools like biometric screenings, health assessments, and wellness coaches, Fabius says, employers can and are slowing healthcare cost increases. "So, the real message to employers and HR directors is that you can buck the national trend. You can actually make your workforce healthier over time through the use of appropriate resources and through the use of data tracking," Fabius says.
Remember, the $670 per employee in additional costs measures only medical treatment and pharmaceuticals. It does not include the costs of sick days and "presenteeism," where employees show up for work but are less productive owing to health issues. Factor that in, Fabius says, and the costs could be considerably higher.
Fabius says he's encouraged that many companies are incentivizing employees with richer healthcare benefits if they improve their health metrics. "There are some companies out there now that have basic, better, and best health plan and you can earn your way to the best health plan by completing a health risk appraisal, by doing biometric screenings, by working with health coaches, or working with care managers for chronic illnesses," he says. "Those are four good steps to move a company in a direction of building a culture of health."
It's not enough, however. "The idea is not just to make people aware of their health risks or chronic conditions but to give them resources to either reduce those risks or manage their chronic condition," Fabius says.
That process is expected to improve as data collection on healthcare behaviors improves. Fabius says he's gathering data that will identify future trends in healthcare behavior that will allow companies to plan ahead. "This allows HR directors to attend to issues upstream, and if you can prevent or reduce the unhealthy behaviors we know you can either prevent or delay the onset of chronic illness," he says.
If you're willing to look past the sales pitch from Thomson Reuters, Fabius makes a good point. With every new study, the data supports the common sense idea that wellness programs save money. In that respect, these are exciting times for HR, which will play a key role in devising wellness programs, and convincing everyone from the board room to the loading dock that it is money well spent.
Community Health Systems Inc.'s hostile takeover bid for Tenet HealthCare Corp. took another twist Monday morning when CHS reconfigured its buyout offer on its Dallas-based rival to $6 in cash per share.
The new bid was launched just three days after Franklin, TN-based CHS acknowledged that it was "cooperating fully" with a subpoena issued by the Department of Health and Human Services, which is investigating alleged billing irregularities in Medicaid and Medicare.
Tenet on Monday morning confirmed receiving the latest CHS bid, but said it was advising shareholders to take no action at this time.
It is not clear if the HHS subpoena stems from a complaint filed by Tenet in a Dallas federal court last week, alleging that CHS overbilled Medicare by as much as $377 million using medically unnecessary admissions that improved its bottom line and appeal to investors.
Even under a cloud of uncertainty, CHS Chairman/President/CEO Wayne T. Smith made it clear that he would push for the Tenet acquisition. "Converting our offer to all cash underscores our commitment to completing this transaction and renders Tenet's irresponsible and inaccurate lawsuit irrelevant to our offer. We are confident that our business practices are appropriate and we will respond in detail to Tenet's claims in due course," Smith said in a media release Monday morning announcing the new buyout offer.
In the previous offer, made in December, CHS offered $5 per share in cash and $1 per share in CHS common stock. Monday's offer was made in a letter to Tenet's Board of Directors, CHS said in a media release.
"Tenet shareholders should be outraged by the billions of dollars in shareholder value that the Tenet Board has destroyed for its own shareholders and the industry at large as a result of its reckless and self-serving allegations. We are confident that Tenet shareholders will hold the entrenched Tenet Board accountable for this scorched earth response to our acquisition proposal," Smith said in a media release.
"Despite the value-destroying defensive tactics employed by the Tenet Board, we remain ready to engage in constructive discussions to move this transaction forward without further delay. As we have made clear, we would welcome the opportunity to review any additional information Tenet can provide and are prepared to recognize any additional value it can demonstrate," Smith said.
In its filing Friday afternoon with the Securities and Exchange Commission, CHS said it received a subpoena, dated March 31, from the Office of Inspector General, related to an investigation of "possible improper claims submitted to Medicare and Medicaid."
"We do not know if the subpoena is related in any way to the allegations contained in the lawsuit styled Tenet Healthcare Corporation vs. Community Health Systems, Inc., et al. filed in the U.S. District Court for the Northern District of Texas on April 11, 2011. We are cooperating fully with the OIG in connection with this subpoena and are currently unable to predict the outcome of this investigation," CHS said.
CHS said the subpoena that came from the OIG's Chicago office "requests documents from all of our hospitals and appears to concern emergency department processes and procedures, including our hospitals' use of the Pro-MED Clinical Information System, which is a third-party software system that assists with the management of patient care and provides operational support and data collection for emergency department management and has the ability to track discharge, transfer, and admission recommendations of emergency department physicians."
The CHS notice, which was signed by CFO W. Larry Cash, said OIG also requested information about CHS' financial arrangements with emergency department physicians. CHS said the OIG's requests are similar to those made by the Texas Attorney General's Office last November in its civil investigation of CHS's Texas hospitals.
A federal jury has convicted Miami physician Rene De Los Rios, MD, on felony false claims and conspiracy counts for his role in a $23 million HIV injection and infusion Medicare fraud scheme, the Departments of Justice, and Health and Human Services announced jointly.
The conviction, handed up Thursday after a three-week trial, carries a maximum penalty of 10 years in prison and a $250,000 fine for the conspiracy count, and a maximum penalty of five years in prison for the four false claims counts. Sentencing will be June 27, federal prosecutors said.
Evidence at the trial showed that De Los Rios was hired by Damaris Oliva, the convicted owner of Metro Med of Hialeah Corp., a bogus HIV infusion clinic that charged for infusion therapies which were medically unnecessary or not provided, prosecutors said.
Prosecutors said Oliva paid De Los Rios $3,000 a week to order unnecessary tests, sign medical analysis and diagnosis forms, and authorize treatments to make it appear that legitimate medical services were being provided to Medicare beneficiaries. De Los Rios also signed patient charts, often without seeing the patient, indicating that injection and infusion treatments were medically necessary when he knew they were not, prosecutors said.
Evidence at trial showed that De Los Rios falsely diagnosed almost all of the patients at Metro Med with the same rare blood disorders to ensure maximum reimbursement from Medicare. De Los Rios also prescribed expensive medications, including Winrho, Procrit, and Neupogen to collect Medicare reimbursements.
From April 2003 through October 2005, Metro Med submitted approximately $23 million in false claims to the Medicare program for injection and infusion treatments, and was paid $11.7 million in claims. Oliva and three other defendants have already pleaded guilty to conspiracy to commit healthcare fraud.
WakeMed Health & Hospitals will break ground on its third hospital in Wake County this fall, the Raleigh, NC-based health system announced this week.
The $62 million, 90,000-square-foot, 61-bed acute care WakeMed North Hospital will be attached to the existing WakeMed North Healthplex, and is targeted for opening in October, 2013, with a focus on inpatient women's health services, including obstetric and gynecological services, and comprehensive preventive, diagnostic, and therapeutic care.
The Healthplex will continue to serve men and children through the existing freestanding emergency department, outpatient surgery, imaging, lab, and physician services, WakeMed said in a media release.
"Since opening in 2002, WakeMed North Healthplex's consumer-driven volumes have consistently outpaced projections, demonstrating the great demand for health care services in this community," Bill Atkinson, MD, WakeMed president/CEO said in a media release. "Currently WakeMed North Healthplex offers a full-service, 24/7 emergency department, ambulatory surgery center, imaging and laboratory services, and a host of additional clinical capabilities. The campus also features an 85,000 square foot medical office building."
Atkinson called transitioning the Healthplex site to a hospital "the next logical step as the infrastructure is already in place and the community has a critical mass of 262,000 residents living within a seven-mile radius of the facility. While the hospital will initially open with a women's focus, our plan is for it to continue to expand to meet the needs of women, men and children alike."
Construction of the North Hospital is expected to create 500 construction jobs and will increase the current 150 employees to 442 full-time equivalent employees with an average salary of $48,760 by the second year of hospital operation.
Private, not-for-profit WakeMed said it received approval to add 41 acute care beds to WakeMed North Hospital in 2009, in addition to the 20 acute care beds already approved for relocation from WakeMed Raleigh Campus.
California Insurance Commissioner Dave Jones has intervened in a whistleblower lawsuit against Sutter Hospitals for alleged false billing of what Jones said could be "hundreds of millions of dollars" for anesthesia services, his office has announced.
"Sutter's alleged fraud comes at the expense of the private health insurance industry, which initially pays for the services, but, ultimately, this unjust burden falls on the shoulders of California's consumers, who must foot the bill for inflated health care premiums," Jones said in a media release.
"We believe the amount of the fraudulent charges is in the hundreds of millions of dollars, if not more. As Insurance Commissioner, I will use the full resources of this Department to root out insurance fraud in all forms and hold all those who engage in such fraud fully accountable."
Sutter Health posted a statement on its website denying the allegations. "Sutter Health believes this case is without merit and that our anesthesia charges are appropriately billed. We intend to vigorously defend this matter," the statement read in part.
In a 23-page complaint filed in California Superior Court in Sacramento, Jones' office alleges that Sutter falsely used an anesthesia billing code to charge for services and supplies that patients and insurers had already paid for, either through other charges on the hospital bill or through the anesthesiologist's bill.
In some instances, the complaint alleges, the billing code was charged even though no anesthesiologist was in the operating room and general anesthesia wasn't provided. Jones' office is seeking unspecified monetary penalties and damages, and injunctive relief.
The suit was originally filed by Rockville Recovery Associates Limited, a New York-based auditor hired by The Guardian Life Insurance Company of America to identify fraudulent claims filed from 2002-2008. Rockville allegedly discovered the fraud after reviewing bills submitted to Guardian by Sutter Hospitals, including at an onsite audit at one of Sutter's facilities, the complaint alleges.
The defendants are Sutter and New York-based Multiplan, Inc., an intermediary whose agreements with Sutter allegedly prevented insurers from meaningfully auditing Sutter's bills. As a result, health insurers paid inflated claims and passed on the costs to consumers in higher premiums, the complaint alleges.
Based in Sacramento, not-for-profit Sutter Health operates 24 hospitals in Northern California, and accounts for more than one-third of the hospital revenue generated in the region.
In the media release, Jones pointed to a recent Los Angeles Times report that hospitals in Northern California's six most populous counties collect 56% more revenue per patient per day than in Southern California's six most populous counties. The article cited Sutter as the "driving force" of those higher costs.
Sutter Health said it remains "committed to compliant billing and charging practices. Our charges are transparent and available to the public and our contracts with health insurance plans are thoroughly negotiated with these sophisticated companies. Since these rates are negotiated, they cannot be fairly characterized as false after the fact."
Sutter said it has asked Rockville Recovery Associates Ltd. to provide evidence to support the allegations. "To date, they have produced nothing to suggest that any bills submitted by any Sutter hospitals were false or fraudulent," the Sutter statement read. "Our negotiated prices reflect Sutter Health's significant financial commitments to comply with California's costly seismic regulations bring lifesaving technology to the bedside and take care of increasing numbers of patients who are unable to pay."
