Sacramento, Calif.-based Sutter Health has agreed to pay $46 million in an out-of-court settlement to resolve allegations of false and improper billing for anesthesia services.
The whistle-blower suit, originally filed in 2009, alleges Sutter Health used an anesthesia billing code to charge for services and supplies the patient or their insurer had already paid for, or for anesthesia services and supplies that were not used during the procedure. Originally filed by a recovery firm hired by a private insurer, California's insurance commissioner intervened in the case in 2011, seeking both monetary penalties and a change in Sutter's billing practices.
Under the terms of the settlement, Sutter will pay $46 million to be split between the recovery firm, the plaintiffs' lawyers and California's general fund, and it has agreed to change from a time-based method for charging for hospital anesthesia services to a flat-rate system. According to C. Duane Dauner, president and CEO of the California Hospital Association, the time-based billing method Sutter had been using is both legal and used by 90 percent of the state's hospitals.
"Sutter hospitals consistently followed appropriate regulations and protocols in billing for anesthesia services," said a Sutter spokesman in the news release. "Because we followed the law and hospital industry practice, it was difficult to agree to a monetary settlement of any size. We made a tough decision — based on the best interests of our charitable assets — that the certainty and closure of a settlement was preferable to the significant human and financial resources associated with a lengthy trial."
The settlement comes a month before the trial was set to begin.
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