News: DOJ joins whistleblower suit alleging Sutter Health inflated risk scores

CDI Strategies - Volume 12, Issue 58

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 (DOJ) announced.

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, HealthLeaders Media reported. 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.”

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 following the DOJ's announcement, so details about the alleged conduct remain hidden from public view, according to HealthLeaders media.

Editor's note: This article originally appeared in HealthLeaders Media. To read the full statement from the DOJ, click here. To read about other recent whistleblower cases, click here.

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