Sutter Health Fraudulent Anesthesia Billing Lawsuit

Result: $46 million settlement

Year: 2013

Lieff Cabraser represented whistleblower Rockville Recovery Associates in a qui tam suit for treble damages and penalties under the California Insurance Frauds Prevention Act, Cal. Insurance Code § 1871.7. The Act is designed to prevent fraud against insurers and, by extension, their policyholders. The complaint alleged that Sutter Health hospitals throughout California submit fraudulent bills for anesthesia services to insurers and other payors.

In May 2011, the Court permitted the California Insurance Commissioner to join the litigation against Sutter. Plaintiffs defeated multiple motions by Sutter, including three demurrers, two motions to strike, a motion to compel arbitration, and a motion to severely restrict the discovery available to Plaintiffs. In December 2011, the Court denied Sutter's motion to strike Plaintiffs' jury demand, ruling that Plaintiffs have a right to a jury trial under California law.

As the trial was to start, the parties announced in November 2013 a $46 million settlement, a record amount under the state insurance whistleblower law. Under the settlement, Sutter will bill only a one-time charge for anesthesia services during surgical procedures, rather than billing on a time basis simultaneously with its timed operating room charge and a separate, timed charge by the anesthesiologist. Sutter will also disclose the basis and average cost of these anesthesia services charges.

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