Lieff Cabraser Discloses Settlement Against Sutter Health for Allegedly False and Misleading Anesthesia Billing [Health & Beauty Close – Up]

Lieff Cabraser Heimann & Bernstein has announced that California Insurance Commissioner Dave Jones has reached a $46 million settlement with Sutter Health in a case alleging false and misleading anesthesia services charges by the Northern California hospital chain.

In a release, Lieff Cabraser stated:

The case was originally brought by a whistleblower represented by Lieff Cabraser, for alleged violations of the California Insurance Frauds Prevention Act ("IFPA"). The Act is designed to prevent false, fraudulent, or misleading medical claims to insurers and, by extension, their policyholders. The settlement is the largest ever under the IFPA.

"Through Commissioner Jones' leadership, the State achieved a record settlement under the Insurance Frauds Prevention Act and has fundamentally changed the way one of California's largest healthcare providers bills for anesthesia services," said Robert J. Nelson of Lieff Cabraser, lead trial counsel for the Plaintiffs and chair of Lieff Cabraser's False Claims Act practice group. "For whistleblowers and state regulators, the IFPA is a powerful tool to reign in misleading hospital charges that harm consumers through inflated health care costs and insurance premiums. This case and this settlement demonstrate that in spades."

As a result of the settlement, Sutter going forward will bill only a one-time charge for anesthesia services during surgical procedures, rather than billing on a time basis for the entirety of the surgical procedure. Plaintiffs alleged that this timed anesthesia charge duplicated an operating room charge that Sutter also billed for over the same time period. Dr. Henry Miller, a hospital billing expert retained by the Plaintiffs, commented on the billing change: "By stopping the clock on these anesthesia charges, patients can better avoid the risk of particularly large charges for the hospital's anesthesia service, especially since the patient already pays an anesthesiologist separately for the same time period."

Sutter will also disclose the underlying basis and average cost of these anesthesia services charges. According to Dr. Miller, "Transparent disclosures to payers and patients about anesthesia charges, and the costs related to those charges, are critical to bringing rationality to complex and often frustrating operating room bills." In addition, "including key billing code information on the list of charges Sutter submits to the state," another key term of the settlement, "should also help payers and patients make better sense of Sutter's charges," said Miller.

In a separate settlement agreement, defendants Multiplan and Private Healthcare Systems, two leased network preferred provider organizations operating in California, settled the Commissioner's claims that restrictive audit clauses in their contracts with Sutter frustrated insurance companies' efforts to identify and challenge false or misleading charges from Sutter.

Lieff Cabraser Heimann & Bernstein is a sixty-plus attorney law firm with offices in San Francisco, New York and Nashville.

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