Facts

Under Medicare Advantage, or the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed health care insurance plans called Medicare Advantage Plans. The plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. Sutter Health is a not-for-profit healthcare system in California. Sutter Health, Palo Alto Medical Foundation (PAMF), and its affiliates contracted to provide health care services to California beneficiaries enrolled in certain plans. Sutter Health received a portion of the payments for treating the beneficiaries under its care. Kathy Ormsby (Relator) filed a qui tam action against Sutter Health alleging that Sutter knowingly violated the False Claims Act (FCA) by causing the submission of inaccurate and invalid diagnosis data on the Medicare Advantage Program, causing the Program to pay false claims. The Government intervened in part in the Relator's qui tam action and alleged that Sutter and PAMF knowingly submitted unsupported diagnosis codes for certain patient encounters for PAMF beneficiaries under their care, which inflated the risk scores of those beneficiaries and resulted in improperly inflated payments to Sutter.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended defendants violated the FCA by providing unsupported diagnosis codes which in turn, caused inflated payments to be made to defendants. Plaintiffs contended defendants knew the importance of their actions and failed to make the necessary corrections. Plaintiffs contended defendants created an aggressive campaign to maximize reimbursements. Plaintiffs contended defendants had actual notice about thousands of false claims but did not correct them and instead thwarted efforts to improve coding practices of diagnosis codes. Plaintiffs contended defendants conduct resulted in the submission of thousands of false claims. Plaintiffs contended that defendants did not correct their actions by repaying Medicare overpayments to which they were not entitled.

DEFENDANTS' CONTENTIONS: Defendants denied all of the contentions.

Result

The case settled for $90,000,000.