Sutter Health Pays $1.4 Million in Settlement for Overcharging

Sutter Health Assocation, which runs , is one of two California health care systems paying a combined $2.3 million settlement regarding allegations of overcharging the federal Medicare program for services, the U.S. Attorney's Office said.

Sutter Health Association paid $1.4 million and Catholic Healthcare West paid $875,564, U.S. Attorney Benjamin B. Wagner said Wednesday.

The two health care systems overcharged the federal Medicare program for infusion therapy and lithotripsy services, Wagner said.

Infusion therapy entails administering medicine through a needle or catheter and lithotripsy is a procedure that uses shock waves to break up stones in the kidney, bladder or ureter.

The overcharging by 25 Sutter Health hospitals in Northern California happened between Jan. 1, 2002 and March 31, 2008, said Lauren Horwood, spokeswoman for the U.S. Attorney's Office in the Eastern District of California.

Thirty-six Catholic Healthcare West hospitals in California, Nevada and Arizona overcharged Medicare for the services between Sept. 3, 2003 and Dec. 31, 2007, Horwood said.

Karen Garner, director of communications for Sutter Health, said the company  reviewed the data presented by the government, agreed with the assessment and made the appropriate payments.

"Honesty and integrity are cornerstones of our organization-wide values, and we strive to always do the right thing," she said in a statement. "When mistakes are made, we acknowledge and fix them, whether they’re identified through our own internal procedures or brought to our attention by another party. As noted in the government’s press release, we cooperated fully and took appropriate remedial action."

The health care systems overcharged Medicare through duplicate billing for infusion therapy, unbundling packaged infusion therapy services when the individual procedures should have been billed as a group and duplicate billing of lithotripsy services under separate revenue codes, Horwood said.

Catholic Healthcare West is the fifth largest hospital provider in the country and the largest in California.

The investigation began when the U.S. Department of Health and Human Services' Office of Audit Services discovered the overbilling when it
analyzed data. The investigation took one year, Horwood said.

"Although we have had bigger settlements with health care systems, this is a significant settlement," Horwood said.

No criminal charges were filed against the health care systems,
which did not admit wrongdoing, and the allegations were settled out of
court, Horwood said.

— Bay City News Service. Novato Patch's Brent Ainsworth contributed to this report.