SACRAMENTO - Sutter Health is accused of overcharging insurers for anesthesia services, and state Insurance Commissioner Dave Jones contends the amount of fraudulent charges over the past decade "is in the hundreds of millions of dollars if not more."
The state insurance commissioner announced last week he is joining a lawsuit against the Sacramento-based health provider, which has 24 hospitals and 3,500 doctors in its network.
"This is happening across all Sutter hospitals," Jones said. "It's being done at the expense of private insurers and ultimately results in higher premiums that businesses and consumers are forced to pay."
The insurance commissioner claims the fraud took place at Sutter hospitals throughout Northern California. That would include Sutter Maternity & Surgery Center in Santa Cruz.
"Sutter hospitals routinely charge, on average, $3,000 to $5,000 under the ... code, when they are entitled to no more than $150 to $250 under that code, if anything," court documents alleged.
Sutter Health issued a statement saying, "This case is without merit" and "anesthesia charges are appropriately billed." The health provider claims the plaintiffs have not produced evidence to support claims of billing improprieties.
The case was filed two years ago by New York-based Rockville Recovery Associates Limited, which had been hired by an insurer to identify fraudulent bills. It is being heard in Superior Court in Sacramento.
Sutter Health, a nonprofit, reported $9.1 billion in revenues and $878 million in income in 2010, up from $8.5 billion and $677 million, respectively, in 2009, according to the San Francisco Business Journal. It posted higher operating income and increased returns on investments.