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Managed Care Risk Adjustment Enforcement Continues with Sutter Health Settlement: Constantine Cannon Client Secures Largest Ever Medicare Advantage Settlement by a Hospital

Posted  August 30, 2021

Sutter Health will pay the Government $90 million under the False Claims Act for allegedly submitting inaccurate and unsupported medical information on tens of thousands of patients.  The settlement in a case brought by a whistleblower represented by Constantine Cannon, together with co-counsel Keller Grover and Kleiman Rajaram, is the largest Medicare Advantage FCA settlement against a hospital system, and the second largest reported Medicare Advantage fraud settlement ever.

The Medicare Advantage program (also known as Medicare Part C) created a series of privately run managed care plans.  Unlike Medicare’s traditional fee-for-service model, Medicare Part C pays for care with monthly amounts based on the health of the patient as documented in diagnosis codes in their medical records, known as a risk adjustment factor (RAF).  Both MA plans and providers such as Sutter Health face FCA liability for fraudulent risk adjustment practices.

The whistleblower, Kathy Ormsby, worked at Sutter as a RAF Manager, where she became concerned about Sutter’s billing practices.  In her complaint, originally filed in 2015, Ms. Ormsby alleged that Sutter, through several affiliates including Palo Alto Medical Foundation (PAMF), intentionally or recklessly submitted inaccurate and unsupported medical diagnosis codes that inflated Sutter’s reimbursements from Medicare Part C.

Medicare Advantage has seen its enrollment double over the past decade and is now a $350 billion market annually.  More than 41% of all Medicare beneficiaries are now enrolled in Medicare Advantage Plans.  This settlement comes as the U.S. Department of Justice announced its intervention in a series of Medicare Advantage fraud cases in recent weeks, including Constantine Cannon’s case against Kaiser Permanente.

In 2019, the Government intervened in the part of Ms. Ormsby’s case related to alleged wrongdoing by PAMF, while Ms. Ormsby continued to pursue the rest of her case on a non-intervened basis.  The settlement resolves both parts of the case and follows Sutter’s unsuccessful effort to dismiss both the complaints.  That effort lead to a critically important 2020 decision finding that the plaintiffs’ allegations properly alleged a FCA violation and denouncing any effort by Medicare Part C participants to avoid FCA liability for inflated RAF scores.

Ms. Ormsby was represented by the Constantine Cannon LLP whistleblower team and its attorneys Gordon Schnell, Hamsa Mahendranathan, Poppy Alexander, and Gary Reilly, as well as by co-counsel Jeff Keller and Kate Scanlan at Keller Grover and Mark Kleinman and Pooja Rajaram at Kleiman Rajaram.

Constantine Cannon Is the Preeminent Law Firm in Risk Adjustment Cases

Constantine Cannon is the leading law firm in Medicare Advantage and risk advantage fraud whistleblower cases, and has deep experience representing all manner of healthcare whistleblowers in False Claims Act lawsuits against health insurance companies, provider groups, and vendors. Constantine Cannon’s risk adjustment work includes:

Whistleblowers play a critical role in bringing managed care fraud to light and holding wrongdoers accountable when they try to cheat the system.  If you would like more information, or would like to speak to a member of the Constantine Cannon’s whistleblower lawyer team, please Contact us for a Confidential Consultation.

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Tagged in: CC Lawyers, FCA Federal, Healthcare Fraud, Managed Care, Provider Fraud, Risk Adjustment Fraud, Whistleblower Case,


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