Almost five years after Sutter Health in California paid $30.5 million to settle false claims allegations with the U.S. Department of Justice (DOJ) over physician compensation arrangements, it’s heading to trial on allegations that DOJ left behind. The last hurdle was cleared Sept. 6 by a federal judge, who granted in part and denied in part the motion for summary judgment filed by the defendants—Sutter Health, Sutter Valley Hospitals, Sutter Valley Medical Foundation, Sutter Bay Hospitals, Sutter Medical Group and East Bay Cardiac Surgery Center Medical Group.
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“The court is just saying that things are open. The plaintiffs introduced enough information that they created a factual dispute,” said attorney Eric Tower, who’s not involved in the case. The jury may or may not agree with the whistleblower. “I don’t view the plaintiff’s case as a slam dunk here at all,” said Tower, with Blank Rome in Chicago.
But the judge’s order is a reminder of the risks posed by medical director and other administrative agreements that depend on FMV assessments to comply with the Stark Law and AKS. “Valuations need to be as thorough and comprehensive as possible,” he said. Hospitals should air everything to FMV appraisers “even if there are factors that don’t support a particular outcome. People shouldn’t predetermine the valuation and work backwards and add line items to justify economic relationships.” Tower also recommends revisiting assumptions made for FMV appraisals, “especially in relationships that continue over a period of time.”
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“Judge Clears Way for Trial in Sutter Health FCA Case on Compensation,” by Nina Youngstrom, was published in The Report on Medicare Compliance (Volume 33, Number 33) on September 16, 2024.
