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Health firm that donated big to Biden, Dems pays $90 million for allegedly bilking Medicare

Sutter Health employees donated nearly $1 million to Democrats in 2020, including nearly a quarter million to the president's campaign.

Updated: August 31, 2021 - 11:41pm

A California health care firm whose executives and employees donated big to Joe Biden and other Democrats has agreed to pay a $90 million civil penalty to settle allegations it bilked Medicare by filing paperwork to make patients look sicker than they were.

The penalty was one of the largest ever reached in a case involving Medicare Part C fraud, government officials said.

Sutter Health, headquartered in Sacramento, Calif., agreed to pay the fine and enter into a corporate integrity monitoring agreement with the government for five years to resolve allegations it violated the False Claims Act by knowingly submitting inaccurate diagnosis codes for Medicare Advantage patients, the Justice Department announced Tuesday.

DOJ alleged that Sutter Health "knowingly submitted unsupported diagnosis codes for certain patient encounters" that "caused inflated payments to be made to the plans and to Sutter Health," and it then failed to take corrective action after being alerted to the problems.

"The government relies on health care providers, including those furnishing services to Medicare Part C beneficiaries, to submit accurate information to ensure proper payment," Deputy Assistant Attorney General Sarah Harrington said in announcing the penalty. "Today's result sends a clear message that we will hold health care providers responsible if they knowingly provide or fail to correct information that is untruthful."

Steven J. Ryan, a special agent for the Department of Health and Human Services Inspector General who investigated the case, said the case was a reminder that the "knowing submission of inaccurate information to Medicare diverts funds from this vital health care program, which is a disservice to patients needing care."

Sutter's practices were well known inside the Biden team, in part because current Health and Human Services Secretary Xavier Becerra pursued the company when he was California attorney general, obtaining a 2019 settlement agreement requiring the company to pay $575 million in compensation for anticompetitive practices.

Despite the cloud of allegations lingering over it, Sutter Health found a welcoming home among Democrats seeking donations in the last election.

Executives and employees of Sutter health ramped up giving to federal candidates in the 2020 election to more than $932,000, nearly five times more than what they donated in the prior presidential election in 2016. Democrats received the lion's share of the donations — more than $800,000 in 2020 — with President Biden's campaign being the largest recipient with more than $233,000, according to Federal Election Commission records gathered by the Center for Responsive Politics.

The Democratic National Committee and Vermont Sen. Bernie Sanders were the next largest recipients of Sutter Health's political largesse, the FEC records showed.

Sutter Health issued a statement Tuesday saying the $90 million penalty includes $30 million the firm agreed to pay two years ago plus $60 million in new payments and that it was admitting no liability.

"Today’s agreements bring closure to a long-running dispute, allowing Sutter to avoid the uncertainty and further expense of protracted litigation, and enabling a constructive relationship with the government as we work together under the CIA," it said.

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