Sutter Health, a Sacramento, California-based health care services provider, and several affiliated entities have agreed to pay $90 million to resolve charges it violated the False Claims Act by knowingly submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage plans, the U.S. Department of Justice said Monday.

The settlement is the largest False Claims Act settlement against a hospital system involving allegations of fraud on the Medicare Advantage program, and the second-largest reported Medicare Advantage fraud settlement ever, according to attorneys who represented a whistleblower in the case.

The DOJ statement said Sutter Health contracted to provide health care services to California beneficiaries enrolled in certain plans and in exchange received a portion of the payments for treating the beneficiaries.

It said Sutter Health knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under its care that caused inflated payments to be made to the plans and Sutter Health.

The DOJ’s lawsuit charged that Sutter Health did not take corrective action after it learned of this, nor delete additional unsupported diagnosis codes after it became aware of these unsupported diagnosis codes.

The Justice Dept. said in addition to paying the fine, Sutter Health and affiliates have entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General which requires, among other things, that Sutter Health implement a centralized risk assessment program as part of its compliance program.

The Justice Department said the settlement includes the resolution of whistleblower claims filed by Kathleen Ormsby, a former employee of Palo Alto Medical Foundation, which is a Sutter Health affiliate. 

Sutter said in a statement it looks forward to collaborating with the Office of Inspector General over the term of the Corporate Integrity Agreement. It said, “In 2017, PricewaterhouseCoopers conducted a compliance program assessment finding Sutter’s program to be effective, with several areas identified as leading practices. Sutter has since maintained and enhanced these program elements and is well-prepared to implement the terms of the agreement.

“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 Corporate Integrity Agreement.