Sutter Health: Toxicology Claims for Tests Performed by Outside Laboratories

In the Sutter Health toxicology settlement, Sutter agreed to pay $13,091,452 to resolve allegations that it billed federal health programs for quantitative urine tests performed by outside laboratories. The government alleged that taxpayers paid the hospital for work other laboratories did. For someone inside laboratory operations or hospital billing, that is a concrete question about the business: who received the specimens, who ran each test, and who sought payment?

The Department of Justice announced the civil settlement on October 17, 2022. The case centered on a contract that brought urine specimens from across the country into a hospital testing arrangement.

The Navigant Contract and the Outside Laboratories

Alta Bates Summit Medical Center entered into a contract with Navigant Network Alliance, LLC. According to the government’s account, Navigant referred urine toxicology specimens obtained from physicians and laboratories nationwide to Sutter. Sutter submitted bills, or caused bills to be submitted, for qualitative and quantitative testing.

The government alleged that third-party laboratories performed the quantitative testing on thousands of those specimens, while Sutter nevertheless sought reimbursement. The alleged billing ran from August 1, 2016, through June 30, 2017.

Sutter Health is a Sacramento-based health care services provider. The settlement also covered Sutter Bay Hospitals, the successor to the Sutter East Bay Hospitals entity that operated as Alta Bates Summit Medical Center.

Who Gets Paid for a Sent-Out Test?

Medicare’s direct-billing rule normally pays the person or entity that performed or supervised the test. In Sutter’s case, the government alleged that the hospital sought and received payment for quantitative testing performed by third-party laboratories.

For an insider, the useful detail is which service moved and how the parties billed it. A person who knows the send-out operation may understand the work behind a claim that looks unremarkable in a billing system. We connect that operational knowledge to the arrangement and the payer’s payment rules.

Screening and Quantitative Toxicology

The Journal of Family Practice’s 2021 review, Urine Drug Screening: A Guide to Monitoring Tx With Controlled Substances, describes the cost and turnaround of more specific confirmatory testing:

The Federal Programs That Paid

The government alleged that the billing reached the Federal Employees Health Benefits Program, Medicare, Medicaid and Tricare. Its account of the covered claims says those programs paid Sutter for urine toxicology testing it did not perform.

For an employee reviewing healthcare claims, the payer belongs alongside the referral and testing records. Those connections turn a concern about outside testing into a specific account of who billed for it and who paid.

The settlement announcement states that Sutter had already paid more than $6.5 million to the United States and agreed to pay the remaining approximately $6.5 million within 30 days.

What Evidence Is Needed to Prove Fraud?

What proves an outside-laboratory billing case depends on the arrangement behind the claims. Our whistleblower experts work through that with you. The Sutter allegations make that connection concrete: a named contract, nationwide specimen referrals, quantitative testing by third parties and reimbursement sought by the hospital.

Your knowledge may sit in the laboratory’s send-out work, the hospital’s billing operation or the business relationship between the parties. We use that view of the operation to understand what the claims represented and how the decisions behind them were made.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Where the Testing Happened

If you know how a hospital billed for work an outside laboratory performed, talk with our whistleblower experts about that arrangement. We build the case with you and bring in laboratory fraud whistleblower lawyers who understand hospital and reference-laboratory billing. We stay beside you throughout, turning your knowledge of the testing business into your strongest laboratory fraud whistleblower case.