Sacramento-based Sutter Health fraudulently charged third-party payors for as much as "hundreds of millions of dollars" in anesthesia services at dozens of its hospitals, clinics and surgery centers over the past decade, alleges a whistleblower lawsuit joined by the state of California this week.

In a motion filed in California Superior Court, state Insurance Commissioner Dave Jones accuses the healthcare provider of routinely charging as much as $5,000 for anesthesia services that should qualify for no more than $250 in reimbursement. These "charges so far exceed actual costs that it is clear Defendants are actually double billing for costs captured in the anesthesiologist's bill or in other revenue codes, or are simply billing for services not actually provided," reads the motion.

In going after Sutter, the state is joining forces with healthcare auditor Rockville Recovery Associates, which first filed suit against Sutter and co-defendant Multiplan Inc., a third party company that works with health insurers and providers, in 2009 after allegedly discovering the billing discrepancies during an investigation requested by Guardian Life Insurance of America.

Sutter denied the allegations in a written statement released to reporters, saying it believes the suit to be "without merit" and that it plans to "vigorously defend" its billing practices. The non-profit health network says the higher rates reflect the costs of meeting the state's earthquake retrofit regulations, upgrading technology and treating patients who can't afford health care.

"Our contracts with health insurance plans are thoroughly negotiated with these sophisticated companies," the statement reads. "Since these rates are negotiated, they cannot be fairly characterized as false after the fact."

Mr. Jones says Sutter, which has 2 dozen hospitals and more than 3,500 doctors in its network, had clauses in its payor contracts forbidding the insurance companies from questioning or refusing to pay Sutter's bills. "These terms effectively preclude insurer challenges to the reasonableness of charges by Sutter Hospitals," claims the motion.

Irene Tsikitas