According to the Sutter Health whistleblower lawsuit, the California-based not-for-profit hospital falsely used an anesthesia billing code to charge for services and supplies that patients and insurers had already paid for, either through other charges on the hospital bill or through the anesthesiologist’s bill. 

In some instances, the whistleblower lawsuit says, the billing code was charged even though no anesthesiologist was in the operating room and general anesthesia wasn't provided.

Sutter operates 24 hospitals in Northern California and accounts for more than one-third of the hospital revenue generated in the region. According to a recent Los Angeles Times report, hospitals in Northern California’s six most populous counties collect 56% more revenue per patient per day than in Southern California’s six most populous counties. The article cited Sutter Health as the “driving force” of those higher costs.

"Sutter's alleged fraud comes at the expense of the private health insurance industry, which initially pays for the services, but, ultimately, this unjust burden falls on the shoulders of California's consumers, who must foot the bill for inflated health care premiums," said California Insurance Commissioner Dave Jones. 

"We believe the amount of the fraudulent charges is in the hundreds of millions of dollars, if not more. As Insurance Commissioner, I will use the full resources of this Department to root out insurance fraud in all forms and hold all those who engage in such fraud fully accountable."

The Sutter whistleblower lawsuit was originally filed by a New York-based auditor hired by The Guardian Life Insurance Company to identify fraudulent claims filed from 2002-2008. The auditor allegedly discovered the fraud after reviewing bills submitted to Guardian by Sutter Hospitals. California joined the whistleblower lawsuit May 5.