Whistleblower Case Result — $90 Million Settlement Against Sutter Health

If you’re considering stepping forward, this case shows how whistleblowers not only recover funds for taxpayers but also receive protection.

Keller Grover LLP represented whistleblower Kathy Ormsby in a landmark $90 million False Claims Act settlement against Sutter Health. The case alleged years of Medicare Advantage fraud and resulted in a Corporate Integrity Agreement requiring federal monitoring of Sutter for future compliance.

This result stands as the largest FCA settlement against a hospital system for Medicare Advantage fraud and the second largest ever reported Medicare Advantage fraud settlement.

If you are searching for a trusted whistleblower attorney, Keller Grover’s proven track record shows what is possible when whistleblowers come forward.

Why this case matters

• $90 million recovered for taxpayers
• Confirms whistleblowers can pursue non-intervened claims even when the government only partially intervenes
• Clarifies that actuarial equivalence does not excuse false or inflated diagnosis coding in Medicare Advantage
• Led to the first Corporate Integrity Agreement addressing risk adjustment fraud in a Medicare Advantage plan

This case also demonstrated how whistleblowers, with the right legal team, can continue pursuing fraud claims even when the government chooses not to intervene in every allegation.

Keller Grover guided Ms. Ormsby through the process of building her case, years of litigation, ensuring her claims were heard and ultimately credited with half of the government’s recovery.

The whistleblower

As a Risk Adjustment Factor manager, Ms. Ormsby identified serious issues with diagnosis coding across Sutter affiliates. She reported internally, but corrective efforts were blocked. With Keller Grover, she helped the government investigate and then pursued additional claims when the Department of Justice intervened only in part of the claims.

Examples of improper coding included unsupported or inaccurate diagnosis codes, overstated severity, old codes carried forward without treatment, and failures to return overpayments despite clear notice.

Despite resistance from Sutter executives, Ms. Ormsby’s persistence and Keller Grover’s legal strategy ensured the fraud was brought to light.

How the case progressed

• 2015 — Ms. Ormsby filed a qui tam complaint under the False Claims Act.
• From 2015 to 2018, the case was under seal while the government investigated with support from Keller Grover.
• In 2018 the DOJ partially intervened in some but not all of the claims, however, Ms. Ormsby continued pursuing her additional claims.
• In 2020, the court denied Sutter’s attempt to dismiss the case. By 2021, a $90 million settlement was reached along with a Corporate Integrity Agreement.

How Medicare Advantage fraud works

Medicare Advantage pays a fixed monthly amount per patient adjusted for health status using diagnosis codes. When providers inflate or falsify codes, patients appear sicker and the program overpays.

Even small code inflation can add up to thousands of dollars per patient each year — ultimately costing taxpayers hundreds of millions of dollars. Whistleblowers who come forward in these cases are critical to stopping fraud and recovering taxpayer money.

Proven track record

Keller Grover has guided whistleblowers through complex investigations and litigation, partnering with the Department of Justice and leading national firms. The Sutter matter is one of the largest hospital system settlements involving Medicare Advantage fraud, underscoring the firm’s commitment to protecting whistleblowers and taxpayers.

If you have information about Medicare, Medicaid, or other government program fraud, you may be able to file a whistleblower action under the False Claims Act and receive between 15 and 30 percent of the recovery.