Jury trial begins in antitrust lawsuit against Sutter Health


Diving Brief:

  • A federal jury trial is about to begin class action Wednesday accusing Sutter Health of anti-competitive conduct that artificially inflated health insurance premiums and out-of-pocket costs paid by health plan members for more than a decade.
  • Hundreds of thousands of Northern California consumers have been overcharged for health services due to conditions Sutter Health was able to impose on health plans due to the hospital system’s substantial market power, according to the case before the U.S. District Court in Northern California. Sutter denies any wrongdoing.
  • The antitrust lawsuit will go to trial less than a year after the nonprofit agreed to pay $575 million to settle similar price gouging allegations in a case brought by the United Food and Commercial Workers union in court. Superior Court of California.

Overview of the dive:

Sacramento-based Sutter Health is a large regional healthcare provider serving approximately 3 million Californians. The hospital system has operated at a loss for the past two years, facing a drop in patient numbers during the COVID-19 pandemic that has strained its finances.

In Sidibe v. Sutter Health, the organization is accused of imposing prices and contract terms on fully insured health plans in violation of federal antitrust and unfair competition laws. Sutter’s actions would have forced the plans to pay more than they otherwise would have had to pay for health services. This, in turn, drove up consumer premiums, as insurers passed the costs on to plan members.

Specifically, Sutter is accused of demanding “all or nothing” terms that require insurers to include services provided by Sutter in their provider networks, at prices dictated by Sutter.

The lawsuit argues that Sutter has monopoly power in certain areas because Kaiser Permanente, Northern California’s other major hospital system, does not participate in those markets. Sutter also prevented health plans from referring members to other hospitals at lower cost, the lawsuit says.

The class action involves individuals and employers in parts of Northern California who purchased health insurance from Aetna, Anthem Blue Cross Blue Shield of California, Health Net or UnitedHealthcare from January 1, 2011 through present.

Sutter denies violating antitrust or unfair competition laws, or that his actions have caused an increase in the price of premiums that individuals and employers have paid for health insurance.

The plaintiffs are asking the court for an order restraining Sutter from engaging in anticompetitive behavior and compensation for the overcharges they claim they paid for their insurance coverage.

The trial begins less than a year after a California state court approved a $575 million settlement against Sutter to settle the price gouging allegations in the UFCW lawsuit, avoiding a trial in that case. Sutter has been accused of using his market power to pressure employers and insurers during contract negotiations involving self-insured health care policies.

As part of the settlement of this litigation, Sutter agreed to end the practice of all-or-nothing contracts. Sutter denied engaging in any all-or-nothing negotiations in the case.

In a separate case also resolved last year, Sutter Health agreed to pay $90 million to settle allegations that it knowingly submitted inaccurate health information about beneficiaries enrolled in Medicare Advantage plans, in violation of the False Claims Act.

In the settlement with the Department of Justice resolving whistleblower claims, Sutter Health entered into a five-year Corporate Integrity Agreement with the HHS Office of the Inspector General that requires the health system to implement a risk assessment program and submit to annual reviews by an independent organization.


Comments are closed.