Appeals court revives antitrust suit against Sutter Health

The U.S. Court of Appeals for the Ninth Circuit has reversed and remanded an antitrust lawsuit alleging Sacramento, Calif.-based Sutter Health used its market power to force illegal tying arrangements and anti-steering clauses upon health plans.

The case, filed by members of various health plans, dates back to 2012. Plaintiffs allege Sutter dominates numerous hospital service areas in Northern California and commercial health plans in some of those areas must include Sutter in participating provider networks, as the system owns the only acute care facilities. Specifically, the plaintiffs allege Sutter leverages its market power in these HSAs to force health plans to include inpatient services in other HSAs, or "tied" markets. 

The plaintiffs further allege Sutter wields its market power for inpatient services to force anti-steering clauses upon health plans, causing plaintiffs and others to pay higher health insurance premiums.

The lawsuit was dismissed by the lower court in June 2014. Ruling that the plaintiffs' geographic market allegations are sufficiently detailed, the appeals court revived the case and sent it back to the lower court July 15.

Sutter Public Relations Director Karen Garner said the allegations "have no basis in fact."

"The plaintiff's allegation that we demand to include all of our hospitals in contracts is simply false — we have many agreements that include only some of our hospitals and physicians. The trial court — the trier of fact — also repeatedly found no factual support for the claim that there is no alternative for Sutter Health hospitals," Ms. Garner said. "We are confident that the ultimate result will be the same regardless of today's decision, and we are hopeful that the plaintiff will stop pursuing this costly litigation."

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