Sutter Health $575M antitrust settlement gets preliminary approval; separate antitrust suit heads to court

A judge has granted preliminary approval of a Sutter Health $575 million antitrust settlement more than a year after it was reached.

The settlement was initially reached in December 2019 by Sutter and the parties that sued the Sacramento, Calif.-based system, including California Attorney General Xavier Becerra, unions and other employers. 

The settlement would resolve allegations that Sutter Health violated state antitrust laws by using its market dominance in Northern California to overcharge patients and employer-funded health plans. The lawsuit claimed that Sutter Health's higher prices led to $756 million in overcharges. 

In addition to the payment, the settlement also requires Sutter to have its business operations monitored for a decade and provide pricing, quality and cost information previously kept secret to insurers, employers and self-funded plans.

San Francisco Superior Court Judge Anne-Christine Massullo granted preliminary approval of the settlement March 9. 

Final approval of the settlement is expected in July.

"This landmark settlement will require Sutter to stop practices that drive patients into more expensive health services and to operate with more transparency," Mr. Becerra said in a prepared statement March 9. 

A separate federal antitrust lawsuit against the health system, Sidibe v. Sutter Health, is headed to court in October after U.S. Magistrate Judge Laurel Beeler March 8 rejected Sutter's attempt to dismiss the case, according to court documents.  

In the Sidibe vs.Sutter Health case, health plans accuse the health system of imposing contracts that forced employers and beneficiaries of the plan to overpay by hundreds of millions of dollars. 

The plaintiffs, which include four people who paid for health insurance and two companies who paid for health insurance for their employees, claim Sutter uses its market power for inpatient services in seven Northern California markets to force health plans in four other geographic markets where it has some competition to include Sutter’s inpatient services at hospitals, resulting in higher prices.

Sutter had moved for summary judgment, arguing that its contracts with the health plans were lawful and did not condition the purchase of any service.

The judge denied Sutter's motion for summary judgment on four of the six counts contained in the lawsuit.

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