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Court denies Sutter Health's request to delay $575M settlement

Sutter Health cited "catastrophic" losses related to the coronavirus pandemic.

Mallory Hackett, Associate Editor

Sutter Health headquarters in Sacramento, California.Sutter Health headquarters in Sacramento, California.

The Superior Court of California, County of San Francisco on Thursday denied Sutter Health's request to delay the approval of the settlement requiring the health system to pay $575 million and end anti-competitive business practices. 

The judge set the approval hearing to take place over August 12 and 13. 

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This case could have nationwide implications if other states begin to examine and challenge local practices, according to Elizabeth Mitchell, CEO of Pacific Business Group on Health, which initiated the lawsuit on behalf of employers and stakeholders.

"While Sutter was something of an outlier, in terms of the scale, we believe this is something that is plaguing the entire industry," Mitchell said. 

In addition to paying $575 million to employers and union trusts to offset claimed overcharges, the settlement requires Sutter Health to end alleged anti-competitive behavior. 

These practices include "all-or-nothing" contracts, surprise billing, price secrecy and the use of gag clauses, according to Mitchell. 

THE LARGER TREND

In December 2019, following five-and-a-half years of what the California Superior Court called "contentious litigation," Sutter Health agreed to settle the class action antitrust case for $575 million.

Lawyers for Sutter Health filed a motion last month to delay the approval of the settlement.

Sutter Health cited "catastrophic" losses related to the coronavirus pandemic and said it shouldn't have constraints on the way it makes revenue. 

"Sutter's financial losses due to these changes have been nothing short of catastrophic," the filing said. "Resuming the settlement approval process in such an uncertain and fluid situation would be impractical, inefficient and potentially detrimental to the class and the communities that Sutter Health serves."

The company asked for an additional 90 days, or until 30 days after the shelter in place orders are lifted in California before the approval proceedings continue.

Sutter Health did not respond to a request for comment following Thursday's ruling.

Pacific Business Group on Health disputed the request. 

PBGH argued that the $205 million Sutter Health received from the Coronavirus Aid, Relief and Economic Security Act should cover the costs of treating COVID-19 patients. 

"That's why congress just allocated $175 billion to hospitals," Mitchell said. "We believe that even if there are some losses, the economic pressure on the employers and families paying these bills is significant. They can no longer absorb [Sutter Health's] very high prices that are outliers in the region."

ON THE RECORD

"Everyone is deeply concerned about the rise in COVID-19 cases throughout California and the nation and its impact on our frontline health care workers. But the reality is that the injunctive relief of the Sutter settlement, which is designed to stop the health system from engaging in anti-competitive business practices, has no bearing whatsoever on its ability to provide patient care during the COVID pandemic," Mitchell said in a statement. "There is no evidence that putting an end to anti-competitive business practices would interfere with clinical care."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org