Sutter Health Receives Jury Support in Antitrust Class Action

A federal jury has sided with Sutter Health in an antitrust class action lawsuit in which plaintiffs claimed that the health system drove up insurance premiums through anticompetitive tactics, Reuters reported.

Plaintiffs first filed the lawsuit, Sidibe v. Sutter Health, in 2012. The case stated that Sutter Health violated antitrust and unfair competition laws, leading certain individuals and employers in Northern California to pay unfairly high premiums for health insurance from Aetna, Anthem Blue Cross, Blue Shield of California, Health Net, and United Healthcare between 2011 and 2020.

The plaintiffs—four patients and two companies representing three million individuals and small businesses—alleged that Sutter Health’s actions resulted in $411 million of damages.

The lawsuit claimed that the health system used its market power to force health plans into contracts that prevented them from directing patients to non-Sutter hospitals with lower costs, resulting in higher premiums for members.

According to plaintiffs, the contracts said that if the health plans wanted to include any of Sutter’s hospitals in their networks, they must include them all.

After less than 10 hours of deliberation across two days, a nine-member jury in the US District Court for the Northern District of California rejected the claims and sided with Sutter Health.

“After hearing many hours of testimony from witnesses, insurance plan representatives, provider organizations and experts, the jury found that Sutter Health did not engage in anticompetitive conduct and did not cause consumers to pay higher prices or premiums as plaintiffs alleged,” James Conforti, interim president and chief executive officer of Sutter Health, said in a statement.

“The jury’s decision reached the substance of the claims, finding squarely that Sutter Health did not tie together its hospital services, did not force insurance companies to agree to contracts that prevented insurance companies from introducing networks, and did not restrain competition.”

“This decision is important not only for Sutter Health, but for all healthcare providers in California,” Conforit continued. “It validates that healthcare providers, including doctors and hospitals, have a right to evaluate whether to participate in health plan networks and ensure that they don’t interfere with the ability to provide coordinated patient care and will not lead to surprise bills.”

This is not the first time Sutter Health has faced antitrust allegations.

In March 2018, California’s then-Attorney General and current HHS Secretary Xavier Becerra filed a similar lawsuit against the health system that claimed it was engaging in anticompetitive behavior that led to high healthcare costs.

In December 2019, Sutter Health and the state of California reached a $575 million settlement for the case. In addition to the fee, the health system agreed to increase price transparency, limit out-of-network charges, and end “all-or-nothing” contract deals.

The settlement also prohibited anticompetitive bundling of services and products and subjected Sutter Health to at least ten years of court-approved compliance monitoring.

Hartford HealthCare (HCC) recently faced an antitrust lawsuit as well. Six Connecticut residents alleged that the health system restrained trade and created a monopoly on acute inpatient hospital services across the state, leading to higher costs for payers and patients. Similar to Sutter Health, plaintiffs accused HCC of using the “all-or-nothing” approach when contracting with health plans.