- A federal jury trial is set to begin a class action lawsuit 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 consumers in Northern California were overcharged for healthcare services as a result of terms Sutter Health was able to impose on health plans due to the hospital system's substantial market power, the case in the U.S. District Court in Northern California alleges. Sutter denies any wrongdoing.
- The antitrust lawsuit is going to trial less than a year after the nonprofit agreed to pay $575 million to settle similar allegations of price-gouging in a case brought by the United Food and Commercial Workers union in California Superior Court.
Sacramento-based Sutter Health is a large regional healthcare provider serving about 3 million Californians. The hospital system has operated at a loss for the past two years, facing a drop in patient volumes during the COVID-19 pandemic that stressed its finances.
In Sidibe v. Sutter Health, the organization is accused of imposing pricing and contractual terms on fully insured health plans in violation of federal antitrust and unfair competition laws. Sutter's actions allegedly forced plans to pay more than they otherwise would have for healthcare services. This, in turn, drove up premiums for consumers, as insurers passed on costs to plan members.
Specifically, Sutter is accused of demanding "all-or-nothing" terms that require insurers to include in their provider networks the services that Sutter supplies, at prices that Sutter dictates.
The lawsuit contends that Sutter has monopoly power in some areas because Kaiser Permanente, the other large hospital system in Northern California, does not participate in those markets. Sutter also has prevented health plans from steering members to other, lower-cost hospitals, the suit states.
The class action lawsuit includes 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 Jan. 1, 2011, to the present.
Sutter denies that it violated any antitrust or unfair competition laws, or that its actions caused any increase in the price of premiums that individuals and employers paid for health insurance.
The plaintiffs are asking the court for an order prohibiting Sutter from engaging in anti-competitive conduct, and for compensation for the overcharges they argue they paid for their insurance coverage.
The trial is getting underway less than a year after a California state court approved a $575 million settlement against Sutter to settle price-gouging allegations in the UFCW lawsuit, avoiding a trial in that case. Sutter was accused of wielding its market power to pressure employers and insurers during contract negotiations involving self-insured healthcare policies.
As part of the settlement of that litigation, Sutter agreed to stop the practice of all-or-nothing contracting. Sutter denied engaging in all-or-nothing negotiations in the case.
In a separate matter also resolved last year, Sutter Health agreed to pay $90 million to settle allegations that it knowingly submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage plans, in violation of the False Claims Act.
In the settlement with the Justice Department resolving whistleblower claims, Sutter Health entered into a five-year corporate integrity agreement with the HHS Office of Inspector General that requires the health system to implement a risk assessment program and submit to annual reviews by an independent organization.