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Verdicts & Settlements

Sutter Health System Settles Anti-trust Allegations

— January 7, 2020

Sutter Health will be monitored moving forward for anti-trust violations.

Sutter Health, the large hospital system in Northern California, has agreed to pay $575 million to settle claims of anti-competitive behavior.  The payout will compensate employers, unions and the state and federal governments, according to court documents, and the health system will also be prohibited from engaging in several business practices.  For one, Sutter will be barred from “all or nothing” agreements, which the attorney general said, “required insurers to include all of Sutter’s medical facilities if they wanted to include some of the system’s hospitals.”  It will also have to limit what the chain charges patients for out-of-network medical services.

“If we’re going to treat something that’s precious and lifesaving like a business, then the marketplace for health care must be vibrant and competitive so that the best in the business can rise to the top naturally,” Xavier Becerra, California’s attorney general, said. “This first-in-the-nation settlement is one of the largest actions against anti-competitive conduct in the health care marketplace across the country.”

Sutter Health System Settles Anti-trust Allegations
Photo by Sandro Porfirio on Unsplash

The UFCW & Employers Benefit said, “From the outset, our goal has been to not only achieve justice for the members of the class, but to also put an end to the anticompetitive behavior that has allowed Sutter to charge inflated prices.”

“Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  Hunt added, “The Department is committed to taking action to eliminate improper inducements that can impact physician decision-making.”

The hospital chain did not admit to any wrongdoing.  “We were able to resolve this matter in a way that enables Sutter Health to maintain our integrated network and ability to provide patients with access to affordable, high-quality care,” said Flo Di Benedetto, Sutter’s senior vice president and general counsel.

Sutter spokesperson Amy Thoma Tan wrote “the UFCW & Employers Benefit Trust case required thousands of hours of work from highly specialized attorneys.”  She added that Sutter was “also served with a number of lawsuits that were found to be without merit.”  Tan continued, “Unfortunately, frequent litigation has become the new normal for healthcare organizations like ours, and we must defend ourselves against frivolous lawsuits.  We would prefer to spend this money on investments that benefit our patients and communities.”

Sutter submitted a statement saying, “Since the date of the 2010 self-disclosure, Sutter has invested significant resources into enhancing its compliance program and will continue to do so in its ongoing efforts toward assuring absolute compliance with all applicable laws and regulations.”

A tentative settlement was announced in October, just as the trial was to begin.  The settlement will need to be approved by a court.  A hearing is scheduled for February 25 in the Superior Court of California in San Francisco.  If approved, an independent party will ensure the agreement is followed.

The announcement of the amount removes a substantial grey area from Sutter’s operations, Olga Beck, a senior director with Fitch Ratings, said.  She added, “Even though it’s a big number, it’s still a big system.  At least we have that uncertainty removed.”


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