Tentative settlement resolves antitrust claims against health system on the eve of trial

A significant antitrust case was tentatively settled on the eve of trial, immediately before opening statements were set to begin in San Francisco Superior Court. Sutter Health, a large health system with over 20 hospitals, 30 surgery centers and 5,000 physicians across Northern California, was alleged to have violated state antitrust laws by using its market power to drive up prices. The case was originally brought by self-insured employers but was eventually joined by California’s Office of the Attorney General.

This case, UEBT and the State of California et al. v. Sutter, was being closely watched nationwide for the impact it could have on the way large health systems negotiate payer contracts. One item specifically at issue was an allegation that Sutter employed an “all or none” approach when negotiating contracts. Simply put, if an insurer wished to contract with a single Sutter hospital, it was alleged that Sutter demanded that the insurer contract with all Sutter facilities, even those that may be higher priced than competitors. A judicial resolution of those allegations appears to have been avoided in this particular case, leaving health systems and insurers to look for guidance elsewhere when attempting to evaluate such issues.

The terms of the tentative settlement were not disclosed and may not be until approval hearings occur in early 2020. However, had the plaintiffs prevailed in this matter, it was expected that Sutter could have faced damages exceeding $2 billion.