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Surprise Settlement In Sutter Health Antitrust Case

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SAN FRANCISCO — Sutter Health has reached a tentative settlement settlement in a intently watched antitrust case introduced by self-funded employers, and later joined by the California Attorney General’s Office. The settlement was introduced in San Francisco Superior Court on Wednesday morning, simply moments earlier than opening statements have been anticipated to start.

While representatives for either side confirmed they’d reached a tentative settlement, they might not disclose particulars of the settlement, which have to be authorized by the court docket.  Superior Court Judge Anne-Christine Massullo advised the jury impaneled for the case that particulars doubtless could be made public throughout approval hearings in February or March.

There have been audible cheers from the jury following the announcement that the trial, which was anticipated to final three months, wouldn’t proceed. Officials with the legal professional normal’s workplace and Sutter Health declined requests for remark.

Sutter stood accused of violating California’s antitrust legal guidelines by utilizing its market energy to illegally drive up costs. Health care prices in Northern California, the place Sutter is dominant, are 20% to 30% greater than in Southern California, even after adjusting for value of residing, in line with a 2018 study from the Nicholas C. Petris Center on the University of California-Berkeley that was cited within the grievance.

The case was an enormous enterprise, encompassing years of labor and thousands and thousands of pages of paperwork, California Attorney General Xavier Becerra mentioned beforehand. If the plaintiffs prevailed, Sutter was anticipated to face damages of as much as $2.7 billion.

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The nonprofit big has 24 hospitals, 34 surgical procedure facilities and 5,500 physicians throughout Northern California, with $13 billion in working income in 2018. The state’s lawsuit alleged Sutter has aggressively purchased up hospitals and doctor practices all through the Bay Area and Northern California, and exploited that market dominance for revenue.

Among different ways, it accused Sutter of using an “all-or-none” method to contracting with insurance coverage corporations, demanding that an insurer that needed to incorporate any one of many Sutter hospitals or clinics in its community should embody all of them — even when a few of these amenities have been costlier than a competitor.

Sutter Health constantly denied the allegations, saying its massive, built-in well being system presents tangible advantages for sufferers, together with extra seamless, high-quality care and elevated entry for residents in rural areas. Sutter additionally disputed that its costs are greater than different main well being care suppliers, saying its inner analyses inform a distinct story.

The case was anticipated to have nationwide implications on how hospital techniques negotiate costs with insurers. Even with particulars of the settlement not but public, attorneys and affected person advocates mentioned they count on the settlement to mark a pivotal second.

David Balto, a former federal regulator who’s now an antitrust lawyer in Washington D.C., referred to as the developments “precedent-setting.”

“You have all these metropolitan markets where you have large hospital systems, but Sutter Health in the Bay Area is like the filet mignon of the problem,” Balto mentioned. “The problems in San Francisco are bigger than anywhere else. And you see that in how Sutter has exploited its market power to the nth degree.”

Sutter’s ways have been onerous to problem underneath antitrust legislation, Balto added. But “what [Becerra] did was bring together hard facts with top-notch scholarship proving there was an overwhelming problem and that Sutter’s strong-arm tactics were the cause of the problem.”

Anthony Wright, government director of the advocacy group Health Access California, mentioned he wasn’t aware of the settlement particulars, however that he anticipated it to embody “some meaningful remedies in terms of adjusting some of the anti-competitive practices and contract provisions that Sutter has advanced over the years.”

“While we await the details of the settlement,” he mentioned, “the lawsuit itself sends a strong signal to hospital chains across the nation and all health care providers planning to adopt predatory prices.”

Jaime King, affiliate dean and a professor of legislation at UC Hastings College of the Law, mentioned Sutter’s resolution to settle “in some ways is not a surprise. On the eve of trial, we often see big settlements.”

Still, she mentioned, it comes at a price: “I think it’s a shame we won’t ever get to see the evidence that would have been brought forward in this case about Sutter’s contracting and pricing practices. There are a lot of very large health systems that are charging a lot of money for their services, and this case had the opportunity to give us much more insight into what we’re spending our health care dollars on.”

Sutter continues to face trial on a separate federal antitrust lawsuit.

Use Our Content This story might be republished without spending a dime (details).

Jenny Gold: jgold@kff.org”>jgold@kff.org, @JennyAGold

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