Sutter Health to change business practices following a $575M settlement resulting from anticompete charges

Final approval for a $575 million settlement was given to the Northern Californian health system, Sutter Health after 7 years of litigation. It had faced an accusation of anticompetitive business practices. The settlement will be distributed among those that claimed overcharges, including union trusts and employers.

Sutter Health must change its business practices to increase transparency and reintroduce competition in the region.

Attorney General Rob Bonta cited the win as groundbreaking for Californians and stated, “Sutter will no longer have free rein to engage in anticompetitive practices that force patients to pay more for health services. Under the terms of our agreement, Sutter’s transparency must increase, and practices that decrease the accessibility and affordability of healthcare must end. A competitive healthcare market is essential to ensuring patients and families aren’t bearing the brunt of healthcare costs while one company dominates the market.”

This case began in 2014 as a class-action lawsuit against Sutter Health, brought by Commercial Workers and Employers Benefit Trust (UEBT) and United Food. They were joined by Xavier Becerra, California Attorney General representing the people of California later on.

The allegations against Sutter Health include all-or-nothing contracting, price secrecy, and anti-tiering provisions in its contracts.

Sutter Health agreed to settle the case a day before the case was set to go to trial. The settlement terms were announced in December 2019.

The company tried to delay the payment of the settlement by citing devastating losses due to the COVID-19 pandemic but this request was denied by the Superior Court of California, County of San Francisco.

Sutter Health will need to abide by compliance monitoring over the next 10 years to ensure the settlement requirements are met. Additionally, it needs to increase transparency by providing access to pricing information, ensure patients don’t receive surprise bills by limiting out-of-network charges, make allowances for payers to offer cost-saving health plan options, end all-or-nothing contracting, and similar anti-competitive practices.

The settlement has been described as a “landmark” case, and it could have country-wide implications, setting the tone for other health systems negotiating with insurers with the possibility that other state attorney generals may start challenging their local practices.

Sutter Health owes the federal government $60 million of the $90 million it had agreed to pay to settle the allegation against the company. This allegation was related to providing incorrect information regarding its Medicare Advantage beneficiaries. The health system had paid $30 million of the amount in 2019, while the rest remains.