Sutter Health pushes employer groups to waive their right to sue

Employment contract

Sutter Health, one of the most powerful hospital systems in the western United States, is apparently making an offer to many employer groups they can't refuse: Drop the right to sue in lieu of network discounts.

Many Bay Area employees who self-insure have received notices through their third-party administrators that Sutter wants their enrollees to surrender the right to sue their hospitals in lieu of the discounts, according to NPR.  Any disputes about care would be settled in binding arbitration--a forum that is believed to be beneficial to companies over plaintiffs.

Some industry observers believe that Sutter is making this demand from self-insured businesses due to an ongoing dispute it is having with the UFCW & Employers Benefit Trust, a union that represents some 60,000 grocery store workers in the Bay Area. Sutter had in place an arbitration clause with Blue Shield of California, the union's third-party administrator and claimed it extended to the union. The issue remains under litigation.

A few companies are fighting the demand. One of them is Castlight Health. Keeping an arbitration clause at bay would allow that healthcare analytics firm to “maintain our flexibility in fighting against what we consider to be difficult, anti-consumer provisions in provider networks,” Jennifer Chaloemtiarana, Castlight Health's general counsel, told NPR

Sutter Health's prices are higher than most other hospitals in the Bay Area, and have grown at a significantly higher rate than other facilities in the region between 2004 and 2013. As of 2010, Sutter's prices were about double what they are at comparable hospitals in Southern California.

Sutter denied that it was using the arbitration clause to continue consolidating its market power, NPR reports. "Recent academic studies have been one-sided and misrepresent the competitive environment of Northern California," Sutter spokesperson Bill Gleeson told NPR. The studies “unjustly inflate the so-called market share of Sutter. There's competition all around.”