Sutter Health loses legal bid to delay proceedings for $575M settlement over price gouging

Sutter Health Building
A federal judge didn't buy Sutter Health's arguments to delay proceedings for a $575 million settlement over price gouging allegations. (Sutter Health)

Hospital system Sutter Health lost a legal bid to delay payments for a $575 million settlement it reached over price-gouging charges.

The northern California-based system had argued for a delay so it can figure out the financial repercussions from the COVID-19 pandemic. But a federal judge ruled Thursday that Sutter has not shown it can’t make the payments and found the settlement won’t hinder the system’s ability to care for patients.

If Sutter believes the COVID-19 pandemic has changed things so drastically, Sutter should oppose the entire settlement rather than delay the proceedings, the judge said in the ruling.

Sutter officials argued the pandemic will make it harder to implement several reforms it agreed to in the settlement, such as capping out-of-network costs and improving price transparency.

The pandemic could cause the system to increase its chargemaster rates above the current rate caps to fund its operations in response to the pandemic, officials said.

RELATED: Sutter Health suffered a $168M operating loss last month as COVID-19 upended finances

But the rate caps can be modified, and, therefore, Sutter’s concerns about the future inability to “comply with the rate caps does not justify a delay in the preliminary approval proceedings,” the ruling said.

The ruling also noted that the approval proceedings have been delayed due to the pandemic and any further delay will cause an injury to the plaintiffs in the case.

California Attorney General Xavier Becerra lauded the ruling.

“Sutter's practices harmed California’s healthcare market by charging higher prices unrelated to quality or cost of care. They did that long before the COVID-19 pandemic,” Becerra said in a statement Thursday. “There is no period of time that medical providers, like Sutter, should be able to carry out such destructive market practices.”