Hospital system Sutter Health is asking a California court to delay payment of a massive $575 million settlement over charges of price gouging.
Sutter filed a brief Friday saying the COVID-19 pandemic has wrecked the Northern California system’s finances, and its ability to comply with the settlement terms are in doubt. The system, which lost $168 million in April, said that it has been wracked by low patient volumes and delays of financially critical elective surgical procedures.
“Sutter’s financial losses due to these changes have been nothing short of catastrophic,” the filing said. “Resuming the settlement approval process in such an uncertain and fluid situation would be impractical, inefficient and potentially detrimental to the class and the communities that Sutter Health serves.”
Sutter’s attorneys stressed they need more time to assess whether the proposed settlement with California Attorney General Xavier Becerra should be modified.
They added that the state declined to renegotiate the settlement reached in December 2019 before the COVID-19 pandemic.
The settlement outlines several steps to end anti-competitive behavior that includes capping out-of-network costs and boosting transparency. The settlement also required Sutter to end “all-or-nothing” contracting deals that require insurers and employers to include all of Sutter’s hospitals or none of them.
The settlement avoided a trial on a class action lawsuit filed by the UFCW and Employers Benefit Trust, which is a health plan for the United Food and Commercial Workers International Union.
Becerra said back in December that the average cost of an inpatient procedure in Southern California cost about $131,586 but shot up to $223,278 in the northern part of the state.
Sutter said it needs more time to understand how COVID-19 has impacted the system’s operations and finances.
“Benchmarks such as easing the state of emergency and [shelter in place] orders will allow Sutter and other providers to assess the near-term challenges and the impact of those challenges on the proposed injunctive relief,” the filing said.
Sutter asked for a delay in the approval proceedings for 90 days or at least 30 days after the shelter-in-place orders are lifted.
“Whether current projections are wrong or there is a second surge that risks overwhelming hospitals, Sutter and the court will be in a far better position to evaluate the propriety of the injunctive relief,” the filing added.
There will be a hearing July 9 on Sutter’s motion to continue the approval process.