A federal jury has sided with Sutter Health over allegations that the Northern California hospital system forced health plans to include inpatient services at only Sutter-affiliated hospitals and charge higher out-of-network prices.
The federal jury in the U.S. District Court for the Northern District of California also ruled Friday that Sutter did not force health plans to agree to contracts that prevented the insurers from steering patients to non-Sutter hospitals that charged lower prices.
The lawsuit dates to 2012 when state residents sued charging that Sutter had used its monopoly power to require health plans to use all the system’s providers and affiliated physicians or none of them at all. The lawsuit also charged that plans required plaintiffs in the lawsuit to get all their care from only Sutter Health providers.
But the health system responded that the lawsuit’s claims were very thin and don’t prove the hospital system prevented any competitors from full competition. Sutter has also contended it never made health plans pay for one service to get access to another.
The system cheered the jury’s unanimous verdict late last week.
“This decision is important not only for Sutter Health, but for all healthcare providers in California,” Sutter said in a statement. “It validates that healthcare providers, including doctors and hospitals, have a right to evaluate whether to participate in health plan networks and ensure they don’t interfere with the ability to provide coordinated patient care and will not lead to surprise bills.”
Sutter added that the jury found Sutter didn’t force insurers to agree to contracts that “prevented insurance companies from introducing networks and did not restrain competition.”
The jury verdict is a major legal win for the hospital system and comes less than a year after it paid the federal government $90 million to settle allegations of mischarging Medicare for its Medicare Advantage plans.
Sutter also is on the hook for a massive $575 million state settlement over allegations of price gouging. In addition to the financial penalty, Sutter Health agreed to install several reforms to help curb anti-competitive practices.