Shortly before returning to the courtroom, Sutter Health has reached an “agreement in principle” to settle a long-running and recently revived antitrust class-action lawsuit, according to a Sunday evening legal filing and statement from the legal counsel for the plaintiffs shared Monday morning.
The case, Sidibe et al v. Sutter Health, was filed in the U.S. District Court for the Northern District of California back in 2012 and claimed about $411 million in damages from 2011 to 2020. In it, plaintiffs alleged that the system had used its power in an uncompetitive healthcare market to force health plans into contracts that only included inpatient services at Sutter-affiliated hospitals.
A jury had unanimously ruled in favor of Sutter Health in March 2022; however, following multiple appeals, the case was revived last June after a 2-1 reversal and remand for new trial from the 9th U.S. Circuit Court of Appeals. That new trial was set to begin today.
According to the plaintiff class counsel’s announcement, the deal is subject to a definitive, final settlement agreement to be drafted and then approved by the court. A motion for preliminary approval of the settlement agreement will be filed in about 30 to 45 days, with a case management conference requested in 90 days, the counsel said.
In response to a request for comment, a representative for Sutter said the system does not have more to add outside of the legal filing at this time.
The plaintiffs are a class of individuals and businesses who paid premiums to the allegedly overcharged plans. Aside from the alleged “all-or-nothing” contracts, they also argued that Sutter’s contracts prevented plans from steering patients to lower cost, non-Sutter providers for services. Removing those alternatives allowed Sutter to charge health plans high rates for its services, they had alleged.
In 2022, the nonprofit system had said its jury victory “validate[d] 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.”
The appellate court, however, overturned that win. In the majority’s opinion, it wrote that the lower court had incorrectly removed the word “purpose” from its instructions to the jury and erred in instructing jurors to ignore evidence predating 2006.
The dissenting appellate judge wrote that the lower court had set “reasonable limits” with the 2006 cutoff and that including anticompetitive purpose in the decision would effectively create “a new antitrust rule” for future litigation.
Sacramento-based nonprofit Sutter logged more than $16.1 billion in total revenues across 2023—its most recently reported fiscal year—and $320 million in operating income. It served 3.4 million patients that same year and employs more than 57,000 people.
In 2021, the system finalized a $575 million settlement over allegations of price gouging, which were brought in a 2014 class-action lawsuit.
Just a few weeks ago, the system announced plans to invest $1 billion to expand its services across Northern California’s East Bay region. The highlight of that plan is a new flagship campus in Emeryville with a 200-bed medical center and an ambulatory services complex.