Sutter Health is calling on a San Francisco court to throw out the state's suit against it alleging anticompetitive practices, saying the case could lead to regulations that would significantly hurt the system's bottom line.
In documents (PDF) filed Monday in San Francisco Superior Court, Sutter says that the case would force the courts to get involved in regulatory issues that are already overseen by the executive and judicial branches. It argued that courts are "ill-suited" to manage such issues.
Furthermore, they said Attorney General Xavier Becerra's case could lead to additional regulations that would "inflict serious harm on this highly complex industry" and could ultimately hurt patients.
"The relief sought by the Attorney General in this Cartwright Act suit against Sutter Health is unprecedented in scope and threatens to upend Sutter's business model and hobble Sutter's efforts to innovate," according to the filing.
Becerra filed suit against Sutter in late March, saying that the health system—Northern California's largest—has engaged in anticompetitive practices that drove up costs in the region. The results of the case could make waves for hospitals across the country.
"Sutter Health is throwing its weight around in the healthcare market, and engaging in illegal and anticompetitive pricing that hurts California families," Becerra said. Becerra said Sutter was able to increase prices in several ways, such as forcing payers to negotiate with it in an "all-or-nothing" systemwide manner and limiting price transparency.
Sutter disputed Becerra's claims, saying in a statement updated May 11 that there is healthy competition in the northern part of the state and that the lawsuit could "disrupt healthcare delivery across our communities and harm patient choice."
"Unfortunately, the California Attorney General's lawsuit gets the facts wrong, and mischaracterizes how Sutter Health serves patients and communities as a not-for-profit organization in the competitive Northern California healthcare environment," the system said.
In the filing, Sutter also said that the AG's request that it use separate negotiating teams for each provider to interact with payers could "cripple" the health system's efforts to work with insurers to build value-based payment systems.
The change would hinder Sutter's negotiating power, as it would favor insurance companies, the system said.
Bercerra said the state's lawsuit against the health system follows a history of anticompetitive behavior by Sutter which has drawn lawsuits from employers and consumers over its prices. The system came under fire for intentionally destroying 192 boxes of evidence in 2015, which it said was a mistake.