Judge Told That COVID-19 No Reason For Sutter To Delay Antitrust Settlement

California Attorney General Xavier Becerra is asking a judge to reject a June 12th motion for continuance by Sacramento-based Sutter Health that would delay final approval of an antitrust settlement agreement reached in December 2019. That agreement is supposed to resolve allegations by the Attorney General and plaintiffs involved in a class action lawsuit that anticompetitive practices by Sutter led to higher healthcare costs for consumers in Northern California. Once it's approved, the settlement will require Sutter to pay $575-million in compensation, stop engaging in anticompetitive practices, and follow certain practices to restore competition in California's healthcare markets. In his court filing, Becerra argues that prompt approval of the settlement is in the public's best interest, particularly in the face of the COVID-19 pandemic.

"We are in the midst of a global pandemic, so it is more important than ever that we make healthcare more accessible and affordable for patients who need it," said Becerra. "This landmark settlement requires Sutter to stop practices that drive patients into more expensive health services and to operate with more transparency. When one healthcare system can dominate the market, those who shoulder the cost of care — patients, families, employers — are the biggest losers. This settlement was reached more than six months ago. It's time for Sutter to stop shirking its responsibilities to the people of California."

Sutter attorneys cited COVID-19 as reason to delay the process, but Becerra claimed that Sutter has received more material financial aid related to the pandemic from taxpayers – and is in a far better financial position to weather any ill effects of COVID-19 – than many other providers in the state. He also insisted that Sutter's issues regarding financial affects of the COVID-19 pandemic are better directed to the federal and state governments and not in the court system.

Becerra went on to say that until the settlement receives final approval, Sutter can continue its anticompetitive practices, which harm healthcare consumers and the California economy. Attorney General Becerra asserts that emergencies such as COVID-19 are not an excuse for Sutter, or any other healthcare entity, to skirt their obligations under antitrust law. Moreover, the settlement itself contains mechanisms by which material changes in the healthcare environment may be used to seek appropriate modifications.

According to the California Department of Justice, once approved, the settlement will require Sutter to:

  • Pay $575-million to compensate employers, unions, and others covered under the class action and to cover costs and fees associated with the legal efforts;
  • Limit what it charges patients for out-of-network services, helping ensure that patients visiting an out-of-network hospital do not face outsized, surprise medical bills;
  • Increase transparency by permitting insurers, employers, and self-funded payers to provide plan members with access to pricing, quality, and cost information, which helps patients make better care decisions;
  • Halt measures that deny patients access to lower-cost plans, thus allowing health insurers, employers, and self-funded payers to offer and direct patients to more affordable health plan options for networks or products;
  • Stop all-or-nothing contracting deals, thus allowing insurers, employers, and self-funded payers to include some but not necessarily all of Sutter’s hospitals, clinics, or other commercial products in their plans’ network.
  • Cease anticompetitive bundling of services and products which forced insurers, employers, and self-funded payers to purchase for their plan offerings more services or products from Sutter than were needed. Sutter must now offer a stand-alone price that must be lower than any bundled package price to give insurers, employers, and self-funded payers more choice;
  • Cooperate with a court-approved compliance monitor to ensure that Sutter is following the terms of the settlement for at least 10 years. The monitor will receive and investigate complaints and may present evidence to the court; and
  • Clearly set definitions on clinical integration and patient access considerations. The settlement makes clear that for Sutter to claim it has clinically integrated a system, it must meet strict standards beyond regional similarities or the mere sharing of an electronic health record, and must be integrating care in a manner that takes into consideration the quality of care to the patient population. This is important because clinical integration can be used to mask market consolidation efforts by hospital systems, when in fact there is no true integration of a patient’s care. For example, saying that hospitals are regionally close or that hospitals are sharing electronic health records is not enough, there must be close coordination that will lead to less costly, higher quality care for local communities.

Sutter Health has the largest hospital system in Northern California. That system includes 24 acute care hospitals, 36 ambulatory surgery centers, and 16 cardiac and cancer centers. Sutter currently employs approximately 53,000 people, and that includes 12,000 doctors. In addition, Sutter negotiates contracts on behalf of the Palo Alto Medical Foundation and many affiliated physician groups.

A copy of the opposition is available here. A copy of the settlement provided to the Court is available here.

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