California Settles Antitrust Suit Against Sutter Health on Eve of Trial

SAN FRANCISCO (CN) – On the eve of a months-long jury trial, the state of California and Sutter Health reached a settlement in principle Wednesday to resolve antitrust claims against Northern California’s largest health care provider.

California Attorney General Xavier Becerra. (Rich Pedroncelli/Associated Press)

After more than a week of jury selection, San Francisco Superior Court Judge Anne-Christine Massullo announced the settlement in court Wednesday morning.

Details will remain confidential until a formal request for approval of a class action settlement is filed with the court. Massullo said a settlement approval hearing will likely take place in February or March 2020.

Massullo thanked members of the jury for their time and willingness to serve on a months-long trial.

California Attorney General Xavier Becerra sued Sutter Health in March 2018, claiming the health care conglomerate prevents insurance companies from offering low-cost plans, inflates medical costs and pushes “excessively high” out-of-network rates on patients.

Sutter Health is the largest hospital system in Northern California, with a network of 24 hospitals, 31 surgery centers and more than 48,000 employees across 19 counties, according to the lawsuit. It brought in $13 billion in revenue last year.

A March 2018 study by the University of California, Berkeley, found a dramatic spike in hospital patient costs at Northern California hospitals since 2010. The report found that procedure prices are often 20% to 30% higher in Northern California than in Southern California, with the difference blamed on the consolidation of hospital, physician and insurance markets.

In its 49-page lawsuit, the state attributed the precipitous rise in health care costs to Sutter’s “anticompetitive contractual practices which it has imposed as a result of its market power.”

Attorneys for the state and Sutter Health declined to comment after the settlement was announced in court Wednesday.

A California Department of Justice spokesperson said by email the state reached a settlement and could “not comment further until the final agreement is approved by the court.”

Sutter Health’s media team did not immediately respond to a phone call seeking comment Wednesday morning.

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