Home Healthcare Sutter loses bid to delay $575M antitrust settlement approval

Sutter loses bid to delay $575M antitrust settlement approval

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Dive Brief:

  • A San Francisco Superior Court judge on Thursday denied Sutter Health’s request to delay preliminary approval of a $575 million antitrust settlement with California amid the uncertainty and financial upheaval of the COVID-19 pandemic.
  • The approval process and settlement agreement are flexible enough to continue as scheduled and the needs of the plaintiffs — a union that operates a trust for employee healthcare benefits and California Attorney General Xavier Becerra — to see the health system’s behavior change are pressing, Judge Anne-Christine Massullo wrote in her order.
  • In a statement Thursday, Becerra applauded the court’s decision. “Sutter’s practices harmed California’s healthcare market by charging higher prices unrelated to quality or cost of care,” he said. “They did that long before the COVID-19 pandemic. There is no period of time that medical providers, like Sutter, should be able to carry out such destructive market practices.”

Dive Insight:

Sutter, like health systems throughout the country, has taken a significant hit to its bottom line as the pandemic forced lucrative elective procedures to be put off for weeks earlier this year. The company posted a net loss of more than $1 billion in the first quarter of this year.

It said the financial losses from the COVID-19 crisis could force it to close or divest hospitals. In its June argument to delay the settlement approval, Sutter said the agreement’s cap or chargemaster prices could be too low “to cover the unprecedented and unforeseeable increases in expenditures to respond to COVID-19 particularly given declining revenue.”

But the judge did not agree, saying the court is “not persuaded that the proposed injunction will interfere with Sutter’s ability, or the broader healthcare system’s ability, to provide patient care during the COVID-19 pandemic.”

Massullo continued: “To the extent that a provision of the proposed injunction poses a threat to patient care or the public interest during the COVID-19 pandemic, or as a result of some other presently unforeseen circumstance, any party may seek a modification of the offending provision if and when such a modification becomes appropriate.”

The preliminary approval hearing is now set for Aug. 12 and Aug. 13, according to multiple news reports.

Sutter avoided a jury trial late last year by agreeing to the settlement, which in addition to the $575 million payout includes stipulations like ceasing contracts that require all of its facilities be in an insurer’s network or none of them. The system, however, did not admit guilt as part of the agreement.

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