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Analysis

Court Denies Sutter Health's Motion for 3-Month Delay on Final Approval of $575M Antitrust Settlement

By Jack O'Brien  
   July 09, 2020

The preliminary hearing is set for August 12-13, according to SCSFC Judge Anne-Christine Massullo.

The Superior Court of San Francisco County (SCSFC) denied Sutter Health's request for a 90-day delay on approval of a $575 million antitrust settlement Thursday.

SCSFC Judge Anne-Christine Massullo set the preliminary hearing for August 12-13.

In mid-June, Sutter had motioned to have the preliminary hearing delayed by 90 days due to the impact of the ongoing coronavirus disease 2019 (COVID-19) on the organization's bottom line.

Appealing to Judge Massullo last month, a lawyer for the Sacramento-based health system said that the organization was in a "crisis situation."

Related: Citing COVID, Sutter Pushes to Revisit Landmark Antitrust Settlement

Prosecutors have accused Sutter of violating state antitrust laws by wielding its massive market power in Northern California to drive up prices.

A settlement was reached just ahead of when opening arguments were slated to begin last October. The provider organization was expected to face up to $2.7 billion in damages.

In mid-December, California Attorney General Xavier Becerra announced the details of the $575 million settlement with Sutter.

In a statement Thursday, Becerra applauded the court's action, saying it "allows the settlement approval process to move forward." 

"Sutter's practices harmed California’s healthcare market by charging higher prices unrelated to quality or cost of care," Becerra 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. We applaud today's ruling because moving forward with the agreement is simply in the public's best interest. We look forward to finalizing the settlement that Sutter agreed to in 2019 and to ending these abusive market practices. It is essential that we protect patients who may be confronting tough financial decisions, like choosing between paying for necessary medical care and paying for their food or rent.”

Sutter Health's bottom line struggled significantly through Q1 2020, due in part to the ongoing pandemic.

The organization posted a $236 million loss from operations during the quarter, according to interim unaudited annual financials released in May.

Related: Reflecting COVID-19 Impact, Sutter Health's Unofficial Q1 Financials Point to Declines

In a statement to HealthLeaders, Sutter said the response to COVID-19 has been "an incredibly costly and difficult endeavor," that will continue to have ramifications for the organization in the future.

"Our entire integrated network acted quickly to adapt our ‘normal’ operations and prepare and manage through patient surges in response to this pandemic," the statement read. "Over the last few weeks, like the rest of the state, we’ve seen an uptick in cases of COVID-19, including hospitalizations that have pushed us to our highest surge levels. This surge requires ongoing emergency response efforts across our integrated network as we continue to provide high quality care during these uncertain times. We continue to secure PPE, convert space and move supplies, equipment and staff throughout our integrated network in order to serve hardest-hit areas."

In an interview with HealthLeaders, Elizabeth Mitchell, CEO of the Pacific Business Group on Health (PBGH), said Judge Massullo's one-month delay was "disappointing" but still better than the three-month delay requested by Sutter. 

Mitchell added that while Sutter has argued that the organization's bottom line has been negatively impacted by the outbreak, PBGH's concern remains on those paying hospital bills, namely businesses and families.

"We do not believe that adhering to ethical business practices should impede [Sutter's] ability to care for patients," Mitchell said. "What the settlement addressed were anti-competitive business practices like gag laws, all-or-nothing contracting, and prohibiting tiering. They're just not related to what [Sutter] is saying is their new need because of COVID."

Related: PBGH CEO on Sutter Health Antitrust Settlement: 'I Don't Think This Issue Will Go Away'

Editor's note: This story has been updated to include commentary from Sutter Health and the Pacific Business Group on Health.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: Sutter Health sign on medical office. Sutter Health is a not-for-profit health system in Northern California - San Francisco, California, USA - July 12, 2019 - Image / Editorial credit: Michael Vi / Shutterstock.com


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