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Analysis

Preliminary Hearing for Sutter Health's $575M Settlement Delayed

By Jack O'Brien  
   February 25, 2020

The continued hearing related to preliminary approval of the deal will be held on April 6.

The Superior Court of San Francisco County (SCSFC) delayed preliminary approval of Sutter Health's $575 million settlement with a group of self-funded employers and the California Attorney General's office Tuesday.

SCSFC Judge Anne-Christine Massullo indicated that she had additional questions that were not included in the tentative ruling, according to minutes of the preliminary hearing on the court's website, specifically "medical administration should the political landscape change in the next 10 years."

Massullo requested a supplemental brief from a member of the California Attorney General's office related to attorneys' fees and an "overview on the mechanism for enforcing the injunction."

"Finally, the Court would like to be informed of the steps taken to ensure diversity in the selection process for the monitor," Massullo wrote.

Massullo stated that supplemental responses must be filed by March 18 and a continued hearing related to preliminary approval of the deal will be held on April 6. 

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

The Pacific Business Group on Health (PBGH) issued a statement to HealthLeaders following today's hearing.

"The case has been delayed as the judge had some questions she wanted answered before moving forward," the statement read. "Since 2010 PBGH has been intimately involved in this case and it has significant implications for our members. We will be tracking this on behalf of our employers, and watching what comes out of the April 6th hearing."

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

The original settlement was reached just ahead of when opening arguments were slated to begin on October 16. The Sacramento-based health system 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.

Related: California AG Announces $575M Settlement in Sutter Antitrust Case

As part of the agreement, Sutter will limit what it charges patients for out-of-network services, stop "all-or-nothing" contracting deals, and abide by a court-approved compliance monitor for the next 10 years.

Additionally, Sutter will stop measures that deny patients access to lower-cost plans, offer a stand-alone price that is lower than any bundled package price, and increase price transparency to insurers and employers.

"Sutter will work with the court and other parties to provide the additional information," a Sutter spokesperson told HealthLeaders. "We settled this matter in a way that preserves our integrated network and ability to provide our patients with high-quality, affordable care."

In its Q3 2019 earnings report, Sutter stated that it expected to receive preliminary approval for its settlement in late February and a motion for final approval in June.

Related: Sutter Health Posts $613M Operating Loss

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: JEMBER, EAST JAVA, INDONESIA, JUNE 09, Sutter Health My Health Online app in play store. close-up on the laptop screen. / Editorial credit: STEFANY LUNA DE LINZY / Shutterstock.com


KEY TAKEAWAYS

The Superior Court of San Francisco County requested an "overview on the mechanism for enforcing the injunction."

The court also stated that supplemental responses must be filed by March 18.

In its latest earnings report, Sutter stated that it expected to receive preliminary approval for its settlement in late February.


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