Healthcare: Anticompetitive Tying Class Action Moves Forward Against Sutter Health

Indirect purchasers of health insurance will proceed as a class against Sutter Health for alleged anticompetitive conduct which plaintiffs maintain illegally tied health plans to its overpriced hospitals. The certified class, which seeks $489 million dollars, will proceed following the Ninth Circuit’s refusal to allow Sutter Health to challenge a magistrate judge’s July 2020 certification of the class.

Last year, Sutter Health agreed to pay $575 million to settle anticompetition claims brought by California Attorney General Xavier Becerra, and the United Food and Commercial Workers International Union and Employers Benefit Trust (UEBT). However, on June 12, 2020, the large hospital network asked that the settlement be delayed, citing challenges caused by the COVID-19 pandemic. Becerra countered that the pandemic makes the settlement even more urgent in that makes healthcare “more accessible and affordable for patients who need it.”

In addition to the settlement amount — which would go to compensate employers, unions and the state and federal governments — Sutter would also be prohibited from engaging in practices the hospital system allegedly uses to remain dominant. It will bar Sutter from using “all or nothing” agreements, that requires insurers to include all of Sutter’s medical facilities, and not pick and choose. Sutter also will be required to limit what it charges patients for out-of-network services, which the state said will prevent people from facing surprise charges.

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