Sutter Health settles class-action lawsuit for $228.5 million
Sutter Health will pay $228.5 million to settle a long-running antitrust lawsuit alleging its contracting practices drove up health care premiums for millions of Californians.
Sutter Health has agreed to pay $228.5 million to settle a long-running federal class-action lawsuit that accused the health system of anticompetitive contracting practices that raised health insurance premiums for millions across the state.
The lawsuit, first filed in 2012, accused Sutter Health of forcing insurers into "all-or-nothing" contracts that required them to include all of Sutter's hospitals and clinics in their networks, even if only a few were needed. Plaintiffs alleged the practice shut out cheaper alternatives and led to more than $400 million in overcharges for patients and businesses, according to the settlement agreement filed Friday in U.S. District Court for the Northern District of California.
The certified class of plaintiffs includes more than 3 million Californians who paid premiums to Aetna Inc., Anthem Blue Cross, Blue Shield of California, Health Net or UnitedHealthcare between 2011 and 2021. If the court grants final approval, eligible class members will receive a share of the $228.5 million settlement fund.
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In a joint statement issued with plaintiffs' counsel Constantine Cannon LLP, Sutter said it denied any wrongdoing but agreed to the settlement to avoid the burden, distraction, and expense of continued litigation.
'Today, under our new leadership, Sutter is staying focused on our mission: strengthening our coordinated care continuum and improving access to comprehensive, personalized and compassionate care across the region,' the system said.
Sutter Health named Warner Thomas as its new CEO in November 2022.
The case, known as Sidibe v. Sutter Health, had a complicated path. A jury initially ruled in favor of Sutter following a 2022 trial. But the 9th Circuit Court of Appeals overturned that decision last year, finding that critical evidence about Sutter's contracting history was improperly excluded at trial. A retrial was scheduled to begin this March before the settlement was finalized.
The $228.5 million settlement represents about 53% of the estimated damages, slightly higher than the 48% recovery awarded in a 2019 case where Sutter agreed to pay $575 million to resolve similar accusations brought by the California Attorney General, according to the settlement agreement. In that earlier case, the settlement also included a series of court-ordered reforms that remain in effect today, banning 'all-or-nothing' requirements and requiring greater transparency around Sutter's pricing and contract terms.
The joint statement from the parties emphasized that the settlement resolves 'strongly disputed claims' spanning conduct from the late 1990s to 2020. The settlement agreement noted there was no admission of liability by Sutter.
Constantine Cannon called the deal a 'hard-fought outcome' that concluded nearly 13 years of litigation.
According to the joint statement, the settlement still requires final approval by the court. A hearing date has not yet been scheduled.
Sutter Health operates 24 hospitals and numerous clinics across Northern California. It is the largest private company based in the Sacramento region, where it is based, and the region's second-largest private employer, after another health system, Kaiser Permanente.
In San Francisco, Sutter Health has a significant presence primarily through its California Pacific Medical Center network, which operates three acute care campuses in the city: Van Ness, Davies and Mission Bernal. Sutter Health also has several other locations in San Francisco, including outpatient centers, medical office buildings and care centers.
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UCSF Health Helen Diller Hospital
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UCSF Benioff Children's Hospital
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Stanford Medicine, Sutter Health Cancer Center View this list
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