State Judge OKs $575M Sutter Health Antitrust Settlement

A California judge late last week approved a landmark $575 million antitrust settlement against Sacramento-based Sutter Health. The company now must operate under new rules designed to curb its ability to dictate the price of health care in Northern California, the “Merced (Calif.) Sun-Star” reported.

Superior Court Judge Anne-Christine Massullo approved the settlement nearly two years after Sutter tentatively agreed to the deal and seven years after a health insurance plan run by the United Food and Commercial Workers Union sued the health care giant. The state joined the case in 2018.

The state and others said Sutter — with 24 main hospitals, 12,000 doctors and $13 billion in annual revenue — used its market power to strong-arm employers and insurers into lopsided contract terms that inflated prices for a wide range of services. Because of an “umbrella effect,” Sutter’s high prices allowed its competitors to raise their rates, too, critics said.

State officials frequently cited various studies showing the high cost of medical care in Northern California, including a 2016 report showing that cesarean births cost about $27,000 on average in Sacramento, nearly twice the cost of Los Angeles.

Among other stipulations, Sutter agreed to end “all-or-nothing” contracts that critics said were forcing insurers and big employers to cover services they didn’t necessarily want at Sutter hospitals and clinics. Sutter will be under a court-approved independent monitor’s supervision for 10 years. In addition, Sutter agreed to pay $575 million in damages to the employers and insurers.