OAKLAND – California Attorney General Rob Bonta today lauded Judge Massullo’s final approval of a landmark $575 million settlement with Sutter Health (Sutter). The settlement agreement was reached in 2019, and resolves allegations by the Attorney General’s office, the United Food and Commercial Workers and Employers Benefit Trust (UEBT), and class action plaintiffs that Sutter’s anticompetitive practices led to higher healthcare costs for consumers in Northern California compared to other places in the state. The settlement requires Sutter to pay $575 million in compensation, prohibits anticompetitive conduct, and requires Sutter to follow certain practices to restore competition in California’s healthcare markets.
“This is a groundbreaking settlement and a win for Californians,” said Attorney General Bonta. “Sutter will no longer have free rein to engage in anticompetitive practices that force patients to pay more for health services. Under the terms of our agreement, Sutter’s transparency must increase, and practices that decrease the accessibility and affordability of healthcare must end. A competitive healthcare market is essential to ensuring patients and families aren’t bearing the brunt of healthcare costs while one company dominates the market.”
Sutter is the largest hospital system in Northern California. The Sutter network consists of some 24 acute care hospitals, 36 ambulatory surgery centers, and 16 cardiac and cancer centers. It also includes some 12,000 physicians and over 53,000 employees. In addition, Sutter negotiates contracts on behalf of the Palo Alto Medical Foundation and many affiliated physician groups.
This settlement is the result of litigation that began in 2014 when UEBT filed a class action lawsuit that challenged Sutter’s practices in rendering services and setting prices. They sought compensation for and an end to what they alleged were unlawful, anticompetitive business practices, which caused them to pay more than necessary for healthcare services and products. In March 2018, the Attorney General’s office filed a similar lawsuit against Sutter on behalf of the people of California, seeking injunctive relief to compel Sutter to correct its anticompetitive business practices moving forward. The separate lawsuits were combined by the court into one case. In October 2019, one day before the trial, the parties reached an agreement to settle. The settlement was filed with the court on December 19, 2019, and in March, Judge Massullo granted preliminary approval.
Today’s finalized settlement requires Sutter to:
A report by the University of California Berkeley showed that over-consolidation drives up prices for consumers. According to the study, outpatient cardiology procedures in Southern California cost nearly $18,000 compared to almost $29,000 in Northern California. For inpatient hospital procedures, the cost in Southern California is nearly $132,000 compared to more than $223,000 in Northern California, a more than $90,000 difference. A 2016 study found that a cesarean delivery in Sacramento, where Sutter is based, costs more than $27,000, nearly double what it costs in Los Angeles or New York, making Northern California one of the most expensive places in the country to have a baby.