Sutter Health settles class action antitrust lawsuit

Sutter Health’s tentative settlement in its class action lawsuit means the not-for-profit hospital giant will likely get to keep more details about its allegedly anticompetitive contracting practices hidden than if the case had gone to trial.

The San Francisco Superior Court judge overseeing the case announced Wednesday morning, the day opening arguments were expected to begin, that the parties had reached a tentative agreement. The judge expects a final settlement to come down in February or March.

Being able to keep details about its contracting practices secret was likely a significant factor in deciding to settle, said Bill Horton, a partner with Jones Walker and co-chair of its healthcare industry team. Sutter likely has a proprietary interest in the model it has developed, and a trial doesn’t afford control over the information that’s revealed, said Horton, who is not involved in the Sutter lawsuit.

“That’s a very uncontrolled setting if you’re interested in managing the flow of information,” he said. “Having proprietary information come out during the course of a trial is just not the way you’re going to want to do it.”

The class action antitrust lawsuit involved about 1,500 self-funded health plans. The trial had been expected to last three months, which is very costly and time consuming, Horton said. A government entity like the state of California is a formidable challenger given that it relies on tax dollars and not private money, he said.

Health plans in the case were seeking $900 million in damages.

Jonathan Grossman, an antitrust attorney with Cozen O’Conner who isn’t involved in the lawsuit, said he expects the settlement in this case will likely include a relatively small amount in damages in exchange for Sutter’s commitment to end the practices that were the subject of the litigation.

The downside of a settlement is that it does not offer a legal precedent on hospital or insurer practices like a trial would, Grossman said.

“If you are a hospital system in Denver, you don’t have the same kind of takeaways as you do if there was a trial litigated to conclusion,” he said.

Sutter spokeswoman Amy Thoma Tan wrote in an email that the parties have reached a settlement agreement to resolve the case, but declined to share any additional information. Jury selection in the Superior Court of California, San Francisco County began last week.

Ken Garcia, a spokesman for the San Francisco County Superior Court, said the judge overseeing the case, Anne-Christine Massullo, cannot comment on the settlement.

The case got a second wind last year when California’s Attorney General, Xavier Becerra, filed a similar lawsuit that was ultimately combined with the existing one.