Sutter Health, a major Northern California healthcare provider, has reached an agreement in principle to settle a long-standing antitrust lawsuit that accused the nonprofit system of charging monopoly prices and imposing restrictive “all-or-nothing” contracts on health insurers.
The case, initially filed in 2012, had been revived last year after an appellate court overturned a prior jury ruling in favor of Sutter Health, Bloomberg Law reported.
Background and Allegations
The plaintiffs, a certified class of individuals and businesses who paid health insurance premiums, alleged that Sutter Health leveraged its dominant market position to force insurers into contracts that only included inpatient services at Sutter-affiliated hospitals. This practice, they argued, prevented insurers from steering patients to lower-cost, non-Sutter providers, resulting in inflated healthcare costs for consumers. The lawsuit sought approximately $411 million in damages for alleged overcharges from 2011 to 2020.
Sutter Health had previously secured a jury victory in March 2022, with the court ruling in its favor. However, the U.S. Court of Appeals for the Ninth Circuit reversed this decision in June 2024, finding that the lower court had improperly excluded crucial evidence and misdirected the jury by omitting “purpose” as a consideration in the case’s legal instructions. This reversal allowed the case to proceed to a retrial, which was set to begin on March 3, 2025.
Settlement Agreement
Just one day before the trial was scheduled to commence, both parties informed the U.S. District Court for the Northern District of California that they had reached an agreement to settle all individual and class claims. A motion for preliminary approval of the settlement is expected to be filed within 45 days, with a case management conference requested in 90 days.
This settlement follows a similar case brought against Sutter Health by the California Attorney General’s office, which was resolved in 2021 for $575 million. The nonprofit system has consistently denied wrongdoing, arguing that healthcare providers have the right to determine participation in health plan networks while ensuring coordinated patient care without compromising quality or leading to surprise medical bills.
Legal Precedents and Implications
The Ninth Circuit’s decision to allow older evidence into the retrial and consider Sutter’s alleged anticompetitive purpose set a significant precedent in antitrust litigation within the healthcare sector. While Judge Lucy H. Koh, writing for the majority, ruled that the exclusion of evidence and jury misinstruction constituted legal errors, dissenting Judge Patrick J. Bumatay argued that the trial court had established reasonable limits and cautioned against creating a new antitrust standard.
With Sutter Health reporting more than $16.1 billion in revenue and $320 million in operating income for 2023, the case underscores the broader implications of market consolidation and competition within the U.S. healthcare system. The resolution of this lawsuit may influence future regulatory actions and legal challenges concerning healthcare pricing and insurer-provider negotiations.
Sutter Health has yet to provide additional comments beyond the legal filing, while the plaintiffs’ legal counsel—Constantine Cannon LLP, Shinder Cantor Lerner LLP, and Mehdi Firm—has stated that the settlement agreement is still subject to court approval.
