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Sacramento-based Sutter Health is a large regional healthcare provider serving about 3 million Californians.

The Sidibe v. Sutter Health class action lawsuit claims Sutter violated antitrust and unfair competition laws, which caused certain individuals and employers in certain parts of Northern California to overpay for health insurance premiums for health insurance purchased from Aetna, Anthem Blue Cross, Blue Shield of California, Health Net or United HealthCare.

The organization is accused of imposing pricing and contractual terms on fully insured health plans in violation of federal antitrust and unfair competition laws. Specifically, Sutter is accused of demanding “all-or-nothing” terms that require insurers to include in their provider networks the services that Sutter supplies, at prices that Sutter dictates.

The case mirrors the allegations that Sutter agreed to pay $575 million to settle in a separate case brought by the California Attorney General in 2018, which was finalized last year. That lawsuit accused Sutter of using its dominance of the Northern California health care market to force insurers into costly contracts.

And it also follows a California state court approval of a $575 million settlement against Sutter to settle price-gouging allegations in the UFCW lawsuit, avoiding a trial in that case. Sutter was accused of wielding its market power to pressure employers and insurers during contract negotiations involving self-insured healthcare policies.

Sutter denies that it has done anything wrong or that its conduct caused any increase in the price of premiums that individuals and employers paid for health insurance from those Health Plans. The Court has not yet determined whether Plaintiffs or Sutter are/is correct.

The tSidibe class action was originally filed in 2012, and the trial finally got underway this month in a federal court in San Francisco. California’s antitrust law allows plaintiffs to try to recover three times the amount of initial damages, which means Sutter could end up paying more than $1.2 billion if it loses the case.

CourtHouse News has been closely following the trial since it began. Sutter executives took the stand in the Sidibe case in Friday to defend Sutter’s practices and their so-called pro-competitive benefits, touting the hospital system’s quality and efficiency.

Sarah Krevans, who recently retired as CEO, testified that Sutter was under tremendous financial pressure as more Californians joined the Medi-Cal rolls after the passage of the Affordable Care Act. The government reimburses Sutter for some of the costs, but it’s hardly enough to cover it all. The rest comes from revenue generated by insured patients, whose numbers Krevans testified are dropping as Californians leave the system for cheaper care at Kaiser Permanente.

Still, she said the rate of Sutter’s price increases to health plans slowed during her tenure, dropping from 6.2% in 2010 to 3% in 2016.

But attorney Matthew Cantor, counsel for a class of more than three million,  presented a chart showing that while Sutter reduced its in-patient price increases year over year, it still charged health insurers more than the cost of inflation. For example, the rates it charged insurers went up 5% in 2013, but the Consumer Price Index was 3% that year. In 2015 its rate went up 3.7% while the CPI was only 1.2%

James Conforti, Sutter’s former Chief Operating Officer and interim CEO also testified about Sutter’s financial challenges, saying Sutter lost 42% of its commercial patients in Modesto when Kaiser built a new hospital just a few miles away.

But on cross examination, plaintiffs’ counsel David Goldstein presented conflicting evidence of Sutter’s financial health, noting that Sutter was able to defer paying $209 million in payroll taxes to the federal government, and benefited from a $13 minion payroll tax credit. It also received approximately $812 million in federal Covid-19 relief funds, and got a $990 million advance from the Centers for Medicare & Medicaid Services.

Sutter Health’s cash assets also doubled from 2019 to 2020, from $505 million to $1.169 billion. All that revenue is essential to provide quality healthcare, Dr. William Isenberg, Sutter’s Chief Medical Officer told the jury.