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Dive Transient:
Sutter Well being should as soon as once more face an antitrust lawsuit after the ninth U.S. Circuit Court docket of Appeals dominated Tuesday that the unique 2022 jury obtained improper directions and was barred from listening to related proof.
The lawsuit, which was initially filed within the U.S. District Court docket for the Northern District of California in 2012, alleged the Sacramento, California-based nonprofit well being system wielded its market dominance to drive well being plans into contracts that solely included companies at Sutter-affiliated areas.
Nevertheless, the district court docket dominated in Sutter’s favor on the time — maybe on account of improper procedural choices by the district court docket. The appellate court docket’s ruling Tuesday opens the door to a brand new trial, by which plaintiffs can search as much as $411 million in damages.
Dive Perception:
Within the lawsuit, a bunch of Northern California companies that purchase medical health insurance argued Sutter pressured them to pay increased premiums by ensnaring them in “all-or-nothing” contracts, the place payers needed to go in-network with all Sutter hospitals — even when the insurers solely wished to work with a handful of Sutter amenities.
The well being system settled comparable allegations in 2021 for $575 million when the then-attorney normal of California, Xavier Becerra, and a grocers union sued Sutter, alleging the well being insurer imposed all-or-nothing contracting that pressured insurers to pay steep charges.
In inner memos, Sutter executives stated the insurance coverage contracts had been a technique to push income up, in accordance with Tuesday’s court docket filings.
Former CFO Robert Reed stated in a 1998 memo that Sutter would make an additional $200 million per 12 months by forcing insurers to contract with all of its hospitals.
“Associated to the well being plans, we drive them to pay us extra… In some instances, they’ve paid us greater than the market,” Sarah Krevans, who would turn into CEO, stated in an interview included in a 2006 Technique Benefit memo.
Nevertheless, the unique jury by no means heard these statements.
The district court docket reasoned that statements made pre-2006 had been too dated to use to a case about spending between 2011 and 2020.
Nevertheless, the appellate court docket known as Krevans’ feedback “direct proof” of anticompetitive results.
Sutter “not solely meant to drive well being plans to pay above-market charges however really did drive the well being plans to pay above-market charges,” the appellate court docket stated.
Circuit Choose Patrick Bumatay dissented, saying that asking jurors to think about an organization’s intent would create a brand new antitrust rule in California that might ripple out throughout the nation.
