Sutter Health argues it doesn’t have market power, can’t violate antitrust laws

Sutter Health argues it doesn’t have market power, can’t violate antitrust laws


Arguments in the Sidibe lawsuit, filed about a decade ago, are very similar to those in UFCW & Employers Benefit Trust. Sutter paid $575 million to settle the latter case ahead of trial in 2019, possibly to prevent its business practices from being scrutinized in court. Both lawsuits accuse the health system of imposing all-or-nothing contracts that have forced people to overpay by hundreds of millions of dollars over the years. The difference is UFCW centers on harm to self-insured plans, while Sidibe concerns fully insured plans, those that companies buy for employees.

Ultimately, Cantor, a partner with Constantine Cannon, said Sutter’s practices prevent insurers from lowering members’ out-of-pocket costs, since using narrow networks and steering plan members to lower-priced providers are their main ways of doing that. Further, he argued the high prices health plans have been forced to pay over the years have driven up members’ premiums.

Cantor said his antitrust economics expert, Tasneem Chipty, founder of Matrix Economics who has done similar work on antitrust cases, analyzed 140 million hospital-health plan transactions and determined that 97% of the higher costs caused by Sutter’s actions were passed on to premium payers. She calculated damages for the class of more than 3 million people to be about $411 million, which Cantor said likely understates losses by $55 million.

LeVee, Sutter’s lawyer, spent a good portion of his time focused on Kaiser, an $89 billion integrated system based in Oakland that’s not part of the lawsuit. LeVee said Kaiser is “the elephant in the room” that plaintiffs want jury members to ignore. Although Kaiser runs a closed system where its health plan members can only visit its own facilities, LeVee argued Kaiser is a market leader in Northern California with respect to both plan membership and hospital market share.

“Even if plaintiffs are right and Kaiser is somehow not in the marker for hospital services, evidence will show Sutter still doesn’t have market share to violate antitrust laws,” LeVee said. “But the fact of Kaiser’s presence will make it easy for you because the evidence will be so overwhelming that Kaiser and Sutter compete directly.”

Class members in the case are Northern Californians who paid premiums to Aetna, Anthem, Blue Cross, Blue Shield of California, HealthNet or UnitedHealthcare since January 2011. The health plans have shared a variety of data with the plaintiffs, although they’re not parties in the case.

Both Sutter attorneys who spoke Thursday were critical of the insurers. LeVee said it’s no wonder those whose contracts are at issue are working with the plaintiffs: They’re hoping Sutter will charge them less. He also noted that antitrust laws don’t require Sutter to agree to every tier or network, and acknowledged that jurors will see evidence of Sutter not agreeing.

“But it’s not a violation of antitrust laws not to agree,” he said.



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