$228.5M Sutter Health Antitrust Settlement Reached Before Trial

Sutter Health faced accusations from millions of health insurance premium payors who claimed the hospital system engaged in anticompetitive practices. The plaintiffs alleged that Sutter forced insurers into "all-or-nothing" contracts, requiring them to include all Sutter hospitals in their networks, thereby driving up costs across California. These claims stemmed from conduct dating back to the 1990s and were positioned to head to trial after nearly 13 years of litigation.

In a joint statement, both sides acknowledged the case involved "strongly disputed claims," emphasizing that prolonging the litigation was not in anyone's best interest.

The Settlement Details

On the eve of trial, the parties reached a $228.5 million settlement agreement, which represents more than 55% of the alleged damages. Approximately $10 million will be allocated toward settlement administration and notice costs, while $28 million is reserved for class counsel expenses. Attorneys representing the class also plan to seek $75.2 million, or 33% of the settlement fund, in legal fees.

After deductions, about $115 million will be distributed among class members. Compensation amounts will be calculated based on the premiums each claimant paid during the class period relative to the total paid by all claimants.

The plaintiffs stated in their motion for approval, "Given the large monetary recovery being offered by Sutter to settle and the risks of continued litigation, there can be no doubt that the proposed settlement is fair, adequate and reasonable to all class members."

The Legal Hurdles

The settlement follows a pivotal Ninth Circuit decision, which found that the initial 2022 trial improperly excluded critical evidence regarding Sutter's practices before 2006. That earlier verdict favored Sutter but was partially overturned when the appellate court criticized the jury instructions, noting they failed to consider Sutter’s anticompetitive "purpose."

Had the case proceeded to a second trial, the plaintiffs would have introduced evidence of Sutter executives admitting the switch to systemwide contracts and the imposition of controversial contract terms.

The premium payor class includes individuals who purchased insurance policies through major providers such as Blue Shield, Anthem Blue Cross, Aetna, Health Net, and UnitedHealthcare.

Previous Settlements and Broader Impact

This is not Sutter’s first entanglement with antitrust allegations. In 2019, the hospital system agreed to a $575 million settlement with the California Attorney General and private groups over similar claims.

The parties stressed in their recent joint statement that the settlement "is what's best for the parties, for patients and for the class," and reiterated that it does not constitute an admission of liability.

The Law Firms Involved

The purchasers were represented by Constantine Cannon LLP, The Mehdi Firm PC, Shinder Cantor Lerner LLP, Farmer Brownstein Jaeger Goldstein Klein & Siegel LLP, Steyer Lowenthal Boodrookas Alvarez & Smith LLP, and Pearson Warshaw LLP. Sutter was represented by Jones Day and Bartko LLP.