Sutter Health reached a $575 million settlement agreement to resolve a lawsuit filed against it over its alleged anti-competitive business practices.

The settlement resolves allegations by California Attorney General Xavier Becerra, the United Food and Commercial Workers International Union and Employers Benefit Trust, and class action plaintiffs.

AG Becerra and the other plaintiffs claimed that Sutter’s anti-competitive business practices led to higher healthcare costs for patients in Northern California and other parts of the state.

Terms of the settlement agreement

Sutter is the largest hospital system in Northern California. The $575 million will be used to compensate employers, unions, and others covered under the class action. It will also cover cost and fees associated with the plaintiff’s legal efforts.

Additionally, the settlement requires the hospital system, to make significant changes to its practices and operations to restore competition in Northern California’s healthcare market.

Under the settlement, Sutter will do the following changes:

• Limit its charges to patients for out-of-network services to ensure that they will not receive surprise medical bills
• Increase transparency by allowing insurers, employers and self-funded payers to provide plan members with access to pricing, quality, and cost information.
• Stop measures that deny patients access to lower-cost plans
• End all-or-nothing contracting deals
• Cease anticompetitive bundling of services and products
• Cooperate with a court-approved compliance monitor to ensure its compliance with the terms of the settlement
• Clearly set definitions on clinical integration and patient access considerations

Settlement with Sutter restores competition in the healthcare markets

In a statement, AG Becerra said, “When one healthcare provider can dominate the market, those who shoulder the cost of care — patients, employers, insurers — are the biggest losers.”

The Attorney General added, “Today’s settlement will be a game changer for restoring competition in our healthcare markets…This first-in-the-nation comprehensive settlement should send a clear message to the markets: if you’re looking to consolidate for any reason other than efficiency that delivers better quality for a lower price, think again. The California Department of Justice is prepared to protect consumers and competition, especially when it comes to healthcare.”