A San Francisco judge on Thursday denied Sutter Health's request to further delay approval of an antitrust settlement, but said she'd consider allowing more time if COVID-19 cases overwhelm the health system's hospitals in the coming weeks.
The decision follows Sacramento, Calif.-based Sutter's filing in June arguing that the pandemic had led to significant financial losses for the health system and it needed an extra 90 days before the preliminary settlement approval to determine whether things would get worse. Sutter said it had lost $168 million on operations in the month of April alone. The class-action lawsuit accused Sutter of anticompetitive business practices that drove up the cost of healthcare in Northern California.
Despite denying Sutter's request, San Francisco Superior Court Judge Anne-Christine Massullo agreed to schedule the next hearing for August 12 and 13 instead of later this month. Massullo emphasized she understands the situation is changing rapidly.
"If in the next week or two it becomes a true healthcare crisis, you can come back in and ask for a continuance," she told Sutter's attorney at Thursday's hearing. "Because I'm not going to be the judge who is responsible for closing down a healthcare system at a time when Californians need it."
In arguing for the 90-day extension, Sutter's attorney, David Kiernan, said conditions have gotten "dramatically worse" since the health system filed its request in June. Sutter's COVID-19 hospitalizations have increased more than 200% in that time, and the health system has added more than 600 critical care beds.
Currently, Sutter is still able to care for patients in a safe manner, but Kiernan warned that could change unexpectedly.
"That's what we're all focusing on is avoiding what happened in New York," he said. "Sutter wants time to see and evaluate what the impact of COVID will be on Sutter and whether the proposed final judgment injunction piece of it would interfere with its ability to provide healthcare in an integrated fashion."
Sutter spokeswoman Amy Thoma Tan said adjusting to COVID-19 has been costly and difficult, especially given the uptick in hospitalizations over the past few weeks.
"This surge requires ongoing emergency response efforts across our integrated network as we continue to provide high quality care during these uncertain times," she said. "We continue to secure PPE, convert space and move supplies, equipment and staff throughout our integrated network in order to serve hardest-hit areas."
The preliminary agreement requires Sutter to pay $575 million, limits charges for out-of-network services, permits more access to pricing data, stops practices that deny patients access to low-cost health plans, stops all-or-nothing contracting deals and bundling of services and products, among other stipulations.
The August hearing is for preliminary approval of the settlement agreement, a step that has already been delayed. The parties first announced the terms of the preliminary settlement in December 2019. Final approval would take place at a subsequent hearing.
Twenty members of the Pacific Business Group on Health are class members in the lawsuit. Elizabeth Mitchell, the group's CEO, said while she's pleased the case won't be delayed another three months, she's disappointed preliminary approval is still up to four weeks out.
Mitchell said Sutter did not produce evidence that COVID-19 limits its ability to meet the requirements under the settlement the health system agreed to.
"They want to preserve the ability to increase charges while those who will be asked to pay those charges, it's even harder for them to do that," she said. "We cannot forget that it's not just hospitals affected by this pandemic. Businesses and families are also affected."
California Attorney General Xavier Becerra, whose March 2018 lawsuit against Sutter was combined with the current case, urged the judge to deny Sutter's request for a delay.
"Attorney General Becerra asserts that emergencies such as COVID-19 are not an excuse for Sutter, or any other healthcare entity, to skirt their obligations under antitrust law," his office said in a news release.
