A majority panel for the U.S. Court of Appeals for the Ninth Circuit has reversed a 2022 jury verdict in favor of Sacramento, Calif.-based Sutter Health in a class action alleging the health system used its market power to charge supracompetitive rates to major insurers, which resulted in higher premiums for members, according to court documents accessed by Becker's.
The majority said in an order filed June 4 that the district court violated California law by removing "purpose" from jury instructions "and thus failing to instruct the jury to consider Sutter's anticompetitive purpose as to the unreasonable course of conduct claim, and that the legal error was not harmless."
The majority also said the lower court abused its discretion under federal rules of evidence in excluding as minimally relevant all evidence of the health system's conduct before 2006.
"The excluded evidence concerned the inception, Sutter's stated purpose, and effects of the conduct challenged during the trial," the order read. "The panel held that Sutter failed to rebut the presumption that the error prejudiced plaintiffs because, among other things, the excluded evidence would have rebutted Sutter's testimony and arguments at trial."
A Sutter spokesperson shared a statement with Becker's, that expressed disappointment in the divided appellate ruling overturning the 2022 unanimous jury verdict.
"Sutter Health intends to pursue all avenues to overturn the erroneous decision, as guided by our commitment to caring for our patients and continuing to provide them with high-quality, connected, and affordable care," the statement said.
While U.S. Circuit judges Lucy Koh and Roopali Desai represented the majority, U.S. Circuit Judge Patrick Bumatay dissented. He said he would affirm the jury verdict because the appellate court should not make the decision regarding the reasonable cutoff date for relevant evidence; and that the majority points to a new antitrust rule — which has not been justified by the Supreme Court or California precedent — under which anticompetitive purpose now becomes an element for every antitrust case.
The lawsuit focused on the health system's contracts with Anthem Blue Cross, Blue Shield, Aetna, Health Net and UnitedHealthcare.
It alleged that Sutter used its market power to force insurers to contract with the entire Sutter system to avoid insurers being able to pick specific facilities. It also alleged Sutter forced insurers to contract for services at the health system's more expensive hospitals to gain access to care patients needed, according to Law360. Plaintiffs contend these practices led to higher premiums for members. The lawsuit, Sidibe v. Sutter Health, was initially filed in 2012. It had a certified class of around 3 million members who purchased health policies since 2011, according to Law360.