Healthcare costs in the US continue to pose significant challenges for patients, providers and policymakers. The settlement of the landmark antitrust case Sidibe et al. v. Sutter Health brought renewed attention to the influence and consequences of anticompetitive behavior among major hospital systems. Here, Matthew L. Cantor, founding partner of Shinder Cantor Lerner and lead trial and appellate counsel for the plaintiffs and certified class, examines key takeaways from the litigation and evaluates the broader implications of its outcome on US healthcare.
After almost 13 years of litigation, Sidibe et al. v. Sutter Health, reached its conclusion in 2024. Throughout the case, multiple antitrust actions were brought against Sutter Health by the California attorney general, a class of self-insured entities and the Sidibe class — a class of 3 million employers and individuals, which I led. In these cases, the plaintiffs claimed that Sutter Health wielded substantial market power through its dominant hospitals to force anticompetitive overcharges on payors of health care services. After years of twists and turns in the case, Sutter’s decision to settle delivered a favorable outcome for the class and, moreover, has potentially paved the way for disciplining other health systems that would otherwise leverage market power to increase their prices. As part of those settlements, Sutter paid over $800 million to the classes (and likely much more when considering the attorney and expert fees that it incurred) and stipulated to price controls and behavioral restraints.
Compliance officers and in-house counsel can learn many lessons from the Sutter Health litigation. Among other things, they should take note that:
Hospital systems are not immune from antitrust damages liability
Hospital systems, of course, offer services necessary for the welfare of US residents and the functioning of our ecosystem. Physicians, nurses, EMTs are often, correctly and literally viewed as “life savers” or heroes by their patients. Consider the New York City residents who were giving ovations to healthcare providers during the darkest days of the Covid-19 pandemic.
Given this exalted status, it would be easy to think that no fact finder would ever rule against providers in an antitrust dispute, particularly one in which plaintiffs sue for treble damages.
Think again. During the Sutter cases, judges were not shy about ruling against Sutter at both the trial and appellate courts, notwithstanding the critical services that it provided to Northern Californians. Even when Sutter Health won interlocutory orders, those orders were reversed on appeal.
For example, when the trial court dismissed our case at the pleading stage, contending that the antitrust markets that we alleged were “not plausible,” the Ninth Circuit Court of Appeals reversed. And when the trial court later ruled that admissions made by Sutter Health executives that they “forced” insurers to “pay them more” should be excluded from the jury’s purview as ancient, the Ninth Circuit reversed again, holding that the court abused its discretion in excluding this “critical” evidence and, as a result, remanding for the case a second trial. The fact that Sutter doctors and nurses did “good deeds” did not immunize the system from antitrust scrutiny. As Sutter’s former CFO admitted on the stand in our case, health systems are “businesses,” notwithstanding the important services that they provide.
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Read moreDetailsProviders negotiate directly with insurers, but insurers are not the only ones that can sue them for high pricing
Healthcare providers negotiate with commercial insurers over the reimbursement they will be paid for services rendered to insurance members. Many patients do not view their insurers favorably; rather, they see them as imposing barriers that hinder their ability to receive the services that they want and, sometimes, need. Given this, providers often feel emboldened in their negotiations — seeing themselves as the guardians of the patients rather than the big bad insurers and not fearing lawsuits by insurance company “bad actors.”
While insurers are the contractual counter-parties to providers, they are not the only ones that can sue providers for alleged anticompetitive conduct predicated on insurer/provider contracts.
The Sidibe case shows that. In this case, millions of employers and individuals allegedly forced to pay higher insurance premiums as a result of Sutter’s conduct joined together to sue Sutter, arguing that it was Sutter’s anticompetitive conduct that caused their premiums to be inflated. They premised their legal theory on actuarial principles and economic analysis that show higher provider prices imposed on insurers are passed on by these insurers in the form of higher premiums. And they premised their theory on legislation and regulations, like the Affordable Care Act, which requires insurers to pass on medical expenses that they incur in order to limit the profit that insurers can reap through premiums. Accordingly, when medical expenses go up, most, if not all, of those expenses are ultimately borne by the premium payer.
Justifying high provider prices is not easy
Providers often like to tout that they have constructed new facilities, utilized cutting-edge technology or participated in substantial medical research to demonstrate that they are rendering quality healthcare services to patients. They also look to quality metrics — like Medicare star ratings or US News & World Report rankings — to relay their excellence. These providers argue that any prices that they charge for their services are justified by these enhanced patient benefits.
The problem, however, is that economic studies have repeatedly debunked the myth that higher medical prices equal higher medical quality or that higher medical quality necessitates higher medical prices. While certain quality systems are higher priced, other quality systems are not. The Sutter case showed that its higher prices did not correlate with better medical outcomes.
Moreover, some providers, like Sutter, have argued that higher commercial prices are needed to offset lower-reimbursement paying for the services of patients covered by Medicare or Medicaid. But all providers face the challenge of lower reimbursements offered by government insurance. Therefore, that cannot be an excuse for demonstrating why one system’s rates are higher than what they otherwise should be.
Documents, documents, documents
Any antitrust case, particularly one steeped in healthcare economics, is not simple. Plaintiffs must provide sophisticated economic analysis to get to the trial phase and survive summary dismissal and, in our case, to certify a class. That analysis must show that, for example, (1) the relevant geographic markets alleged are plausible and econometric analysis (that accounts for various factors like medical quality and the level of competition in given areas) and (2) the prices charged by the defendant health system were supra-competitive. However, at the end of the day, the most damning proof of anticompetitive behavior comes from what the defendants’ officers and employees said in internal documents.
The Sutter case I litigated shows this. It was only after the Ninth Circuit reversed the trial court’s erroneous rulings excluding evidentiary admissions from Sutter personnel that Sutter agreed to settle. Sutter decided to go to trial when those admissions were excluded, but when those admissions were to be put to the jury, Sutter decided that trying the case, which could have resulted in far greater monetary losses for Sutter had it lost, was too risky.
This is commonsensical, as it is easy for a jury to conclude that conduct was meant to raise price when, in fact, the defendant admitted that this was the intent behind the conduct all along.
While the Sutter Health settlement directly affects numerous Northern California individuals and businesses harmed by anticompetitive conduct, the case’s history and resolution continue to offer important lessons for practitioners, especially in the healthcare sector. Compliance professionals, in-house counsel, healthcare systems and others should view the case as a guide for ensuring that healthcare providers deliver high-quality care in a way that does not offend our nation’s antitrust laws.
Matthew L. Cantor is antitrust litigator and founding partner of Shinder Cantor Lerner. He has argued numerous notable antitrust appeals involving issues concerning market definition, market power, standing, evidentiary topics and class certification. 
