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San Francisco public-employee groups ask board to seek city attorneysupport in Sutter Health antitrust case
Summary
The Health Service Board heard a resolution from the Public Employees Committee asking the City Attorney to consider joining or assisting a UFCW antitrust lawsuit alleging Sutter Health used contracting and acquisition practices to limit competition and raise prices; counsel said damages to self-funded plans may exceed $1 billion and an appeal on arbitration is pending.
The Health Service Board on Thursday heard a resolution from the Public Employees Committee requesting the City Attorney's office consider joining or assisting the United Food and Commercial Workers (UFCW) Employers Benefit Trust in an antitrust lawsuit against Sutter Health.
Rebecca Rhine, reading the PEC resolution, said the complaint alleges "Sutter Health's strategy of hospital acquisition and consolidation has limited competition" and that Sutter has used its market position to limit price disclosure and require contracts that impede price competition. Bob Muscat, PEC chair and Local 21 executive director, told the board the combined active and retiree health-care bill for San Francisco exceeds $700 million annually and said the resolution seeks leverage to improve value for taxpayers and employees.
Richard Grossman, counsel for the plaintiffs, outlined the lawsuit's theory and status in court. He said the complaint alleges Sutter deployed contract provisions that prevent price competition and hide price information, creating an "umbrella effect" that keeps other providers from lowering prices. "We believe that the damages to the overcharges to self-insured, self-funded health plans exceeds, probably well exceeds $1,000,000,000," Grossman said. He added that the Superior Court denied Sutter's motion to compel arbitration and that briefing in the court of appeals is complete; a hearing date is expected soon.
Director Catherine Dodd and other board members raised practical questions about immediate remedies. Dodd described operational obstacles when provider contracts include gag clauses and said the board's efforts to create narrow networks or tiered premiums are frustrated by contract restrictions. "Today, the only provider that will submit claims to our all-payer claims database is Kaiser," Dodd said, noting that Sutter and other providers have declined to participate.
Board members asked counsel for the Health Service Board to review precedent, estimate potential costs and outline the timetable and legal risks involved before the board decides whether to formally request the City Attorney to join or assist in the suit. The president said the board would seek a considered legal opinion on whether the board has co-joined similar suits in the past and what financial liability might be entailed.
The petitioners emphasized that if the allegations are proved, remedies could include removing gag clauses, enabling price transparency and allowing plans to design narrow or tiered networks that steer members toward lower-cost, high-quality alternatives. Grossman said those transparency and network remedies are central to the complaint's objectives, but he stressed the matter remains an unresolved legal claim pending appellate action.
Next steps: the board asked its counsel to prepare a formal review of precedent, cost and process so the board can revisit the request in a public meeting.
