9th Circuit revives patients' and employers' antitrust suit against Sutter Health
A divided panel objected to the limits a trial court judge set on the evidence presented.
A federal appeals court in California ruled Tuesday that the plaintiffs in an antitrust class action against Sutter Health should get a new chance to fight the hospital company in court.
A divided three-judge panel at the 9th U.S. Circuit of Appeals threw out a 2022 jury verdict in favor of Sutter, arguing that the judge had kept Sutter from presenting relevant evidence and had changed the jury instructions in an unacceptable way.
The panel sent the case back to the U.S. District Court in San Francisco. It ordered the judge to arrange a new trial.
Sutter said in a response that it will pursue all avenues to overturn the decision.
Sutter is a Sacramento, California-based not-for-profit organization that runs 22 hospitals with 4,094 licensed acute care beds and about $16 billion in annual operating revenue.
The plaintiffs in the class-action lawsuit filed their complaint in 2012. The list of lead plaintiffs includes four individuals and two health plan sponsors: Optimum Graphics and Johnson Pool & Spa.
The plaintiffs asserted in their complaint that Sutter had used its nonprofit status to grow rapidly, crowd out competition and raise prices.
The jury sided in favor of the plaintiffs. Sutter appealed to the 9th Circuit.
Circuit Judge Lucy Koh and Circuit Judge Roopali Desai overturned the jury verdict, partly because of concerns that the trial court judge had tried to focus on what it thought was the relevant information by preventing Sutter from presenting information about its activities before 2006, such as a 2006 memo containing an interview with Sarah Krevans, Sutter’s future CEO.
“The admission by Sutter’s future CEO (Krevans) that Sutter not only intended to force health plans to pay above-market rates but actually did force the health plans to pay above-market rates, and furthermore did so ‘because we could,’ is direct evidence of both anticompetitive effects (the central inquiry in an unreasonable course of conduct claim) and market power,” Koh writes in the opinion.
“The fact that the district court excluded Krevans’s admission even though it was from 2006, simply because it ‘look[ed] back at’ pre-2006 conduct, further highlights the district court’s error,” Koh adds.
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The third judge on the panel, Circuit Judge Patrick Bumatay, argued that the ruling would affect judges’ ability to manage trials.
“District courts may no longer exclude historical evidence from trial whenever ‘history’ is relevant,” Bumatay writes in a dissent. “This applies not only in every antitrust case — but potentially countless others.”