Raja Sékaran, Seth Goldstein Comment on Sutter Health Antitrust Case

Raja Sékaran and Seth Goldstein were quoted extensively in the AIS Health Plan Weekly article “Sutter Health Wins Antitrust Case Amid Stronger Enforcement” (subscription required). 

The article examines Sutter’s recent victory in a class action case filed by a group of individuals and health plan sponsors accusing Sutter of anticompetitive practices, such as price-gouging, which allegedly resulted from Sutter having geographic strongholds in certain areas across the country. Plaintiffs claimed that Sutter forced pricing and contracts on them that violated state and federal antitrust and unfair competition laws.

Commenting on the case, Raja stated that for a long period of time “health plans and insurance companies in California have been less than happy about Sutter’s geographic concentration strategy, which is just a fact. You can’t deny it — look at a map, and you can see their geographic concentration in certain markets. According to the result of this trial, that’s not unlawful.” He continued by noting, “Health plans have to put together a network for each market that they are selling their products in, and no one likes when the opposing party has a really strong bargaining position.”

Raja added that given the ruling and other recent developments, Sutter’s strong position will continue. “The way they do business has been tested. The government tried to challenge it, and then private parties tried to challenge it. They settled one and prevailed in the other.”

The article also notes that a concern similar to those raised by plaintiffs in the Sutter matter—higher prices resulting from one entity dominating a geographic area—was among the chief reasons that the Federal Trade Commission (FTC) and the Rhode Island Attorney General sued to block a proposed merger between Care New England and Lifespan Corp, two of Rhode Island’s largest healthcare providers. As a result of the suit being filed, the merger did not move forward.

“Those concerns were central to the Sutter Health case,” Seth told AIS Health. The allegation was “individuals were paying more out of pocket for health care services as a result of what the hospitals are doing.”

He added, “One of the most interesting things about the [Sutter] case is that, generally in big antitrust litigation, there’s a big fear on behalf of most defendants of going to a jury trial…the worry is always that it’s going to be really complicated to try to explain to a jury why what they did is legit. Here, the case went to trial, and eventually they were able to explain adequately that, ‘We weren’t really doing the thing that the plaintiffs say we were doing.’ ”

Raja followed up by saying that “public perceptions of both payers and providers play a role in jury decisions” like the Sutter case. “Whether public sympathies lie more with providers than insurance companies — that may be the case, and maybe the pendulum swings both ways…But having represented the hospital industry for some time now, I think the hospital industry also has some trepidation about being in front of a jury, especially on billing matters. Getting in front of a jury, that’s not something that big health care organizations relish.”

To close the article, Raja commented on the current merger climate in the healthcare field, saying it is “far from over.”

“Every time I think it’s over, there seems to be another one being contemplated…The appetite for consolidation — I don’t know that it’s passed. These systems just get bigger, … presumably for efficiencies and economies of scale. I don’t know that the party’s over.”

“People who work on deals, sometimes they push the deals too,” Raja added. “And people in management, some leaders in health care, they also have ambitions to lead larger organizations. If they can marshal the resources and make the case that it makes economic sense, then I think we’ll continue to see deals happen.”