Sutter Health, California’s Attorney General and several health plans are headed back to the drawing board in their search for a watchdog to oversee the health system’s compliance with the terms of its antitrust settlement.Not-for-profit Sutter and the plaintiffs, which also include UFCW & Employers Benefit Trust, will submit a new formal plan for selecting a monitor by Oct. 15, with a hearing Oct. 19 on the proposed plan. After that, the selection process is expected to take 3 months. San Francisco Superior Court Judge Anne-Christine Massullo rejected the preliminary settlement agreement in the antitrust lawsuit after after the Sacramento, Calif.-based health system and other parties only interviewed white men for the monitor position. The preliminary settlement agreement required Sutter to have a monitor handle complaints over potential anticompetitive business practices for up to 13 years.”The idea that in 2020 there are only five white men in the United States who are qualified to be interviewed for this position is anathema to what are today basic notions of fairness, equity and justice,” Judge Massullo wrote in her Sept. 22 order. Judge Massullo said the selection process was done hastily and in secret, as both sides worked against the clock to avoid a trial. The day the parties announced their preliminary settlement in October 2019 was the same day opening arguments were expected to start. At that time, the judge had expected a final settlement by March 2020.Sutter was accused of driving up prices in Northern California through illegal, anticompetitive business practices, claims it denies. The health system has agreed to terms that include limits on how much it can charge out-of-network insurers. Insurers, employers and self-funded plans also will no longer have to include all of Sutter’s hospitals, clinics or other commercial products in their plans’ networks, among others. None of those rules will take effect, however, until Massullo approves the final settlement. In the meantime, court records show Sutter has declined to abide by the terms of the preliminary settlement prior to its final approval. Insurers UnitedHealthcare and Heath Net said their contracts with Sutter expire at the end of 2020 and they want their next ones to comply with the settlement terms. United said it tried to include anti-tiering and anti-steering provisions in its new contract, but Sutter informed the insurer it did not want to negotiate based on the preliminary settlement provisions because the final approval will likely be delayed. “United has long offered tiered and premium savings products to its members across the country, and it would like to make those offerings available for Northern California members in light of the provisions in the proposed final judgment, and in anticipation of its approval,” wrote Janet Lundbye, United’s vice president of network management. Health Net wrote that it is concerned if the court doesn’t approve the final settlement by the end of the year, Sutter won’t agree to abide by the settlement terms in its next contract. “It just underscores that without antitrust action, these behaviors aren’t changing,” said Elizabeth Mitchell, CEO of the Pacific Business Group on Health, an employer coalition that includes 20 of the lawsuit’s class members.In response to the plans’ claims, Sutter spokeswoman Lisa Page wrote in an email, “The settlement is still working its way through the approval process with the court.”Flawed monitor search In her order denying the preliminary settlement, Massullo wrote that the California Attorney General’s office and Sutter began their hunt for a monitor in September 2019, soliciting candidates by invitation. The parties had agreed on a set of standards. They wanted a monitor with no conflicts, who was well-versed in antitrust law, had experience with healthcare operations and had previously served as a monitor in a healthcare case of similar magnitude. They ultimately contacted six candidates, five of whom applied. All five were white males. They ultimately chose Jesse Caplan, managing director of corporate oversight with Affiliated Monitors in Boston. They said his application was boosted because his team includes Dionne Lomax. Lomax, a black woman, is a managing director of antitrust and trade regulation with Affiliated Monitors and a lecturer in Boston University’s law and business schools. During the selection process, Sutter’s attorney identified Lomax as a potential candidate, and the parties encouraged her to apply after they had picked their initial six candidates. She declined to apply, and instead joined Caplan’s application. Massullo wrote that Lomax did not feel she was able to apply because she lacked the resources to take the lead position. “Diverse candidates are not prohibited from applying, but they are often found to lack the ‘experience’ or ‘resources’ that white male candidates possess on paper, and thus are weeded out of the process before getting even an opportunity to establish themselves,” Massullo wrote. Massullo also said the selection process could have been public. In an era of appropriately increased sensitivity around diversity and inclusion, the monitor selection process should reflect that, PBGH’s Mitchell said. “There is a limited pool of people with the necessary expertise to appropriately monitor the implementation of the injunctive relief provisions, which we believe are incredibly important, so we appreciate the diligence they are applying to select the monitor,” she said. Sutter has also fought to get information in more than 300 court documents kept under seal so they won’t be publicly accessible. The judge has allowed some of those documents be kept under seal. “As part of this process, it is routine for parties to file motions to seal certain confidential materials,” Page said. “Sutter, the plaintiffs, and third parties such as health plans have all filed such motions in this case.”The antitrust case against Sutter has stretched on for years. UEBT initiated the lead case in April 2014. California Attorney General Xavier Becerra added his case, which is now consolidated with the UEBT case, in March 2018. The proposed settlement in October 2019 followed years of contentious litigation. “We believe the injunctive relief provisions, assuming they’re approved, will make a very significant difference in the healthcare marketplace to avoid anticompetitive practices,” Mitchell said. “So we are eager for approval.”
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