Attorneys Seek Slice of $575 Million Sutter Antitrust Settlement

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Joyce E. Cutler

The California attorney general and attorneys who sued Sutter Health for antitrust violations are calling for 32% of the $ 575 million settlement to end class action lawsuits.

The fee filing is pending a July 21 hearing in the California Supreme Court for final approval of the proposed cash settlement in the event that the health care beast manipulated its market power to boost prices.

Fees cover 216,661 hours for the five law firms that represent the United Food & Commercial Workers & Employers Benefit Trust (UEBT), as well as for the self-funded plans in the class action and prosecutors.

“There are lots of zeros, but given the amount of money Sutter has made from his market power, it’s more of a situation where legal fees are in line,” said Jaime Staples King, professor of health law at the University of Auckland.

“I think over seven years the amount of time, energy, and hours to bring this case up to date is unprecedented in the healthcare antitrust arena,” said Staples King.

Cohen Milstein Sellers & Toll PLLC; Kellogg, Hansen, Todd, Figel, and Frederick PLLC; Pillsbury & Coleman LLP; Farella Braun + Martel LLP; and McCracken, Stemerman & Holsberry LLP represented the class, while the California Attorney General represented the state.

The attorneys pointed to the complexity of the proceedings against Sutter, and the relief achieved in the settlement, reached moments before a potentially month-long court case should be initiated in October 2019.

Over the next 10 to 13 years, the injunction will not only lower Sutter’s prices, but also lower the prices of non-Sutter suppliers in Northern California, which will benefit healthcare consumers across the entire Northern California hospital market – a market with annual sales of over $ 20 billion, according to the fee statement. In short, the plaintiffs’ attorney has achieved exceptional results.

“This is a landmark agreement,” said Charles Silver, a law professor at the University of Texas, in a filing that supported the fee request. “If you just look at the cash component of $ 575 million, this is one of the largest state court class action lawsuits of all time. It also outperforms all but a small fraction of the federal class action settlements. “

Long, expensive case

The case in the San Francisco Superior Court was filed in 2014. The docket contains more than 5,100 entries. The lawyers analyzed hundreds of millions of claims data submitted by insurance companies and had to prove overuse in 27 different Sutter hospitals for 16 years.

The Prosecutor General under the proposal would receive 2% of the fund and the class council, which took the case on an emergency basis, 30%.

The class attorneys are also asking for a $ 21.3 million cost on the 2014 case, mainly to pay for hiring professionals.

“Together we acted as a single virtual law firm, efficiently combining the many talents of the various lawyers required to successfully represent UEBT and overcoming what Sutter and the five highly skilled law firms will soon become a defense against scorched earth would and dozens of attorneys to represent it in this litigation, ”wrote Richard Grossman, Partner and Co-Lead Counsel of Pillsbury & Coleman.

The file notes that Sutter had more than 60 outside lawyers. Jones Day and Bartko Zankel Bunzel & Miller represented Sutter. Redgrave LLP; Quinn Emanuel Urquhart & Sullivan LLP; and Keker, Van Nest & Peters LLP also represented Sutter at times.

The 32% falls within the range of percentages prevalent in the private market, which is typically between 25% and 40%, “even in cases where huge recoveries are possible,” said Silver, an expert on legal fees .

The settlement contains a comprehensive package of omission reforms with a duration of at least 10 years, with which Sutter Health is to prevent that Sutter Health abuses its market power in the future through measures such as cost and quality transparency, said Silver.

“We think the litigation and settlement was a big deal – Sutter created a template that other hospital chains wanted to emulate,” said Anthony Wright, Executive Director, Health Access California | Health Access Foundation.

The case is UFCW & Employers Benefit Trust v Sutter Health, Cal. Super. Ct., No. CGC-14-538451, application filed.