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Sidibe v. Sutter Health

United States District Court for the Northern District of California, San Francisco Division

June 3, 2013, Decided; June 4, 2013, Filed

No. C 12-04854 LB

Opinion

ORDER GRANTING MOTION TO DISMISS

INTRODUCTION

In this putative class action, Plaintiffs Djeneba Sidibe and Diane Dewey sued Sutter Health, a company that owns and operates hospitals and other health care service providers, alleging that Sutter's anticompetitive conduct in the health care services industry in Northern California violates federal and state antitrust laws and California's unfair competition law. See generally First Amended Complaint ("FAC"), ECF No. 15. 1 The allegedly anticompetitive conduct includes imposing tying arrangements that require health plans to use Sutter providers or affiliated physician groups (even if there are lower-priced alternatives) or be denied the ability to have contracted access to any of them (even in areas where Sutter has monopolies). Id. ¶ 143. Plaintiffs also complain that  [*2] Sutter's contracts require health plans to incentivize and encourage the use of Sutter's services and penalize plan members who fail to use them. Id. ¶ 144. These arrangements allow Sutter to impose supracompetitive pricing, meaning, pricing above what could be sustained in a competitive market, and to maintain and enhance its monopoly power in Northern California. Id. ¶ 143.

Sutter moved to dismiss for lack of standing and for failure to state a claim. See Motion, ECF No. 15. The court grants Sutter's motion to dismiss without prejudice and with leave to amend.

STATEMENT2

I. THE PARTIES

A. Sutter Health

Defendant Sutter Health is a non-profit corporation organized and existing under California laws, with its principal place of business in Sacramento, California. FAC, ECF No. 11, ¶ 19. Sutter provides health care and related services 3 in Northern California through contracts with "health  [*3] plans" (insurance, employer-sponsored plans, and managed care plans such as health maintenance organizations and preferred provider organizations), including Blue Cross, Blue Shield, Aetna, CIGNA, HealthNet, Interplan, United HealthCare, and others. FAC, ECF No. 11, ¶¶ 2, 35. It "controls the largest and most dominant hospital chain and provider of health care services in Northern California." Id. ¶ 19. Sutter is the parent company of various non-profit and for-profit entities and organizations that operate primarily in Northern California and that are controlled directly or indirectly through intermediaries. 4 Id. ¶ 19. "Each Sutter Health Northern California region consists of at least one hospital corporation and a medical foundation corporation." 5 Id. ¶ 20. Other Sutter entities are members of Sutter's "Obligated Group," a financial arrangement that combines the revenues, expenses, assets, and liabilities of the Obligated Group Members. Id. ¶ 26. There are other entities affiliated with Sutter, including some in Hawaii and the Cayman Islands. See id. ¶¶ 27-30. "[Sutter], its managers and/or directors currently or previously own or owned and control in-whole or in-part" more than  [*4] 30 additional for-profit entities. See id. ¶ 31.

The FAC makes allegations about Sutter's non-profit status, see id. ¶¶ 109-123, but also  [*5] states that "[t]his action does not concern Sutter Health's non-profit status." Id. ¶ 113. Plaintiffs allege that Sutter "styles itself as a 'non-profit'" to avoid taxes, but it really is one of the most profitable health care operations in the country. Id. ¶ 109. Sutter generates over $9 billion in annual revenue and as of September 30, 2011, it had accumulated $4.4 billion in cash and investments. Id. ¶ 109. Sutter's true profits may be higher than this. Id. ¶ 111. Sutter also has a "de facto network" beyond its "publicly disclosed network" that includes numerous for-profit entities. Id. ¶ 110. Sutter provides its managers and directors with "massive salary and benefit packages." Id. ¶ 109. Many of the same individuals have occupied key positions of control at Sutter for the last two decades and that their conduct is "unaccountable and non-transparent." Id. ¶¶ 119-23.

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2013 U.S. Dist. LEXIS 78521 *; 2013-1 Trade Cas. (CCH) P78,404; 2013 WL 2422752

DEJENEBA SIDIBE and DIANE DEWEY, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. SUTTER HEALTH, and DOES 1 through 25, inclusive, Defendants.

Subsequent History: Dismissed by, Request denied by, As moot Sidibe v. Health, 4 F. Supp. 3d 1160, 2013 U.S. Dist. LEXIS 160512 (N.D. Cal., Nov. 7, 2013)

Dismissed by, Request denied by, As moot Sidibe v. Sutter Health, 51 F. Supp. 3d 870, 2014 U.S. Dist. LEXIS 84589 (N.D. Cal., June 20, 2014)

Class certification granted by, Class certification denied by, Without prejudice Sidibe v. Sutter Health, 2019 U.S. Dist. LEXIS 181179 (N.D. Cal., Aug. 30, 2019)

CORE TERMS

antitrust, network, anti-competitive, geographic, affiliated, patients, entities, regions, enrollees, monopoly, unfair, non-Sutter, licensed, unjust, enrichment, indirect, premiums, co-payments, contractual, injunctive, consumers, laboratories, health-care, non-profit, enrolled, seller