Ninth Circuit Orders New Trial for Sutter Health in Antitrust Case

The Ninth Circuit Court of Appeals has ordered a new trial for Sutter Health, Northern California’s largest hospital chain, following allegations of anticompetitive contracting practices. The decision, reached by a panel majority on Tuesday, reverses a 2022 jury verdict that had cleared Sutter Health of any wrongdoing.

The trial, originally brought under California’s Cartwright Act in 2012 by a group of individuals and two small businesses, accused Sutter Health of abusing its market power to charge supracompetitive rates. The plaintiffs argued that these practices led to nearly $411 million in insurance premium overcharges for 3 million California families and businesses between 2011 and 2017.

The appellate court found that the lower court had mishandled key aspects of the trial, including the jury instructions and the exclusion of critical evidence. Specifically, the court criticized U.S. Magistrate Judge Laurel D. Beeler of the Northern District of California for removing the word “purpose” from the jury instructions, a move that failed to direct jurors to consider Sutter Health’s anticompetitive intent when evaluating the claims.

U.S. Circuit Judge Lucy Koh, writing for the panel, emphasized that this omission contravened California law. “The excluded evidence concerned the inception, Sutter’s stated purpose, and effects of the conduct challenged during the trial,” Judge Koh stated. She further noted that Sutter Health had not successfully rebutted the presumption that this error prejudiced the plaintiffs, highlighting the potential impact of the excluded evidence on the jury’s decision.

The appellate court also determined that Judge Beeler was wrong to exclude evidence of Sutter Health’s conduct before 2006. This evidence, dating back five years before the specific contracts in question were negotiated and took effect, was deemed essential to understanding the inception and intent of Sutter’s allegedly anticompetitive practices.

Matthew Cantor, an attorney with Constantine Cannon LLP representing the plaintiffs, hailed the appellate court’s decision. “The jury did not see or hear critical evidence, including Sutter’s admissions of its anticompetitive purpose and the anticompetitive effects that it caused, due to erroneous rulings of the district court,” Cantor said on Tuesday.

Source: Court House News