Sutter Health Settles Billing Lawsuit
Sutter Health on Thursday settled a class-action lawsuit alleging that the not-for-profit hospital chain overcharged uninsured patients for services, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 8/4).
The suit, filed in 2004, said Sutter spent 40% less on charity care for low-income or uninsured patients than the statewide average among private institutions. According to the suit, charity care spending represented 0.6% of Sutter's revenue in 2002, and the chain reported total patient service revenues in 2003 of $4.5 billion and profits of $465 million.
The suit alleged that the chain used gross "sticker prices" only for uninsured patients. The lawsuit also alleged that Sutter used "coercive, unfair and fraudulent collections methods," including lawsuits, to seek payments from uninsured and low-income patients (California Healthline, 7/1/04).
A Sacramento judge on Thursday approved the settlement, which requires Sutter to provide refunds and offer discounts to uninsured patients who visited the hospital between Sept. 3, 2000, and Aug. 3, 2006 (San Francisco Chronicle, 8/4). Patients will be entitled to refunds of 25% to 45% on their hospital bills (Yi, Los Angeles Times, 8/4).
Kelly Dermody, a lawyer for the patients, said the settlement will be worth at least $275 million (Kasler, Sacramento Bee, 8/4). Dermody said "hundreds of thousands" of patients will start receiving notices about the settlement in mid-September (San Francisco Chronicle, 8/4).
However, Sutter spokesperson Bill Gleeson said the settlement will likely be worth much less than Dermody's estimate because more than 90% of uninsured Sutter patients have not paid their medical bills. Sutter officials said it is more likely that the company will write off "significant sums owed by the patients," the Bee reports (Sacramento Bee, 8/4).
Under the settlement, Sutter also must continue its policy started earlier this year of charging all uninsured patients rates comparable to what it charges insurance companies. In addition, Sutter as part of the settlement will continue a policy started in 2004 of providing free care to patients who earn less than 200% of the federal poverty level.
Gleeson said, "We're proud of our generous model and are pleased to have achieved this settlement." Gleeson added, "It made more sense to put this behind us than to divert more attention and resources to defending the matter."
Anthony Wright, executive director of advocacy group Health Access California, said the Sutter settlement and similar agreements "are important steps toward ending the practice of hospitals overcharging the uninsured. Ultimately, we need legislation to stop these practices, which needlessly leads to bankruptcy."
Wright said the California Assembly has passed a bill that would require hospitals to limit aggressive collection practices and offer discounts to the uninsured (Feder Ostrov, San Jose Mercury News, 8/4).