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Attorneys Seek Slice of $575 Million Sutter Antitrust Settlement

April 12, 2021, 9:36 AM

The California Attorney General’s Office and lawyers who sued Sutter Health alleging antitrust violations are seeking 32% of the $575 million settlement that would end class-action litigation.

The fee petition comes ahead of a July 21 hearing in California Superior Court for final approval of the proposed all-cash settlement in the case over whether the health-care behemoth manipulated its market power to boost prices.

The fees cover 216,661 hours for the five law firms representing the United Food & Commercial Workers & Employers Benefit Trust (UEBT) and the self-funded plans in the class action and for state attorneys.

“It’s a lot of zeroes but given the amount of money that Sutter has been able to make using its market power, it’s more a situation where the attorneys’ fees are in line,” said Jaime Staples King, a University of Auckland health law professor.

“I think over seven years the amount of time and energy and hours to bring this case of this kind is unparalleled in the health-care antitrust” space, said Staples King.

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

The lawyers cited the complex nature of the case against Sutter, and the relief obtained in the settlement reached moments before a potentially months-long jury trial was set to begin in October 2019.

Over the next 10 to 13 years, the injunctive relief will not only moderate the prices of Sutter, it should also moderate the prices of non-Sutter providers in Northern California, benefiting health-care consumers throughout the Northern California hospital market—a market with annual revenue of over $20 billion, the fee filing said. In short, plaintiffs’ counsel obtained exceptional results, the filing said.

“This is a landmark settlement,” University of Texas Law professor Charles Silver said in a filing supporting the fee motion. “Considering only the $575 million cash component, it is one of the largest state court class action settlements ever. It exceeds all but a small fraction of federal class action settlements, too.”

Long, Costly Case

The San Francisco Superior Court case was filed in 2014. The docket has more than 5,100 entries. The attorneys analyzed hundreds of millions of claims data records subpoenaed from insurance companies and needed to prove overcharges spanning 16 years at 27 different Sutter hospitals, the filing said.

The Attorney General’s Office under the proposal would receive 2% of the fund, and class counsel, who took the case on a contingency basis, 30%.

The class attorneys also seek $21.3 million in costs for the case filed in 2014, largely to pay for hiring experts.

“Together, we conducted ourselves as a single virtual law firm, efficiently combining the many talents of the various legal professionals that were necessary to successfully represent UEBT and overcome what would soon become a scorched-earth defense by Sutter and the five highly skilled law firms and scores of lawyers that represented it in this litigation,” wrote Richard Grossman, Pillsbury & Coleman partner and co-lead counsel.

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

The 32% falls within the range of percentages that prevails in the private market, which typically runs from 25% to 40% “even in cases with the potential to generate enormous recoveries,” said Silver, who testifies as an expert on attorneys’ fees.

The settlement contains an extensive package of injunctive reforms, to last for at least 10 years, that are designed to prevent Sutter Health from abusing its market power in the future by such measures as requiring cost and quality transparency, Silver said.

“We think the litigation and settlement was a big deal—Sutter was creating a template that other hospital chains were seeking to emulate,” said Anthony Wright, executive director of Health Access California | Health Access Foundation.

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

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Karl Hardy at khardy@bloomberglaw.com

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