Sutter Health is $575 million poorer — and now must operate under new rules designed to curb its ability to dictate the price of health care in Sacramento and Northern California.
A judge late Friday approved a landmark antitrust settlement agreement between the Sacramento-based hospital chain, the state of California and a group of health insurers and big employers.
The final approval by Judge Anne-Christine Massullo, in San Francisco Superior Court, came nearly two years after Sutter tentatively agreed to the deal – and seven years after a health insurance plan run by the United Food and Commercial Workers union sued the health care giant. The state joined the case in 2018.
The case, which drew national attention, focused on Sutter’s business practices. The state and others said Sutter – with 24 main hospitals, 12,000 doctors and $13 billion in annual revenue – used its market power to strong-arm employers and insurers into lopsided contract terms that inflated prices for a wide range of services.
Because of an “umbrella effect,” Sutter’s high prices allowed its competitors to raise their rates, too, critics said. State officials frequently cited various studies showing the high cost of medical care in Northern California, including a 2016 report showing that cesarean births cost about $27,000 on average in Sacramento, nearly twice the cost of Los Angeles.
Among other things, Sutter agreed to end “all-or-nothing” contracts that critics said were forcing insurers and big employers to cover services at Sutter hospitals and clinics they didn’t necessarily want. Sutter will be under a court-approved independent monitor’s supervision for 10 years. In addition, Sutter agreed to pay $575 million in damages to the employers and insurers.
“This is a groundbreaking settlement and a win for Californians,” said Attorney General Rob Bonta in a prepared statement. “Sutter will no longer have free rein to engage in anticompetitive practices that force patients to pay more for health services.”
This article also appeared in the Merced Sun-Star, The Fresno Bee, and The Modesto Bee.
The lawsuits have been universally celebrated by restaurant owners who feel the companies have gaslit them throughout the pandemic
The city of Chicago has filed separate lawsuits against Grubhub and DoorDash alleging the third-party delivery companies “engaged in deceptive practices to prey on its affiliated restaurants.” The lawsuits, filed today, August 27, in Cook County circuit court, contain a multitude of allegations, including that the companies use bait-and-switch tactics to fool customers into thinking they’ll be paying lower fees compared to what they’re ultimately charged.
The DoorDash lawsuit also alleges that the company “used consumer tips to pay itself rather than its drivers.” There’s also the question of the Chicago Fee, the charge DoorDash added to compensate for the city’s pandemic-era fee cap. The city says DoorDash tried to make it seem like the Chicago Fee was being administered by the city, and even included a customer’s tweet from January in the lawsuit: “one thing about Chicago, they gon tax your ass LMAO.”
A DoorDash spokesperson says drivers get 100 percent of tips but had no comment on the Chicago Fee. Tipping was also the subject of a $2.5 million settlement after the Washington, D.C. attorney general investigated DoorDash in November 2020. At one point, DoorDash was using tips to subsidized wages for drivers, meaning employees wouldn’t earn more than their locked-in wages. DoorDash has since ended this practice.
Attorneys for the city listed many issues relevant to restaurant owners in the lawsuits, including adding restaurants to the platform without the owner’s knowledge or consent, using telephone routing numbers to charge commission on phone calls that didn’t result in orders, and even creating fake restaurant websites to redirect customers to the delivery platform. Many owners have raised concerns that the city hasn’t done enough to help them, although the city did institute a 15 percent fee cap on third parties first instituted in November 2020. DoorDash and Grubhub are suing San Francisco over its decision to implement a permanent fee cap on third-party delivery companies; New York is now looking to enact the same policy.
These are the first lawsuits of their kind of America. Other municipalities have sued the companies, honing in one a single issue. For example, Massachusetts’ attorney general sued Grubhub in July, accusing it of violating a fee cap. Chicago’s lawsuit is the first to combine a variety of issues in one filing; city officials say one lawsuit is more efficient.
On Friday afternoon, Chicago’s restaurants cheered the city’s filings. Many of them — including Medici’s on 57th Street, Bianca’s Burgers, Parachute — were mentioned in the lawsuit, citing social media posts and media coverage of the alleged mistreatment. One example came from Taqueria La Chaquita in Lawndale, with a DoorDash menu pulled on August 26 showing a selection of seafood tacos. Mariscos are great, however, the restaurant does not serve seafood.
The city of Chicago is suing Door Dash and Grubhub, alleging the food delivery services engaged in deceptive business practices during the pandemic, misleading consumers and harming restaurants.
The lawsuits, filed separately Friday in Cook County Circuit Court, allege that as restaurants struggled and closed for indoor dining, DoorDash and Grubhub leveraged soaring demand for delivery by engaging in a “bait-and-switch” on advertised fees, marking up menu items and violating the city’s 15% emergency cap on food delivery commissions.
In addition, the city alleges Door Dash used customer tips intended for delivery drivers to subsidize their pay and imposed a $1.50 “Chicago Fee” on every order within the city limits in response to the November 2020 emergency cap on commissions it was allowed to collect.
“As we stared down a global pandemic that shuttered businesses and drove people indoors, the defendants’ meal delivery service apps became a primacy way for – people to feed themselves and their families, as well as support local restaurants,” Mayor Lori Lightfoot said in a news release. “It is deeply concerning and unfortunate that these companies broke the law during these incredibly difficult times, using unfair and deceptive tactics to take advantage of restaurants and consumers who were struggling to stay afloat.”
The complaints allege both services advertised delivery from unaffiliated restaurants without their consent, lured consumers with deceptively low delivery fees upfront that increased up to sixfold at the end of the transaction, and priced menu items up to 25% higher on Grubhub and up to 58% higher on Door Dash.
Last year, approximately half of Chicago’s 7,500 restaurants closed either temporarily or permanently during the pandemic, the city said. But food delivery services thrived as customers under statewide stay-at-home orders ordered in. The city alleges Door Dash and Grubhub ramped up their “predatory tactics” during the pandemic.
Chicago-based Grubhub, a food delivery pioneer when it launched in 2004, was acquired in June by Amsterdam-based Just Eat Takeaway in a $7.3 billion all-stock transaction. The lawsuit alleges Grubhub “exploited restaurants and the goodwill of consumers” during the pandemic through promotional campaigns such as “Supper for Support,” which billed itself as a bid to save local restaurants but forced restaurants to foot the bill for a $10 off coupon.
“Grubhub deceptively portrayed Supper for Support as a win-win proposition for consumers and the restaurant,” the lawsuit alleges. “As the math makes clear, Supper for Support resulted in extraordinary support for Grubhub but not for struggling local restaurants.”
The lawsuit also alleges Grubhub violated the city’s emergency cap of 15% on restaurant commissions during the pandemic.
Stocks fall as Grubhub’s hometown city accuses food-delivery companies of experiencing ‘tremendous growth on the backs of restaurants and consumers’ during pandemic
The city of Chicago filed a wide-ranging lawsuit against DoorDash Inc. and Grubhub Inc. on Friday, accusing the meal-delivery platforms of engaging in deceptive and predatory business practices.
The lawsuit alleges the companies’ practices harm consumers, delivery workers and restaurants. The city claims DoorDash DASH, -1.60% and Grubhub GRUB, -7.40% deceive consumers by advertising a lower upfront cost for delivery and sometimes misrepresenting the cost of items at restaurants, which the city calls a “bait and switch” because in most cases consumers are too invested in an order to back out when they see additional fees at the end of a transaction.
For example, according to the suit, “During the ordering process, DoorDash and Caviar withhold the existence and amount of the Service Fee, Small Order Fee, and Chicago Fee on the Platforms until the checkout screen.”
The $1.50-per-order “Chicago Fee” isn’t imposed by the city, but rather a reaction by some delivery companies to an earlier attempt by Chicago to rein in the apps’ fees. The lawsuit says DoorDash is trying to recoup some of the money it lost from a 15% commission cap imposed by the city, which like other cities around the nation has tried to limit what huge companies like DoorDash were collecting from struggling restaurants during the coronavirus pandemic.
“DoorDash has experienced tremendous growth on the backs of restaurants and consumers,” the lawsuit states, noting that DoorDash, including its Caviar division, grew its market share in Chicago during the pandemic from 38% to 57%.
The suit — which comes after a yearlong investigation into the companies’ practices — calls for a jury trial, fines of up to thousands of dollars for each misrepresentation and unfair act and practice, and asks the court to order the companies to change their practices. DoorDash shares fell 1.6% to $187.94 in Friday’s trading session, while shares in Just Eat Takeaway NV, the owner of Grubhub, fell 7.4%.
Pennsylvania Gov. Tom Wolf’s administration announced on Tuesday that it has settled a fraud lawsuit accusing IBM of racking up tens of millions in cost overruns while failing to deliver under a $110 million contract to create a new integrated computer system for handling the state’s unemployment compensation program.
The Pennsylvania Department of Labor & Industry said in a statement that it resolved the lawsuit with International Business Machines Corp., but did not provide any further details of the settlement.
“Following an extensive discovery period and exchange of expert reports and opinions, the parties engaged in a lengthy negotiation and the settlement was reached,” the statement said.
IBM has not admitted any liability or wrongdoing and both parties are keen on skirting further litigation costs, the statement added.
Representatives for IBM and for the Pennsylvania department declined to comment beyond the statement, the latter citing the settlement as a factor.
The announcement marks an end to the lawsuit filed in March 2017 by Wolf’s administration over a project that sought to upgrade the state’s outdated unemployment compensation computer system.
The lawsuit said a sweeping computer upgrade the state contracted IBM to complete back in June 2006 fell three years behind schedule, went $60 million over budget, and ultimately never came to fruition.
According to a complaint in the Dauphin County Court of Common Pleas, the upgrade was meant to integrate disparate computer systems that the department relied on to process data regarding tax payments submitted by employers and benefit claims submitted by unemployed workers.
After a three-year bidding process, the complaint said that the state chose IBM for the project based on its representations that it was the only vendor with the type of proprietary databases capable of providing a totally integrated computer system.
But the state said that IBM never came through on its promises.
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The commonwealth is represented by Duane Morris LLP and Cohen Milstein Sellers & Toll PLLC.
Following a lengthy federal lawsuit, University of Maryland Shore Regional Health returned nearly $9.5 million in overpayments to Medicare and Maryland Medicaid to resolve alleged False Claims Act violations in June.
The civil lawsuit was originally filed in July 2016 after a whistleblower brought forward claims that Shore Health allegedly overcharged Medicare and Maryland Medicaid programs between 2014 and 2018 for services provided to their beneficiaries. The federal False Claims Act and its state equivalents allow private citizens like the whistleblower to file lawsuits on behalf of the government for false or fraudulent payment claims under government programs.
Shore Regional Health, which runs two hospitals and several outpatient centers on the Eastern Shore, is a part of the larger University of Maryland Medical System. The health system provides many services to patients covered with Medicare or Medicaid across the Eastern Shore.
The original complaint alleged that since June 2014, Shore Health had been improperly billing Medicare for outpatient services provided at unregulated facilities by using a provider transaction access number (PTAN) — a Medicare-assigned number to authenticate a provider — designated for use by a regulated facility.
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The Maryland U.S. Attorney’s Office and the state of Maryland reached the $9.5 million settlement with Shore Health in June 2021, which Shore Health voluntarily paid. The hospital and health care system did not admit liability for the over-billing in the settlement.
The whistleblower was represented by the Whistleblower/False Claims Act practice group of Cohen Milstein Sellers & Toll, a national firm handling plaintiff class action lawsuits and litigation.
Casey Preston, an attorney with Cohen Milstein and co-lead counsel for the plaintiff, described the whistleblower as “a person of strong integrity” for coming forward with the claims.
“We thank the District of Maryland’s U.S. Attorney’s Office and the Maryland Attorney General’s Office for their diligent and thorough investigation of our client’s allegations and for protecting taxpayers and government health care programs by recovering the substantial overpayments,” he said.
The case wouldn’t have been possible without the “brave individual” reporting the improper billing practice to the government, said Gary Azorsky, an attorney with Cohen Milstein and co-lead counsel for the plaintiff.
“This settlement is a reminder about the important role that whistleblowers play in identifying and rooting out fraud in the healthcare industry,” Azorsky said.
A South Carolina federal judge on Thursday axed several state consumer protection and breach reporting law claims from a consolidated putative class action accusing Blackbaud Inc. of failing to do enough to prevent a massive 2020 ransomware attack, while allowing allegations under California’s novel Consumer Privacy Act to move forward.
In a 33-page ruling, U.S. District Judge Julianna Michelle Childs decided Blackbaud’s motion to dismiss seven of the dozens of statutory claims that 34 plaintiffs from 20 states have raised in a consolidated class action complaint that takes aim at the cloud computing provider’s allegedly lax data security practices. The plaintiffs have alleged that these security failings opened the door for hackers to orchestrate a cyberattack last year that affected personal information held by more than 100 health care, educational and philanthropic organizations that used Blackbaud’s services.
A class action suit filed last week alleges that Citgo shortchanged retirees by millions of dollars in pension funds.
Retired employees in two Citgo Petroleum Corp. pension plans filed a lawsuit Aug. 3 alleging their retirement benefits were diminished because of out-of-date actuarial data. The allegations apply to former Citgo employees who retired before Jan. 1, 2018, according to the complaint.
Citgo is the U.S. subsidiary of the state-run oil company Petróleos de Vetróleos de Venezuela S.A.
For married participants, the default form of pension payment is a joint and survivor annuity, which provides the participant a payment stream for life, and the life of a spouse.
But when the Citgo plan converts a single life annuity to a joint and survivor annuity, it uses mortality data that is 50 years out of date, according to the lawsuit filed in District Court for Northern Illinois.
This shortchanging resulted in the plaintiffs receiving less than the “actuarial equivalent” of their vested accrued benefit, violating the Employee Retirement Income Security Act, which protects retirement benefits.
“This case alleges that Citgo penalizes retirees for being married by paying them less than the full value of the pensions they earned,” said Mary Bortscheller, a partner at the Cohen Milstein law firm representing the plaintiffs. “We look forward to helping married retirees get the full value of the pensions they earned from decades of work at Citgo.”
The class action lawsuit was filed by plaintiffs Leslie Urlaub and Mark Pellegrini.
Urlaub, who worked for Citgo Petroleum for nine years as a project engineer and project manager, said he chose the 50 percent joint and survivor annuity offered by the plan. Pellegrini worked for 32 years at the Lemont Refinery, which in 1997 became owned and by Citgo Petroleum Corp. When he retired from Citgo, he elected to take the 75 percent joint and survivor annuity.
Had Urlaub and Pellegrini’s benefits been determined using reasonable actuarial assumptions, their joint and survivor annuities would be larger, the lawsuit claims.
FLINT, MI – Interim Co-lead Class Counsel in the Flint water crisis litigation announced that Federal Judge Judith Levy of the United States District Court for the Eastern District of Michigan entered an order granting Class Certification on liability claims in the ongoing litigation against private engineering firms Lockwood, Andrews & Newman (LAN) and Veolia, LLC; Veolia, Inc, and Veolia Water (VNA). It is alleged that each company failed to give appropriate professional advice, greatly adding to the widespread lead contamination of the water that flowed into Flint during the water crisis.
By granting “Issues Classes” certification, the parties and the Court will address how damages will be resolved should liability be found on a class wide basis.
LAN and VNA have not signed onto the landmark $641.2 million partial settlement that has received preliminary approval from the Court.
“We are very happy that Judge Levy has entered an order of certification of two Issues Classes and has allowed our case to move forward against the engineering companies, who we believe acted negligently and contributed to the horrific contamination of the Flint water supply, which lead to both property damage and human health issues to the entire Flint community,” said Ted Leopold, court-appointed co-lead counsel and Partner at Cohen Milstein Sellers & Toll. “As we have made clear, we will continue to vigorously pursue the full measure of justice against those who caused harm to the residents of Flint.”
WHAT TO KNOW:
- Recent issues highlight barriers for victims
- Systemic change needed to end harassment
New York Gov. Andrew Cuomo, slammed with state investigative findings that say he sexually harassed multiple women, became the latest powerful figure years after the launch of the #MeToo movement to give face to the persistent toxic culture that creates barriers for victims of hostile workplaces.
The allegations against Cuomo come as recent high-profile lawsuits point to entrenched harassment and discrimination, including in shareholder cases against L Brands Inc., the parent company of Victoria’s Secret, that settled in late July; a California agency’s complaint accusing Activision Blizzard Inc. of a “frat-boy” culture; and sexual assault litigation against an ex-Tinder executive that’s slated for oral argument this week at a federal appeals court.
Despite some advancements from #MeToo activism, legal and political obstacles remain for victims to come forward with harassment claims, and structural changes in the legal system and at companies still need to happen to eradicate these patterns, academics and attorneys said. This is particularly true for vulnerable workers in the restaurant, agriculture, and other industries dominated by low-income employees, they added.
Meanwhile, corporations are looking inward and investing in ways to adjust culture, as employees and shareholders increasingly demand better practices to eliminate harassment and discrimination.
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Shareholder Muscle
While it may be hard for an individual victim to come forward, shareholder lawsuits targeting workplace harassment increasingly have led to changes at companies. L Brands agreed to spend $90 million on changes to corporate practices, including eliminating non-disclosure agreements. This followed a $310 million settlement with Alphabet Inc.’s board of directors and another $90 million settlement with Wynn Resorts Ltd. Another similar case is ongoing against Pinterest Inc.
“As shareholders got more involved, companies chose to make sure they were in compliance with Title VII,” said Julie Goldsmith Reiser, a partner with Cohen Milstein Sellers & Toll PLLC, who has led many of the shareholder suits against companies. “From the date that #MeToo hit, it has turned instead into, ‘What is a toxic culture?’”
She said the #MeToo movement has taken longer to seep into the public sector, and many scandals there didn’t have an impact, including those involving former President Donald Trump.
“Many victims fear not being believed or the other side denying it, or saying that she shouldn’t have put herself in that position: Your dress was too short, you drank too much,” she said. “There are societal checks preventing people from comfortably coming forward.”