Class Action Lawsuit and Litigation News

Sutter Health, which operates one of the largest hospital chains in California, will pay $46 million and make historic changes in its billing and disclosure of anesthesia charges and services to its patients, insurers and other payers, according to the California Department of Insurance.

“This settlement represents a groundbreaking step in opening up hospital billing to public scrutiny,” said state Insurance Commissioner Dave Jones. “The settlement requires Sutter to disclose on its Website every component of its anesthesia billing and what those services cost Sutter.

“Patients, insurers and the public will now be able to compare Sutter’s costs to what it charges for anesthesia. This new transparency should lead to lower prices and point the way to similar billing reforms for all types of hospital services.”

Sutter has over 20 hospitals in northern California, including California Pacific Medical Center in San Francisco, Sutter General Hospital in Sacramento, and Memorial Medical Center in Modesto. The settlement brings to a close a 2011 whistleblower lawsuit brought against Sutter by billing auditor, Rockville Recovery Associates.

Inflated anesthesia charges

The whistleblower lawsuit alleged that Sutter included a false and misleading charge in its surgery bills. Sutter patients or their insurers received three separate charges relating to anesthesia, including a charge by an outside anesthesiologist, a charge for the operating room and a charge under an obscure Code 37x Anesthesia.

Sutter often charged thousands of dollars for Code 37x Anesthesia for each operation. Yet the services covered by that code were allegedly already captured in the operating room charge, itself a charge in the thousands of dollars. Sutter charged for anesthesia on a time-based or chronometric basis even when no Sutter employee, only the outside anesthesiologist, was present and overseeing anesthesia. Some hospitals also charged separately for anesthesia gasses using code 25x. Sutter’s contracts with insurers also included a clause alleged to unduly restrict insurers from contesting the bills.

Corrective actions

The settlement requires that Sutter:

• Pay $46 million
• Stop billing for anesthesia in the operating room on a chronometric basis and instead charge on a fully disclosed flat-fee basis
• Describe every component of its anesthesia billing
• Post on its Website and provide to insurers and the commissioner the cost to each Sutter hospital of its anesthesia services, updated annually
• Clarify the relationship between its master schedule of charges (known as chargemasters in the health care industry) and the bills that consumers and insurers receive. This change will lead to an increase of transparency and accountability in hospital billing
• More readily permit insurers and other payers to contest Sutter’s bills.

Other defendants

Another defendant, Marin General Hospital, has agreed to implement the same changes to its procedures for billing anesthesia services. Marin General Hospital was a member of Sutter Health during the period of the misconduct alleged by the complaint. In 2010, Marin General Hospital became an independent hospital.

The settlement also includes defendants MultiPlan, Inc. (“Multiplan”) and Private Healthcare Systems, Inc. (“PHCS”), whose provider contracts with Sutter included Sutter’s audit policy that allegedly unduly restricted payers' ability to challenge Sutter’s charges. In addition to paying $925,000, MultiPlan and PHCS agreed to continue to provide notifications to payers about their audit rights.

New mothers are often highly concerned with what goes into their child's body, and buying organic products can be one way to help assuage that concern. But some companies’ baby and toddler-focused products may not be as organic as their labels claim.

Two infant formula makers are being accused of falsely labeling products as “organic.” The Organic Consumers Association (OCA) has filed suit against the Hain Celestial Group (owner of the Earth’s Best formula brand) and The Honest Co.

The companies are accused of labeling certain “organic” products that contain ingredients prohibited under the Organic Food Production Act of 1990 (OPPA).

Violates USDA standards

Eleven substances not deemed organic by federal law were found in The Honest Co.’s Premium Infant Formula. Over half of the 48 ingredients in Hain Celestial’s Earth’s Best Organic Infant Formula violate USDA Organic Standards. Non-organic ingredients were also found in other Earth’s Best products (including Organic Infant Formula, Organic Soy Infant Formula, Organic Sensitivity Infant Formula, and Organic Toddler Formula).

The OCA’s international director, Ronnie Cummins, says it’s an especially fitting time to call out the violation of USDA organic standards, as leaders of the organic industry are meeting this week at the Spring National Organic Standards Board (NOSB) to discuss organic standards.

“No one is more concerned about food labels and ingredients than new mothers responsible for feeding infants whose immune systems and brain development are so underdeveloped and vulnerable,” Cummins said in a statement, adding that mothers rely on truthful labeling.

The consumer advocacy group says the goal of the lawsuit is to force the two companies to either comply with USDA organic standards or stop calling their products “organic.”

Approved methods

What is and isn’t “organic” has been a contentious issue lately. According to the USDA, the labeling term should indicate that the food has been produced through approved methods.

The agency states that cultural, biological, and mechanical practices that “promote ecological balance and conserve biodiversity” should apply to a product before it’s labeled organic.

It looks like Tesla will be taking on the state of Michigan for the right to sell its cars to consumers there. The company has filed a lawsuit disputing a law that bars it from selling vehicles directly to Michigan consumers. The action comes less than a week after the automaker’s application for a Class A license was denied by state officials.

The law in question was created in 2014. It dictated that no automaker would be able to sell its cars in Michigan unless it did so through franchised dealerships in the state. It has been dubbed by some as the “anti-Tesla” law because it specifically mentions Tesla in one of its amendments about requiring a franchised dealership.

This is a big problem for Tesla since its company model is based off selling cars directly to consumers; it says that efforts to open dealerships in Michigan have been blocked by state officials.

Opposing forces

Tesla claims that the 2014 law is unconstitutional because it effectively gives automakers in the state a monopoly on car sales.

“As a result of this law, Michigan consumers are forced to accept reduced access to the products they want, less competition and higher prices,” said Tesla in a statement. It goes on to say that it will continue to “fight for the rights of Michigan consumers to be able to choose how they buy cars in Michigan.”

Tesla asserts that its efforts to make headway in the state have been rebuked by Michigan lawmakers at every turn. It stated that it had initially hoped to resolve the matter through the state’s legislature, but it was dismayed to learn that its case would not be submitted for review.

“Unfortunately, the local auto dealers and local manufacturers have made clear that they oppose any law that would allow Tesla to operate in Michigan. Given their position, the leadership of the Michigan legislature recently informed Tesla that it will not even hold a hearing to debate the issue,” the company said in a statement.

“As one leading legislator told Tesla: ‘The local auto dealers do not want you here. The local manufacturers do not want you here. So you’re not going to be here.’”

The company is seeking a jury trial and has named Michigan’s Secretary of State, Attorney General, and Governor as defendants, since each allegedly was involved in preventing Tesla from operating its own stores in the state.

The state of Washington has taken aim at Monsanto – the agrochemical company that has caught the ire of millions over its use of biochemicals. According to a report from Consumerist, the state has sued the company because of its decades-long use of polychlorinated biphenyls (PCBs).

PCBs were banned in 1979 after they were found to be toxic, but Washington officials say Monsanto was aware of their harmful effects well before that time and continued producing them anyway, leading to the pollution of state waterways. Washington Governor Jay Inslee says the chemical is so pervasive that it can be found nearly everywhere.

“Monsanto is responsible for producing a chemical that is so widespread in our environment that it appears virtually everywhere we look — in our waterways, in people and in fish — at levels that can impact our health. It’s time to hold them accountable for doing their fair share as we clean up hundreds of contaminated sites and waterways around the state,” he said.

Prior knowledge of dangers

In its lawsuit, the state spells out the negative effects that PCBs can have on the environment and people. “In humans, PCB exposure is associated with cancer as well as serious non-cancer health effects, including injury to the immune system, reproductive system, nervous system, endocrine system and other health effects. In addition, PCBs harm populations of fish, birds and other animal life,” the complaint states.

It goes on to say that Monsanto was the sole manufacturer of PCBs for over 40 years, between 1935 and 1979. It alleges that the company knew the chemicals were toxic but “concealed these facts and continued producing PCBs until Congress enacted the Toxic Substances Control Act,” which banned PCB production in 1979.

As evidence, the state points to a 1967 company memo where company officials stated that there was “no practice course of action that can so effectively police the uses of the products to prevent environmental contamination.” Still, it continued to manufacture and push sales of the chemicals for more than a decade.

Profits over people

The suit cites another report that makes it clear that Monsanto put profits before the health of citizens. In a report to the Corporate Development Committee, Monsanto says that discontinuing production of Aroclor – the brand name under which PCBs were sold – was unacceptable, saying that “there is too much customer/market need and selfishly too much Monsanto profit to go out.

If successful in its suit, the state will look to claim hundreds of millions in damages. Damages will be assed based on the damage done to natural resources, the economic impact made on the state and its residents, and any future costs associated with the presence of PCBs.

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Update: In a statement emailed to ConsumerAffairs, Scott S. Partridge -- Vice President of Global Strategy at Monsanto -- defended the company and addressed the lawsuit:

“This case is highly experimental because it seeks to target a product manufacturer for selling a lawful and useful chemical four to eight decades ago that was applied by the U.S. government, Washington State, local cities, and industries into many products to make them safer," he said. 

"PCBs have not been produced in the U.S. for four decades, and Washington is now pursuing a case on a contingency fee basis that departs from settled law both in Washington and across the country. Most of the prior cases filed by the same contingency fee lawyers have been dismissed, and Monsanto believes this case similarly lacks merit and will defend itself vigorously."