90 Cal.App.5th 1193
Cal. Ct. App.2023Background
- Plaintiff Joshua Naranjo received emergency treatment at Emanuel/Doctors Medical Center and signed a Consent for Treatment/Conditions of Admission (COA) that did not disclose a separate "Evaluation and Management Services" (EMS) fee.
- Naranjo's itemized bill (after adjustments) still included a large Level 4 EMS Fee; he alleges the fee is set post-discharge by an internal algorithm and is not disclosed in the COA, signage, registration, or in a consumer-accessible format online.
- He sued on behalf of a putative class seeking declaratory and injunctive relief and alleging violations of the Consumer Legal Remedies Act (CLRA) and the Unfair Competition Law (UCL).
- The trial court sustained Medical Center’s demurrer to the first amended complaint without leave to amend and entered judgment for the hospital; Naranjo appealed.
- The Court of Appeal reversed, holding Naranjo plausibly pled CLRA and UCL claims based on the hospital’s alleged failure to disclose the EMS fee (including alleged exclusive knowledge and concealment), and concluded the trial court improperly treated statutory disclosure compliance as an implied safe harbor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether nondisclosure of EMS fees can state a CLRA omission claim | Naranjo: hospital had exclusive knowledge, concealed the fee, and omission was material — CLRA (Civ. Code §1770) claims viable | Medical Center: statutory/ regulatory pricing disclosures suffice; no duty to give pre-treatment notice of EMS fees | Court: CLRA omission claim adequately pled where defendant has exclusive knowledge or actively conceals material facts; plaintiff pled exclusive knowledge, materiality, reliance, and damages |
| Whether compliance with Chargemaster and other disclosure laws creates an implied safe harbor shielding hospital from CLRA/UCL claims | Naranjo: statutory disclosure duties do not preclude additional disclosure duties or CLRA/UCL claims | Medical Center: compliance with state/federal pricing statutes obviates need for further disclosure and precludes liability | Court: trial court erred by creating an implied safe harbor; Cel‑Tech prohibits judicially creating such a shelter unless statute actually bars the claim |
| Whether plea pleaded reliance/causation/damages necessary for CLRA/UCL relief | Naranjo: alleged he would have sought other care had he known and alleged payment/ongoing collection attempts | Medical Center: plaintiff must plead particularized reliance and cannot show he would have acted differently | Court: allegations that plaintiff would have left and sought less expensive treatment, plus payment allegations, were sufficient at pleading stage |
| Whether declaratory and injunctive relief claims were sufficiently pleaded re: COA and disclosure duties | Naranjo: an actual controversy exists over whether COA authorizes EMS fee and whether hospital owes pre-treatment disclosure duty | Medical Center: statutory framework satisfies disclosure; no basis for broader relief | Court: declaratory relief claim adequately alleged and appropriate to resolve parties’ rights; injunctive relief claims tied to sufficiently pleaded statutory and consumer‑protection theories |
Key Cases Cited
- Cel‑Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (Cal. 1999) (limits on creating implied safe harbors under the UCL; UCL claims must be tethered to legislative policy or antitrust concerns)
- Gutierrez v. Carmax Auto Superstores California, 19 Cal.App.5th 1234 (Cal. Ct. App. 2018) (CLRA omission actionable where defendant had exclusive knowledge of material facts not accessible to plaintiff)
- Nolte v. Cedars‑Sinai Medical Center, 236 Cal.App.4th 1401 (Cal. Ct. App. 2015) (hospital that complied with Chargemaster posting and had patient agreement was not liable for undisclosed administrative charge under the UCL)
- Gray v. Dignity Health, 70 Cal.App.5th 225 (Cal. Ct. App. 2021) (refused pre‑treatment disclosure obligation for ER fees; emphasized emergency‑care statutory scheme and held nondisclosure not an unfair practice where statutory posting requirements were met)
- Torres v. Adventist Health System/West, 77 Cal.App.5th 500 (Cal. Ct. App. 2022) (held CLRA omission viable where hospital had exclusive knowledge of EMS fee, but dismissed for failure to plead reliance with specificity)
- Saini v. Sutter Health, 80 Cal.App.5th 1054 (Cal. Ct. App. 2022) (adopted Gray and Nolte reasoning in rejecting similar nondisclosure claims against a hospital)