Sarun v. Dignity Health CA2/7
232 Cal. App. 4th 1159
| Cal. Ct. App. | 2014Background
- Plaintiff Tony Sarun, uninsured, received emergency care at Dignity Health's Northridge Hospital and signed an admissions agreement obligating uninsured patients to pay the hospital’s “full charges, unless other discounts apply.”
- The admissions form defined “full charges” as the chargemaster (published rates before discounts) and explained uninsured patients could apply for government programs or Dignity financial assistance by submitting an application with documentary proof (tax returns, bank statements, pay stubs).
- Sarun received a balance-due invoice showing total charges of $31,359, an "uninsured discount" of $7,871.10, and a remaining balance of $23,487.90; he made a partial payment but did not apply for additional financial assistance.
- He filed a putative class action alleging UCL and CLRA claims, asserting Dignity charged uninsured patients substantially more than insured rates and the reasonable value of services, and that the admissions agreement did not disclose the true magnitude of potential charges.
- The trial court sustained Dignity’s demurrer without leave to amend, holding Sarun failed to allege “injury in fact” because he had not applied for financial assistance and thus had not shown he was required to pay an amount in excess of the reasonable value of services.
- The Court of Appeal reversed and remanded, holding Sarun adequately alleged economic injury based on the invoice and enforceable obligation and rejecting the notion that failing to apply for available discounts necessarily defeats standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing under the UCL/CLRA — whether Sarun alleged "injury in fact" and lost money or property | Sarun alleged an enforceable obligation to pay $23,487.90, made a partial payment, and faced transaction costs to obtain discounts; that suffices as economic injury | Dignity argued Sarun had not suffered economic injury because he did not apply for financial assistance and any further obligation was speculative or self-inflicted | Reversed: the invoice and enforceable obligation constitute imminent economic injury; failure to apply for discounts does not automatically defeat standing (mitigation is not a prerequisite to sue) |
| Whether transaction costs to apply for discounts can be "damage" under CLRA/UCL | The application process (providing tax returns, bank statements) imposed tangible transaction costs and burdens that qualify as damage | Dignity contended exposure only to the pricing system absent payment is insufficient for standing | Held: transaction costs to avoid the allegedly unlawful practice can constitute damage supporting standing under the CLRA and UCL |
| Whether pleading lack of referral to collections or refusal to pay defeats standing | Sarun argued an imminent obligation and partial payment show injury even if no collection occurred | Dignity argued absence of collection or denial of discount shows no present injury | Held: absence of collections does not negate imminent injury where a legally binding obligation and demand exist |
| Whether court should resolve merits (e.g., legality of chargemaster pricing) on demurrer | Sarun sought to proceed to discovery and adjudication of pricing practices | Dignity sought dismissal on standing and other legal grounds | Held: Court of Appeal remanded for further proceedings; merits questions left for trial court in first instance |
Key Cases Cited
- Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (defines the three varieties of UCL unfair competition)
- Kwikset Corporation v. Superior Court, 51 Cal.4th 310 (clarifies Proposition 64 standing requires economic injury: loss of money or property)
- Meyer v. Sprint Spectrum L.P., 45 Cal.4th 634 (CLRA requires that unlawful practice result in some damage; discussion of transaction costs as damage)
- Hale v. Sharp Healthcare, 183 Cal.App.4th 1373 (uninsured patient who received bill and made partial payment had standing based on imminent obligation)
- Clayworth v. Pfizer, Inc., 49 Cal.4th 758 (mitigation of damages does not extinguish standing; incurred overcharges still constitute loss)