GORDON GRAY,
A158648 (San Francisco City & County Super. Ct. No. CGC-19-574074)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION ONE
Filed 10/13/21
CERTIFIED FOR PUBLICATION
INTRODUCTION
After plaintiff Gordan Gray received emergency medical care at St. Mary Medical Center (owned and operated by defendant Dignity Health), he received a bill that included an ” ‘ER LEVEL 2 W/PROCEDU’ ” charge (ER
It is important to point out what Gray does not claim. He does not claim that by including an ER Charge in its billing, Dignity is in violation of any of the extensive state and federal statutory and regulatory law governing the disclosure of hospital billing information and the treatment of persons presenting for treatment at an emergency department. Nor does he take issue with the hospital‘s “chargemaster” amount for the Level 2 ER Charge (and which his medical insurance largely covered). Rather, his UCL, CLRA, and declaratory relief claims are based solely on his assertion Dignity must, prior to providing emergency medical care, disclose that this specific charge will be included in its billing.
The trial court sustained Dignity‘s demurrer to Gray‘s complaint without leave to amend and entered a judgment of dismissal. We affirm.
BACKGROUND
Statutory and Regulatory Background
The Legislature has enacted a series of statutes, collectively known as the “Payers’ Bill of Rights,” setting forth numerous obligations California hospitals owe to consumers with respect to the pricing of medical services. (
This statutory scheme requires California hospitals (except “small and rural hospitals,” an exception that does not apply here), to make a written or electronic copy of the hospital‘s “chargemaster” available to the public. (
Hospitals must submit their chargemasters to the Office of Statewide Health Planning and Development (OSHPD) on an annual basis (
https://oshpd.ca.gov/data-and-reports/cost-transparency/hospital-chargemasters/ [as of Oct. 13, 2021] [stating “chargemasters are currently not required to be provided in a standardized format“].)
Hospitals must separately submit to the OSHPD, on an annual basis, a list of their 25 most common outpatient procedures and charges. (
“Upon the request of a person without health coverage, a hospital shall provide the person with a written estimate of the amount the hospital will require the person to pay for the health care services, procedures, and supplies that are reasonably expected to be provided to the person by the hospital, based upon an average length of stay and services provided for the person‘s diagnosis. . . . This section shall not apply to emergency services provided to a person under Section 1317.” (
§ 1339.585 .)
As originally introduced, this legislation required hospitals to provide an estimate of charges upon the request of any patient—including those receiving care in the emergency department. (Assem. Bill No. 1045 (2005-2006 Reg. Sess.) as introduced Feb. 22, 2005.) As the bill moved through the
chargemasters and upholding new federal regulations requiring disclosure of additional pricing information].)
legislative process, it was amended first to apply only to non-emergency patients (Assem. Bill No. 1045 (2005-2006 Reg. Sess.) as amended May 27, 2005) and then amended again to apply only to uninsured persons. (Assem. Bill No. 1045 (2005-2006 Reg. Sess.) as amended Sept. 6, 2005.)
Section 1317, in turn, imposes obligations on California hospitals specifically with respect to emergency medical services. It requires hospitals to provide such services to any person presenting at the emergency department “for any condition in which the person is in danger of loss of life, or serious injury or illness,” and to do so regardless of the ability to pay.5 (
Finally, the Hospital Fair Pricing Act requires California hospitals to establish, give notice of, and administer financial aid and charity care policies. (
Federal law imposes like obligations on Medicare participating hospitals, as is St. Mary. “[I]f any individual . . . comes to the [hospital‘s] emergency department and a request is made on the individual‘s behalf for examination
for an appropriate medical screening examination within the capability of the hospital‘s emergency department. . . .” (
Federal law also prohibits tax-exempt hospitals, such as St. Mary, from doing anything that might “discourage” emergency room patients from following through with needed emergency treatment. Hospital policy must prohibit “the hospital facility from engaging in actions that discourage individuals from seeking emergency medical care, such as by demanding that emergency department patients pay before receiving treatment for emergency medical conditions. . . .” (
Effective January 2, 2021, federal regulatory law, pursuant to the Affordable Care Act, imposes additional pricing disclosure requirements on Medicare participating hospitals—namely that they must file, in addition to
their chargemaster, a “list” of “standard charges” in accordance with guidelines promulgated by the Secretary of Health and Human Services.6 (
“After receiving nearly four thousand comments, the Secretary issued a final rule that defines ‘standard charge’ as ‘the regular rate established by the hospital for an item or service provided to a specific group of paying patients.” (AHA, supra, 983 F.3d at p. 532;
the patient, thus allowing patients to price shop and schedule a service at a time that is convenient for them.” (84 Fed. Reg. 65564.) Thus, the list of 300 such services includes 70 specific services identified by the Center for Medicare and Medicaid Services (CMS) following efforts “to ensure such services could be scheduled in advance.” (84 Fed. Reg. 65571.)
The new required information is made public for purposes of the rule when it is available on “an appropriate publicly available internet location” selected by the hospital; it is “displayed [on the internet] in a prominent manner that identifies the hospital location with which the information is associated“; and the information is “easily accessible, without barriers,” meaning the information is free of charge, accessible without registration or creation of a user account or password, or without submission of any personal identifying information, and searchable in specified respects. (
During the rule making process, concern was raised “that if the hospital attempts to provide pricing information to patients prior to stabilizing them, it would not only constitute an EMTALA [Emergency Medical Treatment and Active Labor Act] violation, but it could also potentially cause the patient‘s
patient receiving critical care.”8 (84 Fed. Reg. 65536.) In response, the CMA explained why the new regulatory requirements would not conflict with that Act:
“[W]e believe that the policies we finalize here that require hospitals to make public standard charges online are distinct from EMTALA‘s requirements and prohibitions and that the two bodies of law are not inconsistent and can harmoniously co-exist. To be clear, the price transparency provisions that we are finalizing do not require that hospitals post any signage or make any statement at the emergency department regarding the cost of emergency care or any hospital policies regarding prepayment of fees or payment of co-pays and deductibles.” (84 Fed. Reg. 65536, italics added.)
Plaintiff‘s Lawsuit
Gray does not allege that Dignity violated any of the statutory and regulatory duties set forth above. Rather, he claims the hospital is required to do more than is required by the federal and state regulatory schemes, and specifically, is required to disclose to emergency department patients, prior to providing any treatment, that its billing will include an ER Charge (which in the case of St. Mary, is a charge set forth in both its chargemaster and its
separate list of the 25 most common outpatient charges filed with the OSHPD).
Gray alleges that he sought and received treatment at St. Mary‘s emergency department in August 2018. After he received treatment, he signed the hospital‘s conditions of admission (COA) form.
Gray was insured through Kaiser at the time. As to insured patients, the COA stated in pertinent part:
“We will bill the patient‘s insurance company for all the services provided during this stay. Co-payments, co-insurance and deductibles required by the insurance company must be paid by the Patient. . . . If the insurance company or benefit plan denies all or part of the payment, the Patient agrees to be responsible to pay any amounts due to the Hospital under the law. . . . [¶] . . . [¶] You also agree the Patient is financially responsible as allowed by law for any charges not paid by the insurer or benefit plan.”
Gray does not allege how much he ultimately owed the hospital, after insurance adjustments and payments by his insurer. But the billings sent to him state he ultimately owed the hospital $879.19.
Gray complains the COA made “no mention” that Dignity would bill for an ER Charge “in addition to the charges for the specified services provided” and that this charge “is not disclosed on signage posted in or around Defendant‘s emergency rooms, or verbally during the patients’ registration process.” Gray further asserts the ER Charge “is not based on the individual terms of treatment or services provided to the patient,” but is “charged to emergency room patients simply for presenting and being seen” in the emergency department. He maintains the “failure to disclose” the ER Charge “is particularly egregious in light of the fact that Defendant represents itself as a charitable, non-profit organization, providing care and help to patients in the community.”
Gray also brings the case as a putative class action on behalf of “[a]ll individuals who, within the last four years, received treatment at a Dignity Health emergency room in California, and who were charged an emergency room fee . . . which is billed on top of the charges for the individual items of treatment and services provided.”
Gray alleges three causes of action: for unfair competition under the UCL, for violation of the CLRA, and for declaratory/injunctive relief. Gray‘s attorney acknowledged that each of his causes of action was grounded solely on Dignity‘s failure to separately and specifically disclose its ER Charge prior
provided,” in his closing brief on appeal, wherein he proposes language of the signage he claims is required, he describes the charge as “intended to cover the costs of [the patient‘s] initial evaluation and management” and “costs of operating and maintaining [a] 24-hour Emergency Department.”
emergency department, or “verbally during the patients’ registration process.” Gray claims this one specific charge must be disclosed prior to the rendition of any emergency medical care, because “if known about prior to treatment,” the charge “would be a substantial factor in a patient‘s decision to remain at the Hospital and proceed with treatment.”
Dignity interposed a demurrer, which the trial court sustained without leave to amend, relying largely on Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1408 (Nolte), which affirmed the dismissal of a UCL case based on allegations Cedars-Sinai had not “specifically, separately, and individually disclose[d]” an administrative charge prior to the plaintiff receiving services from a physician at a hospital medical facility. (Italics omitted.)
DISCUSSION10
The UCL Claim
” ‘The purpose of the UCL [citation] “is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services. [Citation.]” ’ (McKell v. Washington Mutual, Inc. (2006)
142 Cal.App.4th 1457, 1470. . . .) ‘A UCL action is equitable in nature; damages cannot be recovered. [Citation.] . . . [U]nder the UCL, “[p]revailing plaintiffs are generally limited to injunctive relief and restitution.” ’ (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144. . . .)” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1359 (Durell).)
“The UCL does not proscribe specific acts, but broadly prohibits ‘any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising. . . .’ (
“Historically, the UCL authorized any person acting for the interests of the general public to sue for relief notwithstanding any lack of injury or damages. (Troyk v. Farmers Group, Inc., supra, 171 Cal.App.4th at p. 1335.) At the November 2, 2004, General Election, the voters approved Proposition 64, which amended the UCL to provide that a private person has standing to bring a UCL action only if he or she ‘has suffered injury in fact and has lost money or property as a result of the unfair competition.’ (
Gray asserts two bases for his UCL claim. He generically alleges that Dignity‘s failure to disclose that it would include an ER Charge in its billing prior to providing emergency medical services was “unfair” because the COA did not “mention” the charge, there was no “signage in the emergency room” disclosing this charge, and there was no “verbal[]” disclosure to him “during registration.”
He additionally alleges Dignity‘s failure to disclose, prior to providing emergency medical services, that its bill for such service would include an ER Charge is both an “unfair” and “unlawful” business practice because the hospital “bills patients amounts in violation of the [CLRA]” and therefore his UCL “claim is tethered to a legislatively declared policy.” In connection with his CLRA claim, he alleges Dignity‘s failure to disclose, prior to providing emergency medical services, that the hospital‘s bill for such services would
did not have or involve, or which were prohibited by law in violation of
We address first Gray‘s generic claim—that Dignity‘s failure to disclose, prior to providing emergency services, that its billing would include an ER Charge is an “unfair” business practice.
The UCL does not define the term “unfair.” It is frequently stated that ” ‘[a] business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits. [Citations.] The determination whether a business practice is unfair ” ’ “involves an examination of [that practice‘s] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant‘s conduct against the gravity of the harm to the alleged victim. . . . [Citations.]” [Citation.]’ ” ’ (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473. . . .)” (Nolte, supra, 236 Cal.App.4th at pp. 1407-1408.) Some courts have, in the wake of Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163 (Cel Tech), adopted a more rigorous standard, requiring that “unfairness” be “tethered to some legislatively declared policy.” (See generally Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131, 1150 (Moran) [discussing different standards applied by the Courts of Appeal]; Durell, supra, 183 Cal.App.4th at pp. 1364-1365 [same].)
We need not decide which standard is preferable, as even under the standard more generous to consumers, as was applied in Nolte, Gray does not state a claim for an “unfair” business practice. We agree with the trial court that Nolte is analogous to the instant case, and we agree with Nolte‘s holding.
The plaintiff in Nolte saw a physician who practiced in a Cedars-Sinai medical facility. (Nolte, supra, 236 Cal.App.4th at p. 1406.) “Like all the doctors in the Cedars network, Nolte‘s physician‘s practice had contracted with Cedars for Cedars to maintain computerized records for its patients.” (Ibid.) At the physician‘s office, Nolte signed the Cedars-Sinai COA, which stated, among other things, that Nolte was admitted to the medical center as an outpatient, “that all physicians were independent contractors who ‘may bill separately for their services,’ ” and that as a patient of the medical center, Nolte obligated himself to pay the ” ‘account of the Hospital in accordance
The appellate court pointed out that Nolte did not allege that the Cedars-Sinai fee, itself, was unfair or excessive, but rather, that the hospital had not “specifically, separately, and individually” disclosed to him, prior to treatment, that it would charge such a fee. (Nolte, supra, 236 Cal.App.4th at p. 1408.) This, said the court, did not state a claim for an “unfair” business practice. (Ibid.)
“[H]ospitals are required by law to make available a schedule of charges online or at the hospital, and to provide notice to consumers (here, patients) that they have done so in a prescribed fashion, and there is no allegation that Cedars did not do so. Cedars‘s agreement with Nolte‘s physician was that it would set up the computerized billing service for the patients. Nolte signed the COA stating that he would pay Cedars‘s charges, and that he may be billed separately by his physician and by Cedars (which was prohibited by law from employing his physician). Cedars then issued a separate bill to Nolte for creating his patient account (a function which the complaint alleges is often provided by the medical providers themselves, who would then presumably pass on the administrative cost to the patient). Here, Nolte agreed in the COA to separate billing.” (Nolte, supra, 236 Cal.App.4th at p. 1408.)
Nor did Nolte‘s complaint that the fee was not separately and individually disclosed prior to treatment state a claim for “fraudulent” business practices. “The test for fraud under Business and Professions Code section 17200 is ’ ” ‘whether the public is likely to be deceived.’ ” ’ ” (Nolte, supra, 236 Cal.App.4th at p. 1409, quoting Searle v. Wyndham Internat., Inc. (2002) 102 Cal.App.4th 1327, 1335.) The complaint, however, did “not allege (and the law does not provide) that Nolte had the right to have every individual charge specifically disclosed to him in advance before Cedars issued a bill. Cedars‘s obligation to Nolte and other consumers of medical services was that Cedars make a written or electronic copy of its schedule of charges available in the manner codified in section 1339.51 of the
106 Cal.App.4th 953, 966.) Thus, “Nolte‘s allegation that Cedars did not separately and specifically disclose and explain the facilities fee to him was not sufficient to state a claim that the public was likely to be deceived.” (Nolte, at p. 1409.)
Gray asserts Nolte is inapposite because it involved “specific facts and unusual circumstances.” Gray points out Nolte did not seek treatment for a medical emergency but consulted a physician at a scheduled time. The physician Nolte consulted was an independent contractor, not a hospital employee. And Nolte signed the hospital‘s COA “at the doctor‘s office.” (Italics omitted.) Thus, according to Gray, it was the physician, not the hospital, who “had the ‘duty’ to disclose whatever charges the patient would incur in his ‘second opinion’ visit.” Gray‘s hospital visit, in contrast, “took place in Dignity‘s emergency room, and [allegedly] with Hospital personnel.”
Gray‘s effort to distinguish Nolte is unavailing. While he may believe Nolte should have directed his nondisclosure claim at the physician he consulted, that is not the claim Nolte brought. With good reason. Nolte was admitted and treated as an outpatient of Cedars-Sinai, and his complaint was with a charge by Cedars that he claimed should have been separately and specifically disclosed by Cedars in its COA prior to his treatment. This is essentially the same claim Gray advances here—that, prior to providing any emergency medical services, Dignity is required to disclose that its billing for such services will include an ER Charge. The factual distinctions to which Gray points are immaterial.
Indeed, the circumstances in the instant case are even more compelling than those in Nolte. Not only did Dignity fully comply with all state and federal disclosure requirements, including the requirement that there be signage in its emergency room departments stating how its pricing information can
be accessed (
As we have recited, state and federal law governing emergency medical care require California hospitals to provide emergency treatment to any person presenting at an emergency department who needs emergency care. (
It is also telling that in expanding the pricing disclosure obligations of hospitals under the Affordable Care Act, federal regulators took care to ensure that these new obligations do not interfere with the emergency treatment obligations under the EMTALA. As we have discussed, the new pricing disclosure requirements are focused on “shoppable” medical services, that is, services that can be scheduled in advance and, by definition, are not emergency medical services. Thus, the new pricing information is to be posted on-
line in a readily accessible format for use by consumers planning for scheduled medical treatment. People seek emergency medical treatment, in contrast, for serious, and often grave, unplanned accidents or medical calamities.
Moreover, when concern was raised that the new federal disclosure requirements might interfere with a hospital‘s obligations under the EMTALA—including providing emergency treatment to any person who seeks it and providing such treatment before any discussion about ability to pay—the CMC stated, “the price transparency provisions . . . do not require that hospitals post any signage or make any statement at the emergency department regarding the cost of emergency care or any hospital policies regarding prepayment of fees or payment of co-pays and deductibles.” (84 Fed. Reg. 65536.) And while the CMC lauded hospitals that go beyond posting the new pricing information, the efforts it identified were post-treatment financial counseling and workable payment strategies. (84 Fed. Reg. 65577.) In short, Gray is claiming Dignity owes the very pre-treatment disclosure obligation—by signage and direct verbal communication—the CMC has reassured hospitals does not exist.
Further, Gray claims Dignity owes this pre-treatment disclosure duty in order to accomplish an objective antithetical to state and federal law—to discourage some patients from remaining in the emergency room and receiving medical care. He asserts, for example, that if signage were posted—identifying the cost of each of the five levels of ER Charges (ranging from $984 to $7,356), each level accompanied by a one-word descriptor (ranging from “minor” to “complex/life-threatening“), with a caveat that these are “gross” charges prior to insurance and any other reduction and “[y]our . . .
“relatively minor ailments” and go a long way towards making emergency departments “less crowded.” Even if lessening the load on our emergency rooms might be a laudable goal, Gray‘s sweeping assumption that those seeking care at an emergency department can accurately diagnose whether their ailment is “relatively minor” and whether they can safely transport themselves or be transported to a lower acuity facility, is unsupportable. And while Gray complains this is a “paternalistic” attitude and asserts every person has a right to decide for him or herself whether to seek medical treatment at an emergency department, and to do so based on readily accessible cost information, this disregards the long standing regulatory environment within which emergency departments operate, which emphasizes that no one in need of emergency care should be deterred from receiving it because of its cost.
Thus, while Gray is correct that conduct not expressly prohibited by statute may nevertheless be found to be an “unfair” business practice under the UCL (see, e.g., Durell, supra, 183 Cal.App.4th at p. 1359), the alleged conduct must nevertheless meet the substantive definition of an “unfair” practice to be actionable, which the failure to disclose Gray complains of here, does not for the reasons we have discussed.12
In sum, even giving Gray‘s allegations their full due, the fact that Dignity did not disclose, prior to providing emergency medical treatment, that its billing for such services would include an ER Charge does not identify a practice that ” ‘violates established public policy,’ ” or is ” ‘immoral, unethical, oppressive or unscrupulous.’ ” (Nolte, supra, 236 Cal.App.4th at pp. 1407-1408.) We therefore turn to Gray‘s CLRA claim, which he urges provides a “tether” for his UCL claim.
The CLRA Claim
” ’ “The [CLRA], enacted in 1970, ‘established a nonexclusive statutory remedy for “unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result
Gray relies specifically on subdivisions (a)(5) and (a)(14) of the CLRA. Subdivision (a)(5) of
disapproved on another ground in Noel v. Thrifty Payless Inc., supra, 7 Cal.5th at p. 986, fn. 15.)
Even assuming, without deciding, that Gray adequately alleged standing to assert his CLRA claim,13 he has not alleged a claim under either subdivision (a)(5) and (a)(14) of
Civil Code Section 1770, Subdivision (a)(5) Misrepresentation
While Gray is correct that a
As the court in Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 36-37 (Outdoor Marine)14, explained, “[i]t is fundamental that every affirmative misrepresentation of fact works a concealment of the true fact. . . . [¶] Fraud or deceit may consist of the suppression of a fact by one who is bound to disclose it or who gives information of other facts which are likely to mislead for want of communication of that fact.” (See Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 834 [“the CLRA proscribes a concealment of characteristics or quality ‘contrary to that represented,’ but in [plaintiff‘s] case, no representation was made to which the alleged concealment was contrary“].)
Thus, where the plaintiff fails to allege that the defendant “was ‘bound to disclose’ ” the nondisclosed fact or facts showing the defendant “ever gave any information of other facts which could have the likely effect of misleading the public ‘for want of communication’ of the fact” allegedly not disclosed, a misrepresentation claim under
52 Cal.App.3d at p. 37 [representation that “hydrastatic transmission provide[d] ‘positive braking’ . . . necessarily conceal[ed] that the braking system [was] ‘totally defective’ ” and stated nondisclosure claim under
For all the reasons we have discussed in connection with Gray‘s “unfair” business practice claim, Dignity did not owe Gray the duty he claims was owed in this case—to disclose, prior to providing any medical emergency treatment, that its billing for such treatment would include an ER Charge. We
Civil Code Section 1770, Subdivision (a)(14) Misrepresentation
Gray does not allege any collateral oral misrepresentation by Dignity that is at odds with the terms of the hospital‘s COA. Nor does he allege that Dignity‘s COA contains any term prohibited by law. The only allegation Gray makes with respect to the hospital‘s COA is that “under Hospital‘s Contract,”
he is assertedly “not required to pay” the “undisclosed” ER Charge. At most, he has alleged a breach of contract, which, alone, is not sufficient to state a claim under
In sum, Gray‘s assertion that Dignity failed to disclose, prior to providing any medical emergency treatment, that its billing for such treatment would include an ER Charge, does not, under either
Declaratory/Injunctive Relief Claim
Gray‘s claim for declaratory and injunctive relief has no independent vitality apart from his UCL and CLRA claims. Rather, it is a request for particular forms of equitable relief. (See Green Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425, 433, fn. 8.) Since his UCL and CLRA claims fail, so too does his request for declaratory and injunctive relief.
The judgment is AFFIRMED. Respondent to recover costs on appeal.
Banke, J.
We concur:
Humes, P.J.
Margulies, J.
A158648, Gray v. Dignity Health
Trial Court: San Francisco City and County Superior Court
Trial Judge: Hon. Mary E. Wiss
Counsel:
Carpenter Law, Gretchen A. Carpenter; Law Offices of Barry L. Kramer, Barry Kramer for Plaintiff and Appellant.
Manatt, Phelps & Phillips, LLP, Barry S. Landsberg, Harvey L. Rochman, Joanna Sobol McCallum for Defendant and Respondent.