Wednesday, November 13, 2019
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Court of Appeal:
Class Must Be Certified on Issue of Whether Hospital Is Entitled to Payment at Full Rates
Patient Who Received Emergency Care After Agreeing to Pay Amounts Posted For Services Contends That Recovery Is Limited to Quantum Meruit
By a MetNews Staff Writer
An uninsured patient who received emergency treatment at a hospital after signing an agreement to pay the facility for services at the posted rates is entitled to have a class certified to litigate the issue of whether the admissions contract contains an “open price term” which would limit recovery to quantum meruit, Div. Seven of the Court of Appeal for this district held yesterday.
The plaintiff, Tony Sarun, was taken by ambulance to Northridge Hospital Medical Center after incurring injuries in a traffic accident. He was treated and was released about three or four hours later.
He was billed $23,487.90, which reflected charges, at posted rates, amounting to $31,359, minus a $7,871.10 “uninsured discount.” The admissions form he signed says: “Patients who do not have insurance must pay us for the services at our full charges, unless other discounts apply,” defining “full charges” as “the Hospital’s published rates (called the chargemaster), prior to any discounts or reductions.”
Civil Code §1611
Sarun sued Dignity Health, which then owned and operated the hospital, insisting the charges were “unfair, unconscionable and/or unreasonable.” He asserted that the admissions contract contains an “open price” term, limiting charges, under Civil Code §1611, to the reasonable value of the services. That section provides:
“When a contract does not determine the amount of the consideration, nor the method by which it is to be ascertained, or when it leaves the amount thereof to the discretion of an interested party, the consideration must be so much money as the object of the contract is reasonably worth.”
In 2014, the Court of Appeal held that Sarun had standing to sue under the Unfair Competition Law.
Sarun moved for class certification, defining the class as all persons who had received treatment at Northridge Hospital Medical Center during the defined class period and who were billed either at “chargemaster rates” or those rates minus an “uninsured discount.”
Judge Nelson’s Ruling
Los Angeles Superior Court Judge Maren E. Nelson denied certification. She reasoned that if she decided whether §1611 limits Dignity’s recovery to quantum meruit, there would have to follow an individual determination as to the reasonable value of the services as to each class member.
Div. Seven yesterday reversed in an opinion by Presiding Justice Dennis Perluss. The jurist announced that the panel was exercising its “inherent authority” to redefine the issue by directing the Superior Court “to certify as a class issue whether Dignity Health’s admissions contract contains an open price term, so that patients within the class are obligated to pay no more than the reasonable value of the services provided.”
He said:
“[T]he trial court’s decision that common issues do not predominate with respect to Sarun’s request for certification of a class to pursue his cause of action for declaratory relief in its entirety is supported by substantial evidence….However, its implicit finding with respect to the limited issue class that the common issue of contract interpretation raised by Sarun is outweighed by individual questions of fact is not.”
Perluss went on to say:
“[A]lthough the trial court correctly observed that answering the open-price-term question would not fully resolve class members’ ultimate liability to Dignity Health, it erred in suggesting there was no utility in deciding this threshold issue. To the contrary, settling this issue could significantly expedite final determination of any outstanding billing disputes….If Sarun’s interpretation of the admissions contract is upheld, Dignity Health could not assert that uninsured patients are contractually bound to pay chargemaster rates less discounts without regard to whether those rates are reasonable. If it is rejected, as to all class members bound by the judgment Dignity Health need only defend the rates charged against the claim they are unconscionable, a quite different issue with a different party bearing the burden of proof.”
The case is Sarun v. Dignity Health, B288062
Las Vegas attorney Barry L. Kramer and Gretchen Carpenter of Manhattan Beach represented Sarun. Darius Ogloza and David Fortney of the San Francisco firm of Ogloza Fortney acted for Dignity.
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