Bondanza v. Peninsula Hospital
| Citation | 79 Cal.App.3d 449,145 Cal.Rptr. 69 |
| Court | California Court of Appeals |
| Decision Date | 05 April 1978 |
| Parties | Catherine M. BONDANZA et al., Plaintiffs and Appellants, v. PENINSULA HOSPITAL et al., Defendants and Respondents. Civ. 39454. |
Carol R. Golubock, Legal Aid Society of San Mateo Co., Daly City, for plaintiffs and appellants.
Carr, McClellan, Ingersoll, Thompson & Horn, David C. Carr, Burlingame, for defendants and respondents.
Plaintiffs, who are respectively a patient and two parents of patients treated at defendant hospital, have appealed from an order denying their motions to certify a class action and for summary judgment, and from a judgment, entered following the granting of the motion of defendant hospital and its collection agency for summary judgment. 1 That judgment granted plaintiffs some partial relief. For reasons set forth below we conclude that the trial court did not err in denying the plaintiffs' motion for certification of the action as a class action. They received all the relief to which they were entitled when the court, in granting the defendants' motion for summary judgment, provided that the defendants were each permanently enjoined and restrained from imposing upon or collecting, directly or indirectly, any collection fee or charge from any of plaintiffs.
By their amended complaint for declaratory and equitable relief the plaintiffs sued on behalf of themselves and all other individuals who, in the three years preceding the filing of the complaint, had signed form agreements with the hospital requiring them to pay reasonable collection costs if their medical bills were turned over to a collection agency, and who were assessed collection costs equal to one-third or greater of the amount due on their medical bills. They sought to enjoin the hospital from using the form of admission agreement reviewed below. 2 The plaintiffs alleged, and the record establishes, that each signed an agreement, providing in pertinent part as follows: None of the plaintiffs made any payment upon the discharge of the patient who was treated, and each was ultimately billed for a sum representing the balance due plus one-third of that sum as a collection fee. In their first cause of action plaintiffs alleged that the imposition of the collection charge was an unfair business practice under the provisions of section 3369 of the Civil Code. In their next three causes of actions plaintiffs contended that the collection costs were void and unenforceable because based on a liquidated damages provision within the meaning of sections 1670 and 1671 of the Civil Code, because based on a forfeiture provision within the meaning of section 3275 of the Civil Code, and because the provision for payment of such costs imposed, in an adhesion contract, an unreasonable penalty that was contrary to the public policy of this state. A fifth cause of action sought a declaration concerning the respective rights and obligations of plaintiffs and the hospital and its collection agency, and the sixth cause of action sought equitable relief from attempts to impose the collection fees on plaintiffs.
The facts of the matter were presented to the trial court through the defendant hospital's answers to interrogatories, the affidavits of plaintiffs, a so-called "affidavit" of the attorney for plaintiffs, which appears to marshall the facts in support of certification as a class action, and hospital billing records admitted by stipulation. It appears that the collection procedure normally followed by the hospital was as set forth in the margin. 3 By arrangement with the collection agency the hospital, as evidenced by a listing sheet assigning the claims for collection, agreed to pay the collection agency a commission of 331/2 percent of any amount collected, up to that percentage of the total amount due when the account was assigned. Payment was made by the hospital subsequent to the collection of any such assigned account.
With respect to the particular plaintiffs involved in this case the record reflects as follows:
Plaintiff Bondanza entered the hospital on September 18, 1973. She signed the form agreement because she thought that she was required to do so in order to be admitted. She was discharged from the hospital on September 23, 1973. On that date she incurred a debt to the hospital of $477.36. On December 3, 1973, Ms. Bondanza filled out and returned forms which the hospital had sent her in order that the hospital could bill her insurer, John Hancock. On December 18, 1973, Ms. Bondanza's physician sent the hospital a copy of a letter that he had sent to Blue Cross, Ms. Bondanza's other insurer, contesting Blue Cross' preliminary determination that her stay in the hospital was not covered by the insurance. From the date of discharge until March 27, 1974, the hospital contacted Ms. Bondanza by telephone four times and wrote her eight times, including an itemized statement mailed three days after discharge and five further itemized statements mailed monthly, in the attempt to collect the debt. The remaining two letters sent by the hospital to Ms. Bondanza were form letters bearing business headings of the defendant collection agency under the name "Credit Bureau," (the two "pre-collection assignment letters" referred to in "step 5" of the hospital collection procedure outlined above in footnote 3). In February, Ms. Bondanza telephoned the hospital to explain that she was having difficulty in obtaining payments from her insurers and that, her sole income being $247 a month from social security and SSI, she was personally unable to pay the debt. On March 27, 1974, the hospital assigned the debt to the collection agency, as its agent for collection. On May 9, 1974, Ms. Bondanza's insurer, John Hancock, paid the hospital $410.36 on her account. On May 14, 1974, Ms. Bondanza wrote the hospital stating that she would pay the balance as soon as possible. About three weeks thereafter, she received a "Final Notice" from the collection agency stating that she owed the hospital $242.80. When she telephoned the collection agency she was told that $67 of this amount represented the balance of the medical bill, while $175.80 represented collection costs and interest. On July 1, 1974, Ms. Bondanza sent $67 either to the collection agency or to the hospital. On or about July 18, 1974, she received another letter from the collection agency stating that she owed $175.80. The hospital paid the collection agency $159.12 pursuant to their agreement, that is 331/3 percent of $477.36, the amount paid after assignment of the debt. When this action was brought, the hospital claimed that $159.12 remained due and owing for the collection costs on Ms. Bondanza's account, but alleged that, due to the hospital's policy of not pursuing such charges after payment in full of the outstanding medical bills, no action had been or would be taken to collect that amount.
Plaintiff Arrellano incurred a debt of $281.30 to the hospital on August 5, 1973, for medical services rendered to his daughter. He had signed the form agreement upon her admission. From the date of discharge until February 26, 1974, the hospital contacted Arrellano once in person and wrote him eight times, including an itemized statement mailed three days after discharge, and five further itemized statements mailed monthly. The remaining two letters sent by the hospital to Arrellano were form letters bearing business headings of the collection agency. In response to one of these letters, Arrellano, who had been unemployed since November, told the hospital that he would attempt to obtain payment from his insurer. On February 26, 1974, the hospital assigned the debt to the collection agency as its agent for collection. On or about June 1974, Arrellano explained to representatives of the collection agency that the forms which he had sent to his insurer had been lost, and that he and his physician had filled out new forms. In August 1974, Arrellano received a notice from the collection agency stating that he owed "$545.34" comprising $281.30 for medical services and "$107.34" in collection costs and interest. When this action was brought, the hospital claimed that $281.30 for medical services and $93.76 (331/3 percent of $281.30) were due and owing from Arrellano.
Plaintiff Rivera incurred a debt of $577.34 to the hospital on January 4, 1974, for medical services rendered to his sons. He had signed the form agreement upon their admission because he thought that he was required to do so in order that they might be admitted. From the date of discharge until July 23, 1974, the hospital contacted Rivera twice by telephone and wrote him seven times, including an itemized statement four days after discharge, and four further itemized statements mailed monthly. The two remaining letters sent by the hospital to Rivera were form letters bearing business headings of the collection agency. In January and February 1974, Rivera's insurer paid the hospital $472.94, and in March he received a bill for the remaining $104.40. In April 1974, Rivera suffered a stroke and became dependent on disability payments and aid to family with dependent children, all of which he explained when the hospital telephoned regarding his bill. On or about April 20, 1974, Rivera sent the...
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