Nygaard v. Sioux Valley Hospitals
| Decision Date | 04 April 2007 |
| Docket Number | No. 23906.,No. 23905.,No. 24058.,23905.,23906.,24058. |
| Citation | 731 N.W.2d 184,2007 SD 34 |
| Parties | Sherry B. NYGAARD, On Behalf of Herself and All Others Similarly Situated, Plaintiff and Appellant, v. SIOUX VALLEY HOSPITALS & HEALTH SYSTEM, Defendant and Appellee. Robert Dosch, On Behalf of Himself and All Others Similarly Situated, Plaintiff and Appellant, v. Avera Health, Defendant and Appellee. Brett and Debra Burgher, On Behalf of Themselves and All Others Similarly Situated, Plaintiffs and Appellants, v. Rapid City Regional Hospital, INC., Defendant and Appellee. |
| Court | South Dakota Supreme Court |
[¶ 1.] Sherry Nygaard, Robert Dosch, and Brett and Debra Burgher (Patients) commenced these class actions against Sioux Valley Hospitals and Health System, Avera Health, and Rapid City Regional Hospital, Inc. (Hospitals).1 The Patients were uninsured and not covered by Medicare/Medicaid. They sought damages for being charged the full, undiscounted price of the Hospitals' services, which was more than the price paid by patients who were insured or covered by Medicare/Medicaid. Patients also sought damages for alleged misrepresentations concerning the Hospitals' willingness to provide medical care regardless of ability to pay. They brought their claims on four theories. Three were premised on contract. The fourth alleged a violation of SDCL 37-24-6, part of South Dakota's Deceptive Trade Practices and Consumer Protection Act (Trade Practices Act or the Act). The circuit courts granted the Hospitals' motions to dismiss for failure to state a claim under SDCL 15-6-12(b)(5).2 Although each case has procedural issues not present in the others, the four substantive theories are the same. Because Patients' complaints fail to state a claim under the substantive theories, we have consolidated the cases and affirm.
[¶ 2.] Because the cases were dismissed for failure to state a claim, we restate the facts pleaded in the complaints. Sioux Valley is a non-profit corporation with its principle place of business in Sioux Falls, South Dakota. Sioux Valley described itself "as an integrated network of nearly 300 physicians and more than 150 healthcare facilities." Nygaard alleged that Sioux Valley held itself out: as striving "to provide the highest value of health care services through a combination of high quality and cost effective care"; as being "dedicated to providing quality care for patients of all ages, regardless of race, creed, their circumstances, or their ability to pay for such services"; as providing "care for the elderly and poor through the Medicare and Medicaid programs at agreed upon rates, which are substantially lower than the normally charged rates"; and as providing "charity care to patients who have demonstrated an inability to pay for medical services." Nygaard also alleged that Sioux Valley received state and federal tax exemptions, and as a nonprofit charitable organization, was required to provide services regardless of ability to pay.
[¶ 3.] In May 2003, Nygaard underwent surgery at Sioux Valley's Vermillion Campus Hospital. She also received other related treatment at Sioux Valley's facilities. Upon admission, Nygaard alleged that she was required to sign a standardized contract agreeing to pay, in full, unspecified and undiscounted charges for medical care. She also alleged that the charges were pre-set by Sioux Valley in its sole discretion. Nygaard was subsequently charged what she describes as the full, undiscounted price of the services provided. Although Nygaard made payments to Sioux Valley, a substantial balance remained, and Sioux Valley charged interest and fees relating to that balance. The complaint does not reflect the amount Nygaard was charged, the amount she paid, or the amount that remains owing.
[¶ 4.] Avera is also a non-profit corporation with its principal place of business in Sioux Falls. Avera held itself out as a health ministry of the Benedictine and Presentation Sisters "serving the people of eastern South Dakota and surrounding states with hospitals, nursing homes, clinics and other health services at more than 100 locations." Avera's "Health Mission" stated that it "provide[s] a quality, cost effective health ministry, which reflects Gospel values." Dosch alleged that Avera publicly stated that it was "guided by gospel values of . . . hospitality and stewardship" and "compassion . . . especially for the poor. . . ." Dosch also alleged that Avera received state and federal tax exemptions, and as a nonprofit charitable organization, was required to provide services regardless of ability to pay.
[¶ 5.] In May 1993, Dosch was treated for a broken hip at Avera St. Luke's in Aberdeen, South Dakota. Upon admission, Dosch alleges that he was required to sign an agreement to pay the unspecified, undiscounted, pre-set charges described by Nygaard. Dosch was billed in excess of $30,000. He set up a payment plan, paying $200 per month, but the payments were offset by interest and fees.
[¶ 6.] Rapid City Regional Hospital (RCRH) is a non-profit charitable organization with its principle place of business in Rapid City, South Dakota. Burghers alleged that RCRH publicly represented itself: as "striving to continually exceed the expectations of every patient and customer in regard to service, effort and professional standards, demonstrating honest, positive and ethical behavior and communication in dealing with our patients, customers and employees"; as "providing quality services at the lowest possible cost"; and as "provid[ing] quality medical health care regardless of race, creed, sex, national origin, handicap, age, or ability to pay[.]" Burghers also alleged that RCRH received state and federal tax exemptions, and as a nonprofit charitable organization, was required to provide services regardless of ability to pay.
[¶ 7.] Brett and Debra Burgher, and their son, Nathan, all received medical care at RCRH. Before receiving treatment, they were also required to sign an agreement to pay the unspecified, undiscounted, pre-set charges described by Nygaard.
[¶ 8.] The following issues have been preserved3 for review:
1) Whether the circuit court erred in dismissing Patients' contract theories involving: an implied, commercially reasonable price term; breach of the covenant of good faith and fair dealing; and enforcement of an adhesion contract.
2) Whether the circuit court erred in dismissing Patients' claims under the Trade Practices Act.
[¶ 9.] Guthmiller v. Deloitte & Touche, LLP, 2005 SD 77, ¶ 4, 699 N.W.2d 493, 496. "[T]hese `motions are viewed with disfavor and seldom prevail.'" Elkjer v. City of Rapid City, 2005 SD 45, ¶ 6, 695 N.W.2d 235, 238 (quoting Fenske Media Corp. v. Banta Corp., 2004 SD 23, ¶ 7, 676 N.W.2d 390, 392-393 (citations omitted)). However, "facts `well pled' and not mere conclusions may be accepted as true." Janklow v. Viking Press, 378 N.W.2d 875, 877 (S.D. 1985). A 12(b)(5) motion "does not admit conclusions of the pleader either of fact or law." Akron Savings Bank v. Charlson, 83 S.D. 251, 253, 158 N.W.2d 523, 524 (1968). Therefore, "[w]hile the court must accept allegations of fact as true when considering a motion to dismiss, the court is free to ignore legal conclusions, unsupported conclusions, unwarranted inferences and sweeping legal conclusions cast in the form of factual allegations." Wiles v. Capitol Indemnity Corp., 280 F.3d 868, 870 (8th Cir.2002). We review the circuit court's ruling de novo, with no deference to its determination. Elkjer, 2005 SD 45 at ¶ 6, 695 N.W.2d at 238.
[¶ 10.] The circuit court that dismissed Nygaard's and Dosch's breach of contract theories viewed the essence of their claims as contentions that the Hospitals breached the contracts by not charging Patients the reduced rate that insured and Medicare/Medicaid patients received. The circuit court's view was based on the complaints' numerous references to being charged the "full, undiscounted cost" rather than the discounted rates Hospitals charged insured and Medicare/Medicaid patients. Therefore, when dismissing, the circuit court explained that recognizing such a claim would put the court in the role of a policy maker and "usurp the traditional role of the Legislature" in regulating hospitals. The circuit court in Burghers' case reached essentially the same conclusion.
[¶ 11.] Patients, however, emphatically contend that none of their theories seek entitlement to the discounted rates charged to insured and Medicare/Medicaid patients. They contend that their references to discounted rates were merely pleaded as an illustration that the Hospitals' charges were unreasonable....
To continue reading
Request your trial
-
Hartranft v. Encore Capital Grp., Inc.
...unconscionability to invalidate a contract." Compare Garcia, 2019 WL 2902499 at *3 (citing Nygaard v. Sioux Valley Hosp. & Health Sys., 731 N.W.2d 184, 194-95 (S.D. 2007)) with Tompkins v. 23andMe, Inc., 840 F.3d 1016, 1023-28 (9th Cir. 2016) (noting that California law also requires both p......
- Giddings v. Media Lodge, Inc.
-
Hyde v. Franklin Am. Mortg. Co.
...to an agreed common purpose and consistency with the justified expectations of the other party.’ " Nygaard v. Sioux Valley Hosps. & Health Sys. , 731 N.W.2d 184, 194 (S.D. 2007) (quoting Garrett , 459 N.W.2d at 841 )."The covenant of good faith does not create an amorphous companion contrac......
-
Cayanan v. Citi Holdings, Inc.
...of both procedural and substantive unconscionability are required to invalidate such provisions. Nygaard v. Sioux Valley Hosps. & Health Sys., 731 N.W.2d 184, 194–95 (S.D.2007); accord Hoffman v. Citibank, N.A., 546 F.3d 1078, 1083 n. 2 (9th Cir.2008) (citing Nygaard ). Because the Court fi......
-
Price Transparency and Incomplete Contracts in Health Care
...187 Cal. Rptr. 3d 737, 744 (Cal. Ct. App. 2015).122. DiCarlo, 530 F.3d at 264; see also Nygaard v. Sioux Valley Hosps. & Health Sys., 731 N.W.2d 184, 193 (S.D. 2007) (quoting Cox v. Athens Reg'l Med. Ctr., Inc., 631 S.E.2d 792, 797 (Ga. Ct. App. 2006) ("[I]n a hospital setting, it is not po......