Sarun v. Dignity Health

Decision Date15 December 2014
Docket NumberB251767
Citation232 Cal.App.4th 1159,181 Cal.Rptr.3d 545
CourtCalifornia Court of Appeals Court of Appeals
Parties Tony SARUN, Plaintiff and Appellant, v. DIGNITY HEALTH, Defendant and Respondent.

Law Offices of Barry L. Kramer, Los Angeles, Barry L. Kramer ; Strange & Carpenter, Brian R. Strange and Gretchen Carpenter, Los Angeles, for Plaintiff and Appellant.

Ogloza Fortney, San Francisco, Darius Ogloza, David Fortney, and Brian D. Berry, for Defendant and Respondent.


Tony Sarun was uninsured when he received emergency health care services from a hospital owned and operated by Dignity Health. Upon admission Sarun signed an agreement to pay the hospital's "full charges, unless other discounts apply." The agreement explained uninsured patients might qualify for government aid programs or financial assistance from Dignity. After receiving an invoice for $23,487.90, which reflected a $7,871 "uninsured discount," and without applying for any other discount or financial assistance, Sarun filed a putative class action complaint asserting claims including unfair and/or deceptive business practices under Business and Professions Code section 17200 et seq. (UCL) and violation of the Consumers Legal Remedies Act (CLRA) ( Civ. Code, § 1750 et seq. ). The complaint alleged Dignity had failed to disclose uninsured patients would be required to pay several times more than other patients receiving the same services, the charges set forth on the invoice were not readily available or discernable from the agreement, and the invoiced charges exceeded the reasonable value of the services.

The trial court sustained Dignity's demurrer to Sarun's second amended complaint without leave to amend and dismissed the action on the ground Sarun had not adequately alleged "actual injury," and, therefore, lacked standing. We reverse.

1. The Terms of the Admissions Agreement

According to the allegations of the second amended complaint, Sarun was taken by ambulance to Northridge Hospital Medical Center after a motor vehicle accident. He was released three to four hours later after receiving various diagnostic tests.

While at the hospital Sarun signed a "Conditions of Admissions and Treatment" agreement, which included terms governing payment for services.

Paragraph 8.b. stated, "Patients who do not have insurance must pay us for the services at our full charges, unless other discounts apply. However, uninsured patients may be able to qualify for government programs or financial assistance. Financial assistance may include a discount from the Hospital's full charges, free care, interest free payment plans or other assistance. Patients seeking government or financial assistance must complete an application (see Paragraph 9 below )." "Full charges" was defined as "the Hospital's published rates (called the chargemaster), prior to any discounts or reductions." Paragraph 8.c., "Additional Terms," provided the patient would be responsible for attorney fees and collection expenses if it was necessary to refer the matter for collection. Paragraph 9, "Financial Assistance," explained Dignity could help uninsured patients enroll in government health care programs, and, if the patient did not qualify, might provide financial assistance under its own financial assistance policy. Paragraph 9 reiterated an uninsured patient was required to complete an application and provide certain personal and household financial information to determine eligibility for financial assistance.

Sarun subsequently received a "Balance Due Notice," reflecting total charges of $31,359, an uninsured discount of $7,871.10 and a balance due of $23,487.90. The invoice directed Sarun to make his check payable to Northridge Hospital Medical Center, contained spaces for use of a credit card, and also provided a Web site address to access, manage or pay his account online. It also invited Sarun to call a customer service representative if he wanted to set up a payment plan.

The invoice further stated, in addition to the uninsured discount, "you may be eligible for other forms of financial assistance such as government sponsored programs" and provided a telephone number for further information. A document included with the invoice described the financial assistance options, provided an application and enumerated the necessary documentation.1 It provided in part, "If you are unable to supply one of the documents, or there are additional factors that may influence the evaluation, please submit a written statement explaining your situation. [¶] If any of the [required documents] are not included, the application cannot be processed. After all documents have been received, your application will be reviewed and you will be notified as soon as a decision has been made."

Sarun did not seek any further discount or apply for financial assistance. He did, however, make a partial payment toward the balance due.

2. The Second Amended Complaint

After a demurrer to Sarun's first amended complaint was sustained with leave to amend,2 on January 24, 2013 Sarun filed a second amended class action complaint asserting causes of action for violations of the UCL and CLRA. Sarun alleged Dignity was "charging and seeking to enforce collection of unreasonable, unfair, and grossly inflated prices for emergency care provided to its uninsured patients" and "bills and takes action to force uninsured emergency care patients to pay substantially more than the reasonable value of its treatment and services." Sarun averred Dignity's "full charges" were grossly inflated prices, which could not be ascertained from the admissions agreement itself and were several times higher than the reimbursement rates for other patients and more than quadruple the hospital's actual costs.3 Although Sarun acknowledged in his second amended complaint that "discounts" are an "essential component in the determination of an uninsured's payment liability," the pleading further alleged Sarun "had no intention of paying, or seeking financial aid in order to pay an outlandish bill ... particularly where he felt that the cost of the services and treatment rendered should have cost, at most, in the area of $3,000."4

3. The Trial Court's Order Sustaining Dignity's Demurrer Without Leave to Amend

Dignity demurred to the second amended complaint on grounds including that Sarun lacked standing under the UCL and CLRA because he failed to adequately allege he had suffered an economic injury or, to the extent he had, that it was caused by Dignity's business practices. Dignity argued Sarun had conceded he would be willing to pay approximately $3,000 and, until he applied for financial assistance, it was speculative whether he would be required to pay more than that amount. Dignity further argued Sarun's refusal to seek financial assistance made it impossible to determine whether he was in fact injured and rendered injury, if any, self-inflicted, not traceable to unfair business practices or conduct proscribed by the CLRA.

The trial court sustained Dignity's demurrer without leave to amend, finding Sarun had failed to allege injury in fact: "Even assuming, arguendo, that [Dignity] was required to charge the reasonable value of the services provided, and assuming that the invoice reflected an amount in excess of the reasonable value of those services, [Sarun] does not allege that he has been required to pay any amount in excess of the reasonable value of the medical services provided.... The [second amended complaint] notably does not allege that the amount [Sarun] has already paid is unreasonable or in excess of the $3,000 that [Sarun] ‘felt’ was a reasonable price. Nor does the [second amended complaint] allege that [Sarun's] medical bill has been referred to a collection agency or that [Dignity] has taken other informal steps to coerce payment. [¶] Moreover, the [second amended complaint] does not allege that [Sarun] sought and was denied a discounted rate.... Rather than pursuing the remedy presented to him for avoiding the inchoate injury, the second amended complaint alleges that [Sarun] immediately sought legal counsel." The trial court did not address the other grounds asserted in Dignity's demurrer.5

1. Standard of Review

A demurrer tests the legal sufficiency of the factual allegations in a complaint. We independently review the superior court's ruling on a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of action or discloses a complete defense. ( McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415, [106 Cal.Rptr.2d 271, 21 P.3d 1189] ; Aubry v. Tri–City Hospital Dist. (1992) 2 Cal.4th 962, 967 [9 Cal.Rptr.2d 92, 831 P.2d 317] .) We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of which judicial notice has been taken. ( Evans v. City of Berkeley (2006) 38 Cal.4th 1, 20 [40 Cal.Rptr.3d 205, 129 P.3d 394] ; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 [6 Cal.Rptr.3d 457, 79 P.3d 569] .) We liberally construe the pleading with a view to substantial justice between the parties. ( Code Civ. Proc., § 452 ; Schifando, at p. 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569 .)

2. Standing Under the UCL and CLRA

Unfair competition under the UCL means "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." ( Bus. & Prof. Code § 17200. ) Written in the disjunctive, Business and Professions Code section 17200 establishes "three varieties of unfair competition–acts or practices which are unlawful, or unfair, or fraudulent." ( Cel–Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 [83 Cal.Rptr.2d 548, 973 P.2d 527] ( Cel–Tech ); accord, Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949, [119 Cal.Rptr.2d 296, 45 P.3d...

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