Sarun v. Dignity Health

• Decision Date: 19 July 2022
• Docket Number: B311909
• Parties: TONY SARUN, Plaintiff and Appellant, v. DIGNITY HEALTH, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

TONY SARUN, Plaintiff and Appellant, v. DIGNITY HEALTH, Defendant and Respondent.

B311909

California Court of Appeals, Second District, Seventh Division

July 19, 2022

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Los Angeles County No. BC483764 Daniel J. Buckley, Judge. Affirmed.

Carpenter Law, Gretchen Carpenter; Law Office of Barry Kramer and Barry L. Kramer for Plaintiff and Appellant.

Manatt, Phelps & Phillips, Barry S. Landsberg, Harvey L Rochman, Joanna S. McCallum and Craig S. Rutenberg for Defendant and Respondent.

PERLUSS, P. J.

Dignity Health's conditions of admission agreement, presented to patients after they receive emergency care at one of its hospitals, provided an uninsured individual must pay the hospital's "full charges, unless other discounts apply." "Full charges" was defined as "the Hospital's published rates (called the chargemaster) prior to any discounts or reductions."^[1] The admissions agreement explained uninsured patients might qualify for government aid programs or financial assistance from Dignity Health.

Following emergency treatment at Northridge Hospital Medical Center (Northridge Hospital), owned and operated by Dignity Health, Tony Sarun received an invoice for $23,487.90, which reflected a chargemaster rate of $31,359 reduced by a $7,871.10 "uninsured discount." Sarun filed a putative class action lawsuit against Dignity Health, alleging claims for unfair and/or deceptive business practices under California's unfair competition law (UCL) (Bus. & Prof. Code, § 17200) and Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), and seeking declarations that Dignity Health's billing practices are unconscionable and, because the prices to be charged are not adequately disclosed or readily available to uninsured individuals who receive emergency care at a Dignity Health hospital (that is, the prices are unfixed or indeterminable), the admissions agreement contains an "open price" term within the meaning of Civil Code section 1611 (section 1611), so that self-pay patients are liable only for the reasonable value of the services provided.

After it certified a class limited to the request for a declaration the admissions agreement contains an open price term, as instructed by this court in Sarun v. Dignity Health (2019) 41 Cal.App.5th 1119 (Sarun II), the trial court granted Dignity Health's motion for summary adjudication and denied Sarun's cross-motion for summary adjudication as to that cause of action (the only class claim), finding section 1611 did not apply because the admissions agreement disclosed "the method by which [the price] is to be ascertained." We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. Sarun's Emergency Treatment and the Hospital's Admissions Agreement and Billing Statements

Sarun, who was uninsured at the time, was taken by ambulance to the emergency room at Northridge Hospital following a motor vehicle accident. He was released three to four hours later after being examined and receiving various diagnostic tests.

While at the hospital Sarun signed a standard form "Conditions of Admissions and Treatment," which included terms governing payment for services. Paragraph 8(b) of the admissions agreement 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." The term "full charges" was defined at the beginning of the agreement as "the Hospital's published rates (called the chargemaster), prior to any discounts or reductions." Paragraph 9, "Financial Assistance," explained the hospital 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.

Shortly after his treatment Sarun received a "Balance Due Notice" reflecting total charges of $31,359, the chargemaster rate; an uninsured discount of $7,871.10; and a balance due of $23,487.90. The notice stated, "Only patients seen for eligible hospital services as set forth in Dignity Health's Uninsured Discount Policy, with an annual household income that does not exceed $250,000, who are uninsured and who agree to assign all benefits relating to this claim to Dignity Health, are entitled to the Uninsured Discount." The notice also 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 notice described the financial assistance options, provided an application and enumerated the necessary documentation. Several days later a second balance due notice was issued, which indicated an additional 25 percent discount would be applied if Sarun paid the total amount due within 30 days, reducing the outstanding balance to $15,648.15.^[2]

2. Sarun's Lawsuit

Without applying for any other discount or financial assistance, Sarun filed a putative class action complaint in May 2012 asserting claims under the UCL and CLRA and seeking declaratory relief based on allegations the charges set forth on the invoices were not readily available or discernable from the admissions agreement and the invoiced charges exceeded the reasonable value of the services.

The trial court sustained Dignity Health'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 reversed and remanded the case for further proceedings. (Sarun v. Dignity Health (2014) 232 Cal.App.4th 1159, 1170.)

Sarun's third amended complaint again alleged causes of action under the UCL and CLRA and sought declarations on behalf of members of a state-wide putative class^[3] that Dignity Health's billing practices are "unfair, unconscionable, and/or unreasonable" and that Dignity Health's admissions agreement "contains an 'open price' term with respect to self-pay emergency care patients and thus [they] are liable to [Dignity Health] for no more than the reasonable value of the treatment/services provided."

The trial court denied Sarun's motion for class certification of the declaratory relief cause of action. We reversed in part, directing the trial court to certify a modified issue class with respect to Sarun's open price term claim as it related to uninsured individuals who received emergency care at Northridge Hospital and who signed (personally or through an authorized agent) the admissions contract and were thereafter directly billed for that treatment at chargemaster rates or chargemaster rates less the uninsured discount. (Sarun II, supra, 41 Cal.App.5th at p. 1123.) The trial court certified the issue class in July 2020, specifically noting, "The Class is limited to the issue of whether the admissions contract contains an open price term."

3. The Cross-motions for Summary Adjudication

Section 1611 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." Section 1611 describes what is commonly referred to as an "open price term." (See, e.g., Sarun II, supra, 41 Cal.App.5th at p. 1123.)

Following discovery, Dignity Health moved for summary adjudication on the class claim for declaratory relief, contending Northridge Hospital's admissions agreement does not contain an open price term within the meaning of section 1611. To the contrary, it argued, the admissions agreement specifies on its face the method by which the amount of the consideration (the charges to be paid by the patient) will be ascertained for uninsured patients-a published price list (the chargemaster) subject to discounts.

Sarun opposed Dignity Health's motion and filed a cross-motion for summary adjudication on the open price term claim. Sarun argued Northridge Hospital's admissions agreement contained an open price term within the meaning of section 1611 because the term "full charges" was not clearly defined; the agreement did not effectively incorporate by reference the chargemaster schedule; and the qualifying language, "unless other discounts apply," did not identify or explain the discounts and thus left uncertain the charges that would be assessed. "Indeed," Sarun asserted, "the Uninsured Discount provided to Plaintiff was not even mentioned in the Financial Agreement or anywhere else in the Contract, nor was the 'Prompt Pay' discount subsequently 'offered' to Plaintiff mentioned in the Contract. The 'discount' term is particularly problematic, since there are several different, and completely unknown, potential discounts that could be applied by Dignity, based on numerous factors, complex formulas, a patient's income and assets (which may be difficult or impossible to quantify and/or verify), and various subjective criteria such as a patient's 'financial need' or the Hospital's discretionary case-by-case determination of specific circumstances."

At the hearing on the motions, after stating she disagreed with much of the court's detailed tentative ruling rejecting each point Sarun had advanced to establish the admissions agreement contained an open price term, Sarun's counsel did not challenge...