Moran v. Prime Healthcare Mgmt., Inc.

94 Cal.App.5th 166

312 Cal.Rptr.3d 92

Gene MORAN, Plaintiff and Appellant,

v.PRIME HEALTHCARE MANAGEMENT, INC., et al., Defendants and Respondents.

G060920

Court of Appeal, Fourth District, Division 3, California.

Filed August 7, 2023

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

Miller Barondess, Los Angeles, Mira Hashmall, Los Angeles, and Adam M. Agatston for Defendants and Respondents.

OPINION

MOORE, J.

This is the second appeal in this putative class action regarding hospital fees and costs for patients not covered by insurance. Plaintiff Gene Moran, who was a patient at Huntington Beach Hospital (the Hospital) three times in 2013, sued defendants Prime Healthcare Management, Inc., Prime Healthcare Huntington Beach, LLC, Prime Healthcare Services, Inc., and Prime Healthcare Foundation, Inc. (collectively defendants)¹ under various theories in 2013. In our prior opinion, we found that while most of Moran's claims lacked merit, he had sufficiently alleged facts supporting standing to claim the amount that self-pay patients were charged was unconscionable, and we reversed the trial court's dismissal of the case. ( Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131, 1137, 208 Cal.Rptr.3d 303 ( Moran ).)

Moran's sixth amended complaint included both the allegations regarding unconscionability and a new theory of the case. The new allegations asserted defendants had violated the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200 ), and the Consumer Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq. ) by failing to disclose Evaluation and Management (EMS) fees charged in the emergency room through signage or other methods. The complaint sought relief under both the old and new theories for violations of the UCL, CLRA, and for declaratory relief ( Code Civ. Proc., § 1060 ).

Defendants moved to strike the allegations regarding EMS fees, arguing their disclosure obligations were defined by statute. The trial court agreed and struck the allegations from the sixth amended complaint.

We conclude that the trial court's order striking the EMS fee allegations was proper. The duties Moran seeks to impose on defendants interfere with the extensive and carefully drawn state and federal legislative and regulatory scheme governing the disclosure and transparency of hospital prices. Accordingly, we affirm the order.

IFACTS

Background

As our prior opinion stated, "On three occasions in October 2013, plaintiff, ‘a self-pay patient,’ went to the emergency room of a hospital owned and operated by defendants .... Each time, he signed a printed Conditions of Admission agreement (Contract) and received medical treatment. Subsequently, plaintiff received bills from the hospital for the treatment provided during the three visits that exceeded $10,000.

"In November 2013, plaintiff filed this putative class action against defendants. The initial complaint stated causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, violation of the UCL, restitutionary relief under the CLRA, and declaratory relief. Plaintiff subsequently dropped the first and second counts. His first amended complaint also expanded the scope of the CLRA cause of action to include a request for damages by alleging that he complied with the statutory requirement of giving defendants notice of the purportedly unlawful practice and a demand for correction of it. Although verbose, confusing, containing contradictory allegations, and contentions of law, each iteration of the complaint is based on allegations the rates defendants charge self-pay patients are discriminatory, exceed the reasonable value of the treatment, and are ‘artificially inflated and grossly excessive.’ " ( Moran, supra , 3 Cal.App.5th at pp. 1137-1138, 208 Cal.Rptr.3d 303.) In July 2014, the Hospital sent a letter to Moran stating that following an administrative review, his accounts had been settled and he had a zero balance. The Hospital also contacted the credit reporting agencies to inform them that any information regarding the Hospital should be removed, and issued Moran a partial refund of $50 for one of his visits. ( Id. at p. 1137, fn. 1, 208 Cal.Rptr.3d 303.)

Defendants demurred to the third amended complaint, which the trial court sustained without leave to amend. ( Moran, supra , 3 Cal.App.5th at p. 1138, 208 Cal.Rptr.3d 303.) We found that while Moran had standing and had sufficiently alleged the Contract was unconscionable, the remainder of his other claims were invalid. (See id. at pp. 1141-1153, 208 Cal.Rptr.3d 303.)

After remand, Moran filed a fourth and eventually a fifth amended complaint. The fifth amended complaint alleged representative claims with respect to the UCL and CLRA causes of action, and a class claim as to the declaratory relief cause of action. His list of common questions of law and fact in the declaratory relief cause of action related to the reasonableness and/or unconscionability of the rates charged despite contractual language promising to pay. Around the same time, however, a number of trial courts had declined to certify classes based on the same theory, and Division One of this District had affirmed the denials. (See, e.g., Hefczyc v. Rady Children's Hosp.-San Diego (2017) 17 Cal.App.5th 518, 225 Cal.Rptr.3d 641, disapproved of in part by Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 955, 986, fn. 15, 250 Cal.Rptr.3d 234, 445 P.3d 626 ; Kendall v. Scripps Health (2017) 16 Cal.App.5th 553, 224 Cal.Rptr.3d 446, disapproved of in part by Noel , at p. 986, fn. 15, 250 Cal.Rptr.3d 234, 445 P.3d 626.)²

Following these decisions, Moran later moved to certify a class on a different basis. His proposed "issue" class was based on the question of whether the Hospital had a duty to disclose EMS fees, a subject which had not been raised in any of his six prior complaints. The court noted, in denying the motion for class certification, that this class was "quite different from that alleged in [Moran's] Fifth Amended Complaint." The court ultimately denied the motion to certify the class and granted leave to file a sixth amended complaint, which is the operative complaint before us.

Sixth Amended Complaint

In the sixth amended complaint, filed on March 8, 2021,³ Moran stated he challenged "two specific practices of Defendants. First, on a classwide basis, Plaintiff challenges Defendants' unfair, deceptive, and unlawful practice of charging emergency room patients an ‘Evaluation and Management Services Fee’ or ‘EMS Fee,’ without any notification of their intention to charge a prospective emergency room patient such a Fee for the patient's emergency room visit ... and without any agreement by Plaintiff to pay for such a Fee." This is the claim, new to the sixth amended complaint,⁴ that is at issue in this appeal.

Under general allegations concerning the EMS fee, Moran alleged that charging this fee "without any notification of their intention to charge a prospective emergency room patient such a Fee for the patient's emergency room visit" was an "unfair, deceptive, and unlawful practice." The issue, according to the complaint, "is not that Defendants fail to list an EMS Fee as a line item in the Hospital's published Chargemaster,⁵ or that Defendants fail to list the price of such EMS Fees in the Hospital's Chargemaster, but rather the fact that Defendants give no notification or warning that they charge an EMS Fee for an emergency room visit. As a result, emergency room patients end up being surprised by a substantial charge added to their bill that they were not expecting. Such charges are effectively hidden by Defendants' intentional failure to provide notice of them in the emergency room."

Further, the complaint alleged that the EMS fee is charged "simply for seeking treatment in the emergency room; it is independent of, and in addition to, the charges for the individual items of treatment and services provided to a patient. Rather than being tied to the individual items of treatment and services a patient receives in the emergency room, an EMS Fee is charged to all patients who receive treatment in the emergency room, regardless of what other services and treatment they receive. This Evaluation and Management Services Fee invariably comes as a complete surprise to unsuspecting emergency room patients." The EMS fee, Moran alleged, is charged at one of five levels.

Defendants, Moran alleged, keep this fee "effectively hidden from patients who might otherwise look for less costly medical treatment and services elsewhere, such as in urgent care facilities that do not charge such fees, or even forego treatment altogether." The EMS fee "is not visibly posted on signage in or around Hospital's emergency rooms or on signage at its registration windows/desks, where a patient would at least have the opportunity of knowing of its existence, nor is it disclosed to patients orally at the time of registration, or by any other means." Nor, the complaint alleged, is the EMS fee disclosed in writing, either before admission or at the time of discharge. The complaint alleged the chargemaster did not list the EMS fee as being charged to all emergency room patients, although the chargemasters themselves reveal EMS fees for levels two through four are listed under the 25 most common procedures, with language such as "Emergency Room Visit, Level 2 (low to moderate severity)" in both the 2012 and 2020 chargemasters.⁶ With respect to his own claim, Moran alleged he was charged a total of $3,568.80 in EMS fees over three visits. In sum, the failure to disclose the EMS fee, the complaint alleged, violated the UCL, CLRA, and was subject to declaratory relief.

Defendants moved to strike the EMS fee claims, arguing that no duty to disclose EMS fees existed outside the context of the requirements set forth in the relevant provisions of the Health and...