Motion ReconsiderCal. Super. - 6th Dist.June 9, 2020KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA TAYLOR CAPITO, Plaintiff, VS. SAN JOSE HEALTHCARE SYSTEM LP, dba REGIONAL MEDICAL CENTER OF SAN JOSE, et al., Defendants. Case N0.: 20CV366981 SUPPLEMENTAL ORDER CONCERNING DEFENDANT’S DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT AND MOTION TO STRIKE CLASS ALLEGATIONS This is a putative class action brought by Plaintiff Taylor Capito challenging the alleged nondisclosure 0f an Evaluation and Management Services Fee (“EMS Fee”) charged t0 emergency care patients by defendant San Jose Healthcare System LP, dba Regional Medical Center 0f San Jose (“Regional”). On February 24, 2021, the Court overruled Regional’s demurrer t0 the original complaint, but granted in large part Regional’s motion t0 strike the class allegations from the complaint. In response, Plaintiff filed an amended complaint 0n March 23. Regional again demurs t0, and moves t0 strike the class allegations from, the operative complaint. ORDER ON SUBMITTED MATTER Electronically Filed by Superior Court of CA, County of Santa Clara, on 9/17/2021 12:51 PM Reviewed By: R. Walker Case #20CV366981 Envelope: 7289226 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO On July 27, the Court issued an order that, among other things, stated it would sua sponte reconsider its past rulings and ordered supplemental briefing. The parties provided those briefs, and the Court deemed the matter resubmitted as 0f August 27. The Court now SUSTAINS WITHOUT LEAVE TO AMEND Regional’s demurrer. That decision renders Regional’s motion t0 strike MOOT. I. BACKGROUND A. Factual As stated in the operative Second Amended Complaint (SAC), Regional is a major hospital in San Jose, and has an active emergency room. (See FAC, 1] 6.) Plaintiff is a California resident who was billed two EMS Fees after being seen there 0n two occasions. (161., 1] 5.) Plaintiff alleges that Regional charges its emergency room patients a hidden and undisclosed EMS Fee, based 0n a secret, intemally-developed formula. (SAC,W 8-9.) The EMS Fee is set at one 0f five levels and is determined after discharge: for 2019, the amounts ranged from $672.00 for Level 1 t0 $5,635.00 for Level 5. (161., 1] 9.) Unlike other items billed t0 emergency room patients, the EMS Fee is charged simply for seeking treatment in Regional’s emergency room and is designed t0 cover various “overhead” type expenses that are not billed individually. (Id, 1] 10.) Regional’s intent t0 charge an EMS Fee t0 patients simply for being seen in its emergency room is not visibly posted 0n signage in 0r around the emergency room 0r registration area. Nor is the EMS Fee disclosed t0 patients orally at the time 0f registration 0r by any other reasonable means, according t0 Plaintiff. (SAC, 1] 11.) The fee is not disclosed 0n the Conditions 0f Admission and Consent for Outpatient Care (“Contract”) used in Regional’s emergency room, and the Contract does not contain a promise 0r agreement by the patient t0 pay it. (Id,W 8, 11.) Plaintiff alleges that emergency room patients cannot reasonably be expected t0 be aware 0f the EMS Fee, and Regional knows most are not. Plaintiff also alleges the EMS Fee would be a substantial factor in influencing a reasonable patient’s decision as t0 whether t0 remain and seek treatment at Regional’s emergency room. (Id. ,W 1 1-13 .) KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO While Regional promises pricing transparency 0n its web site, n0 information about the EMS Fee appears there. (SAC, 1] 14.) And although an item labeled “LVL [1-5] EMER DEPT” is included 0n Regional’s charge description list (see Health & Saf. Code, § 1339.51, subd, (b)(1)), and this “Chargemaster” list filed with California’s Office 0f Statewide Health Planning and Development (“OSHPD”), Plaintiff is informed and believed that Regional does not make its Chargemaster spreadsheet available 0n its own website (which has displayed a dead link t0 Regional’s “price list”) 0r reasonably available t0 patients at the time 0f their emergency room Visits. (Id., 1] 15.) According t0 Plaintiff, the Chargemaster list does not inform patients that the EMS Fee will be added t0 each and every bill, regardless 0f what other services and treatment are provided. (See id.,W 15-16.) Plaintiff herself was not expecting this charge and would have left and sought less expensive treatment elsewhere had she been notified 0f it. (161., 1] 52.) Plaintiff does not seek an order requiring Regional t0 disclose, in advance, every charge for a patient’s Visit-nor would it be possible t0 d0 so where charges other than the EMS Fee are based 0n the treatment and services ordered for the patient, which can’t be known before evaluation, as Plaintiff admits. (SAC, 1] 16.) But Plaintiff does seek an order requiring Regional t0 notify patients that an EMS Fee is charged for an emergency room Visit, since this is knowledge which Regional exclusively possesses. (Ibid) In addition t0 alleging that the fee should be disclosed in Regional’s Contract and orally at the time of registration, Plaintiff provides the following example 0f a sign that would pass muster in her View: REGIONAL MEDICAL CENTER OF SAN JOSE NOTICE: EMERGENCY DEPARTMENT VISIT FEES Our standard Emergency Department Visit Fees are shown below. These fees are in addition t0 our charges for your actual treatment and services, and are intended t0 cover the costs 0f operating and maintaining our 24-hour Emergency Department. Level 1 (CPT code 99281: minor) $672.00 Level 2 (CPT code 99282: simple) $1,660.00 Level 3 (CPT code 99283: moderate) $2,836.00 Level 4 (CPT code 99284: severe) $3,780.00 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO Level 5 (CPT code 99285: complex & life-threatening) $5,635.00 Please note: These are our standard gross charges before allowing for any insurance 0r other discounts that may be applicable. Your out-of-pocket costs may be substantially less than the above amounts. (SAC, 1] 17, bolding in original.) Plaintiff alleges that at the very least, Regional should be ordered t0 post a prominent sign in its emergency room, informing prospective patients that there will be a separate EMS Fee for receiving treatment in the emergency room, in addition t0 the charges for individual items 0f treatment and services provided. (161., 1] 18.) B. Procedural Plaintiff filed this action in June 2020. In December 2020, Regional filed: (1) a demurrer t0 the then-operative First Amended Complaint (FAC); (2) a motion t0 strike the class allegations from that pleading; and (3) a motion t0 continue the discovery stay. In an order filed 0n February 24, 2021, the Court overruled Regional’s demurrer, granted in large part its motion t0 strike with 30 days’ leave t0 amend, and denied its motion t0 continue the discovery stay. Plaintiff filed the SAC in March 2021. The SAC defines the putative class somewhat more narrowly than the FAC, limiting it t0 individuals who received treatment at Regional’s emergency room 0n 0r after June 10, 2016 and were charged an EMS Fee for Visits “designated with a CPT Code 0f 99281, 99282, 99283, 99284, 0r 99285,“ and who “made payments and/or have a remaining account balance for their emergency room Visit.” (SAC, 1] 24.) The SAC also expressly seeks certification 0f an “issue” class under rule 3.765(b) 0f the Rules 0f Court as an alternative ground for class certification. (161., 1] 33.) In addition t0 the single cause 0f action alleged in the FAC, for Violation 0f the Consumers Legal Remedies Act (CLRA), Civil Code section 1750 et seq. (which is now the third cause 0f action), the SAC asserts claims for: (1) declaratory judgment/injunctive relief; and (2) Violation 0f the Unfair Competition Law (UCL). The SAC is generally based 0n the same allegations as the FAC, but includes additional allegations related t0 the Contract that Plaintiff 1 These appear t0 be the CPT Codes associated with the five levels 0fEMS Fees. (See Regional’s 8/27/21 Supp. Brief, at p. 20.) KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO signed with Regional. These allegations form the basis for a new theory supporting the first cause 0f action, which seeks “a declaration that Defendant’s practice 0f charging a substantial undisclosed EMS Fee, in addition t0 the charges for the specific services and treatments provided, is not authorized by Defendant’s Contract.” (SAC, 1] 35.) Consistent with Plaintiff’s original theory in the FAC, the first cause 0f action also seeks a declaration that “Defendant owes a duty t0 disclose its intention t0 charge EMS Fees t0 emergency room patients prior t0 providing treatment triggering such a charge.” (Id, 1] 36.) Regional again demurs t0 the operative complaint, arguing that all three causes 0f action Plaintiff asserts are uncertain, fail t0 name an indispensable party, and fail t0 state a cause 0f action. (Code CiV. Proc., § 430.10, subds. (d), (e) and (f).) In a second motion, Regional moves t0 strike the amended class allegations as well as allegations regarding Plaintiff’s requests for declaratory and injunctive relief. Plaintiff opposes both motions. II. DEMURRER Regional demurs t0 the SAC, arguing: (1) it has n0 duty under the CLRA t0 disclose the EMS Fee, failure t0 disclose the EMS Fee was not unfair 0r unlawful under the UCL, and the Contract did authorize the EMS Fee; and (2) Plaintiff lacks standing because she fails t0 allege reliance 0r damages? (Code CiV. Proc., § 430.10, subd. (6).) A. Legal Standards 1. General Demurrer Standard A demurrer tests the legal sufficiency 0f the complaint. (Chen v. PayPal, Inc. (2021) 61 Cal.App.5th 559, 568.) Consequently, it “reaches only t0 the contents 0f the pleading and such matters as may be considered under the doctrine ofjudicial notice.” (Wei! v. Barthel (1955) 45 Cal.2d 835, 837; see also Code CiV. Proc., § 430.30, subd. (a).) “It is not the ordinary function 0f a demurrer t0 test the truth 0f the plaintiff” s allegations 0r the accuracy with which he describes the defendant’s conduct. Thus, the facts alleged in the pleading are deemed t0 be 2 The Court rejects Regional’s uncertainty argument. Plaintiff” s claims are understandable enough for Regional t0 form a coherent response, as Regional has done. (Khoury v. Maly's 0f California, Inc. (1993) 14 Cal.App.4th 612, 616.) 5 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) In ruling on a demurrer, the allegations 0f the complaint must be liberally construed, with a View t0 substantial justice between the parties. (Glennen v. Allergan, Inc. (2016) 247 Cal.App.4th 1, 6.) Nevertheless, while “[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions 0r conclusions 0f law 0r fact.” (George v. Automobile Club ofSouthem California (201 1) 201 Cal.App.4th 1112, 1120.) A demurrer will succeed where the allegations and matters subject t0 judicial notice clearly disclose a defense 0r bar t0 recovery. (Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 183.) 2. Omissions under the CLRA T0 give rise t0 a claim under the CLRA, an omission “must be contrary t0 a representation actually made by the defendant, 0r an omission 0f a fact the defendant was obliged t0 disclose.” (Daugherty v. American Honda Motor C0., Inc. (2006) 144 Cal.App.4th 824, 835.) There is a duty t0 disclose “when the defendant is the plaintiffs fiduciary, when the defendant has exclusive knowledge 0f material facts not known 0r reasonably accessible t0 the plaintiff, and when the defendant actively conceals a material fact” 0r “makes partial representations that are misleading because some other material fact has not been disclosed.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 125, internal citation and quotations omitted.) Here, Plaintiff alleges that Regional has exclusive knowledge that it charges the EMS Fee for every Visit, but fails t0 disclose this practice.3 3. UCL The UCL prohibits “any unlawful, unfair 0r fraudulent business act 0r practice and unfair, deceptive, untrue 0r misleading advertising[.]” (Bus. & Prof. Code, §§ 17200, 17203, 17204.) An “unlawful” act 0r practice is “anything that can properly be called a business 3 Plaintiff has disclaimed any reliance 0n a fiduciary duty theory. KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO practice and that at the same time is forbidden by law.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone C0. (1999) 20 Cal.4th 163, 180 (Cel-Tech).) There are varying standards in the appellate courts as t0 what constitutes an “unfair” act 0r practice under the UCL. (See Nationwide Biweekly Administration, Inc. v. Superior Court (2020) 9 Cal.5th 279, 303, fn. 10 [describing, but not resolving, split 0f authority].) One line of appellate decisions has adopted a “balancing” test, which requires a court t0 examine the challenged practice’s “impact 0n its alleged Victim, balanced against the reasons, justifications and motives 0f the alleged wrongdoer.” (Smith v. State Farm Mutual Automobile Ins. C0. (2001) 93 Cal.App.4th 700, 718, internal quotation marks omitted.) Another line 0f decisions has adopted a “tethering test,” requiring that “the public policy which is a predicate t0 [a consumer unfair competition action under the ‘unfair’ prong 0f the UCL] must be ‘tethered’ t0 specific constitutional, statutory 0r regulatory provisions.” (Gregory v. Albertson ’s, Inc. (2002) 104 Cal.App.4th 845, 854.) A final line 0f decisions has adopted a “section 5 test,” namely that: “(1) The consumer injury must be substantial; (2) the injury must not be outweighed by any countervailing benefits t0 consumers 0r competition; and (3) it must be an injury that consumers themselves could not reasonably have avoided.” (Camacho v. Automobile Club ofSouthern California (2006) 142 Ca1.App.4th 1394, 1403.) In the Court’s View, the specific test (e.g., a balancing test, a “tethering” test, 0r a “section 5” test) is not material t0 the outcome 0f this demurrer. B. Duty t0 Disclose Plaintiff contends that Regional had a duty t0 disclose the EMS Fee before it imposed this fee on Plaintiff, and that Regional’s failure t0 d0 so violated the CLRA and thus also was “unlawful” under the UCL. Plaintiff also contends that Regional’s failure t0 disclose the EMS Fee was “unfair” and therefore constituted “deceptive” advertising under the UCL. In response, Regional argues that these theories are “predicated 0n a misunderstanding 0f the laws regarding EMS Fee levels and Chargemaster disclosures, which preclude the alleged duty advanced in the FAC.” According t0 Regional, “[b]0th California and federal law legal[ly] prohibit hospitals from discussing charges and payment before rendering emergency care.” KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO In its February 24, 2021 order overruling Regional’s demurrer t0 the FAC, the Court held that none 0f the California 0r federal authorities cited by Regional4 affirmatively and explicitly bars disclosure 0f the EMS Fee. After due consideration, the Court reaffirms this holding. But that still leaves Regional’s argument that “[f] ederal and state law and regulations occupy the field governing healthcare and disclosures as t0 emergency services.” Regional relatedly argues that because the California Legislature deliberately, and after much consideration, chose t0 impose liability 0n health care providers in the Payers’ Bill of Rights for certain non-disclosures, the Legislature therefore decided that liability was not appropriate for other types 0f non-disclosures (like the ones at issue here). In light 0f these arguments, the Court ordered the parties t0 provide supplemental briefing concerning the legislative history and background 0f the California Payers’ Bill of Rights. After reviewing that briefing and the legislative history provided} the Court finds that: 1. The Legislature thoroughly considered the best way t0 inform emergency room patients 0f fees that may be charged t0 them (0r their insurers). 2. The Legislature balanced the benefits 0f providing information about emergency room fees t0 consumers with the burden 0n hospitals t0 make this information available 0n demand, and chose t0 require only disclosure in certain ways (e.g., 0n the hospital’s website and notices in various offices). For the Court t0 require Regional t0 provide further disclosures 0n demand for every emergency room patient would be t0 upset this deliberate legislative balance. The Legislature has already decided what disclosures sufficiently serve public policy, and has concluded that further disclosures 0f the type Plaintiff seeks would not serve this public policy 0r consumers well. The Court hence finds Regional’s non-disclosure was not wrongful 0r unlawful under the 4 These are: a) Health and Safety Code section 1317, subd. (b); b) Health and Safety Code section 1339.585; c) “EMTALA” (42 U.S.C. section 13955dd, subd. (h); and d) California “Payers’ Bill of Rights” (especially Health and Safety Code sections 1339.5 1 and 1339.55). 5 The Court GRANTS judicial notice 0f the materials attached t0 the parties’ August 27, 2021 supplemental briefs. KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO CLRA,6 and was not “unfair” under the UCL under any 0f the previously-described tests. That means Plaintiff’s UCL and CLRA claims both fail. The Court draws support for its conclusion from two cases: Ramirez v. Plough, Inc. (1993) 6 Cal.4th 539 (Ramirez) and Nolte v. CedarS-Sinai Medical Center (2015) 236 Cal.App.4th 1401 (Nolte). Ramirez involved a negligence action where a statutory standard 0f conduct with regard t0 the packaging and labeling 0f nonprescription drugs was a tissue. Following a thorough review 0f “the dense layer 0f state and federal statutes and regulations that control” nonprescription drug marketing-“in particular the necessity 0r propriety 0f foreign-language label and package warnings,” the very issue complained 0f by the plaintiff in RamireZ-the California Supreme Court found that it was inappropriate t0 impose a duty upon manufacturers t0 include foreign-language warnings with their packaging materials. (See Ramirez, supra, 6 Cal.4th at pp. 548-556.) Of relevant note, the Ramirez Court observed that “[g]iven the existence 0f a statute expressly requiring that package warnings 0n nonprescription drugs be in English, we think it reasonable t0 infer that the Legislature has deliberately chosen not t0 require that manufacturers also include warnings in foreign languages.” (Id. at p. 552.) Similarly here, there is a “dense layer” 0f federal and state laws concerning emergency room billing and disclosures. And the Legislature enacted a statute expressly requiring certain billing disclosures for emergency room patients. Given the legislative history discussed above, and with Ramirez in mind, it would be inappropriate for the Court t0 impose an additional duty requiring additional billing disclosures. In Nolte, the plaintiff had expressly authorized a hospital and a medical provider in the hospital’s network t0 separately bill him for services rendered. The plaintiff complained that he did not expect t0 be billed by the hospital for administrative services normally performed by medical providers themselves-specifically, he challenged a $167 “facility fee” charged for 6 In addition, Regional did not actively conceal a material fact, as the key fact-the existence 0f an EMS fee-was disclosed in the Chargemaster, as required by the legislative scheme. The specific amount 0f the EMS fee was not required t0 be disclosed directly t0 the patient, as explained above. KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO setting up a new patient account in the hospital’s computer system, which both the hospital and doctor used for billing. (Nolte, supra, 236 Cal.App.4th at p. 1408.) He therefore brought a UCL claim against the hospital. In rej ecting the UCL claim before it, Nolte employed a balancing test t0 hold that existing law does not require a hospital t0 specifically disclose every individual charge in advance before billing a patient. (Nolte, supra, 236 Cal.App.4th at p. 1409.) In fact, Nolte cited section 1339.51 0f the Health and Safety Code, 0n which Regional also relies in our case. Likewise, the Court is holding that in light of the Legislature’s choice 0n what emergency room disclosures were necessary, Regional did not need t0 disclose the EMS Fee. True, Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373 (Hale I) held that Where the statutes governing hospital billing practices were not “precisely germane” t0 the conduct at issue (there, disparate billing for insured and uninsured patients), the “highly regulated” nature 0f hospital billing in general was n0 bar t0 the plaintiff’s claim. (Id. at pp. 1379-1380.) But that factual scenario is not before the Court. Moreover, Health and Safety Code section 1339.51 is very “germane” t0 the proposed disclosures Plaintiff wants. Therefore, Hale I is distinguishable. In sum, the Court sustains Regional’s demurrer t0 Plaintiff” s UCL and CLRA claims. (Given this conclusion, the Court need not address Regional’s standing argument.) C. Declaratory Relief As mentioned above, Plaintiff has two declaratory relief claims: one relating t0 an alleged duty t0 disclose the EMS Fee, and one relating t0 how the EMS Fee is not authorized by the Contract. Plaintiffs “duty t0 disclose” declaratory relief claim does not differ materially from her UCL and CLRA claims, since all 0f them require the Court t0 find a duty t0 disclose. Since the Court has found there is n0 such duty t0 disclose, Plaintiff’s declaratory relief claim fails. (See C.J.L. Construction, Inc. v. Universal Plumbing (1993) 18 Cal.App.4th 376, 390-391 [separate declaratory relief action improper when the issues in that action exist in other causes 0f action].) That leaves Plaintiffs “Defendant’s Contract does not authorize the EMS Fee” declaratory relief claim. But under the Contract, a patient promises t0 pay at the rates stated in 10 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO the hospital’s price list (i.e., the ChargeMaster). (See SAC, EX. A, 1] 8.) And the EMS Fee is 0n Regional’s Chargemaster,7 as Plaintiff admits. (SAC, 1] 15.) Thus, in the Court’s View, the Contract does authorize the EMS Fee. Plaintiff argues that the EMS Fee is somehow “overhead” that does not fall within the costs she agreed t0 pay by signing the Contract. But as Regional explains, the EMS Fee is characterized under federal regulations as relating t0 specific procedures, and not as generalized overhead. (See Regional’s 8/27/21 Supp. Brief, at p. 20.) The Court therefore sustains Regional’s demurrer t0 these declaratory relief claims. III. MOTION TO STRIKE In light 0f the Court’s above analysis, Regional’s motion t0 strike is MOOT. IV. CONCLUSION For the foregoing reasons, the Court SUSTAINS Regional’s demurrer and deems Regional’s motion t0 strike MOOT. And because the dispositive issues for this demurrer are legal, not factual, the Court finds it appropriate t0 sustain Regional’s demurrer WITHOUT LEAVE TO AMEND. IT IS SO ORDERED. Date: The Honorable Sunil R. Kulkarni Judge 0f the Superior Court 7 Plaintiff claims in her SAC that the Chargemaster 0n Regional’s website was, at least one time, nonfunctional and “dead.” (SAC, 1] 15.) But she admits Regional’s Chargemaster was 0n file with the State. (Id.) And while she contends the Chargemaster was not available in Regional’s emergency room, she does not claim that Regional failed t0 “post a clear and conspicuous notice in its emergency department . . . that informs patients that the hospital's charge description master is available” elsewhere in the hospital. (See Health & Saf. Code, § 1339.51, subd. (0).) 11 September 17, 2021