Judge David S. Cunningham, Case 19STCV05681 2022-08-16 Tentative Ruling

Judge: David S. Cunningham, Case: 19STCV05681, Date: 2022-08-16 Tentative Ruling

Moving Party: Cedars-Sinai Medical Center (“Defendant” or “Cedars-Sinai”)

Defendant’s request for judicial notice (“RJN”) is granted as to Exhibits A, B, and C. The Court judicially notices the existence of the documents but declines to judicially notice:

* whether the documents appeared on the Office of Statewide Health Planning and Development’s website at the time of Plaintiff’s emergency treatments; and

Defendant’s demurrer to Plaintiff’s second amended complaint (“SAC”) is overruled as to the Unfair Competition Law (“UCL”)[1] and the Consumer Legal Remedies Act (“CLRA”).[2]

This is a class action. Plaintiff alleges that Cedars-Sinai charges an undisclosed fee – the ER Visitation Fee – for seeking treatment at Cedars-Sinai’s emergency room.

The initial complaint alleged causes of action for declaratory relief, violation of the UCL, and violation of the CLRA.

On 12/10/20, Judge Ann Jones granted Plaintiff’s motion for class certification as to all three causes of action.

On 4/27/21, Judge Jones denied Cedars-Sinai’s motion for judgment on the pleadings.

Then Cedars-Sinai filed a petition for writ of mandate, which the Court of Appeal denied.

On 4/18/22, this Court granted Plaintiff’s motion for leave to file the first amended complaint (“FAC”), adding a cause of action for breach of contract.

On 6/16/22, the Court overruled the demurrer as to breach of contract and declaratory relief and sustained it with leave to amend as to the UCL and the CLRA.

On 7/22/22, Cedars-Sinai filed the demurrer to the SAC, challenging the UCL and CLRA causes of action.

When considering demurrers, courts read the allegations liberally and in context, and “treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) It is error “to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)

“[T]he UCL permits a cause of action to be brought if a practice violates some other law. In effect, the ‘unlawful’ prong of § 17200 makes a violation of the underlying law a per se violation of § 17200.” (Stern, Bus. & Prof. Code Sec. 17200 Prac. (The Rutter Group 2022) ¶ 3:53.) “Virtually any law or regulation — federal or state, statutory or common law — can serve as predicate for a § 17200 ‘unlawful’ violation. Thus, if a ‘business practice’ violates any law — literally — it also violates § 17200 and may be redressed under that section. [Citation.] As the California Supreme Court has said, § 17200 ‘borrows’ violations of other laws and treats them as unlawful practices independently actionable under § 17200.” (Id. at ¶ 3:56.)

“The second ‘wrong’ proscribed by § 17200 is ‘unfair’ business practices. Because § 17200's definition of the five proscribed ‘wrongs’ is set forth in the disjunctive, a business practice can be ‘unfair’ — and violative of § 17200 — even if it is not ‘deceptive’ and even if it is ‘lawful.’” (Id. at ¶ 3:112.) “The ‘unfair’ standard is intentionally broad, allowing courts maximum discretion to prohibit new schemes to defraud.” (Id. at ¶ 3:113.)

“The third type of conduct proscribed by § 17200 is ‘fraudulent’ business practices.” (Id. at ¶ 3:153.) “A business practice is ‘fraudulent’ within the meaning of § 17200 if ‘members of the public are likely to be deceived.’” (Id. at ¶ 3:154.) “An advertisement's potentially deceptive effect is measured by the audience to which it is addressed. Under the UCL and False Advertising statute, this will usually be the ‘reasonable person’ standard.” (Ibid.)

Proposition 64 limits “private standing . . . to any ‘person who has suffered injury in fact and has lost money or property’ as a result of unfair competition [citations].” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4^th 310 320-321.) “The intent of this change was to confine standing to those actually injured by a defendant's business practices and to curtail the prior practice of filing suits on behalf of clients who have not used the defendant's product or service, viewed the defendant's advertising, or had any other business dealing with the defendant. . . .” (Id. at 321, internal quotation marks omitted.)

“[T]he CLRA contains no general proscription against ‘unfair’ or ‘deceptive’ acts or practices. [Citation.] Instead, the Act sets forth a laundry list of 24 activities defined to be ‘unlawful.’ Some of these practices are also found in the laundry list of practices that are deemed to constitute false advertising and, hence, are also actionable under” the UCL. (Stern, supra, at ¶ 10:4.)

Defendant argues that Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4^th 1401 and Gray v. Dignity Health (2021) 70 Cal.App.5^th 225 foreclose Plaintiff’s UCL and CLRA causes of action. (See Demurrer, pp. 11-13.)

Defendant made the same argument last time, and the Court found it unavailing. The Court emphasized:

* Judge Jones “reviewed Nolte and rejected Defendant’s ‘duty to disclose’ argument” (6/16/22 Tentative Ruling Re: Demurrer, p. 8 [citing 4/27/21 Ruling Re: Motion for Judgment on the Pleadings, pp. 2-6]); and

* Torres v. Adventist Health System/West (2022) 77 Cal.App.5^th 500 “distinguishes Gray and Nolte, noting that ‘neither of those decisions addressed whether the hospital had a duty to disclose based on its exclusive knowledge of facts’” (Ibid. [quoting Torres, supra, 77 Cal.App.5^th at 513]).[3]

Next, Defendant cites Saini v. Health (Cal. Ct. App., June 17, 2022, Case No. A162081) -- Cal.Rptr.3d --, 2022 WL 2643451 and claims Torres is both distinguishable and supportive of Defendant’s demurrer. (See Demurrer, pp. 13-18; see also Reply, pp. 2-7.)

Plaintiff responds that the Saini court failed to reach the “duty to disclose” issue and that the SAC’s allegations comply with Torres. (See Opposition, pp. 5-11, 14-17.)

In Saini, the operative complaint alleged a single cause of action for violation of the CLRA “based on defendant’s failure to disclose, prior to providing emergency medical treatment, that its bill for emergency services would include an” EMS Fee “by visibly posting ‘signage in or around defendant’s emergency rooms or at its registration windows/desks.’” (Saini, supra, 2022 WL 2643451, at *1.) “The trial court sustained the hospital’s demurrer . . . without leave to amend, concluding that defendant has no duty to post notice of the EMS Fee in its emergency room.” (Id. at * 2.) On appeal, the Court of Appeal followed Gray and affirmed the judgment.

Gray and Saini are First District decisions. The Gray panel considered “identical allegations” and held that they “do not state a cause of action under the CLRA.” (Ibid.) The Saini panel characterized the Gray panel’s opinion as a “well-reasoned opinion[,]” followed it, and agreed that “defendant does not have a duty under the CLRA to disclose the EMS Fee by posting additional signage in its emergency rooms.” (Id. at *3.)

Important to the Saini panel’s analysis was the complaint’s acknowledgement that “the EMS Fee is disclosed in the hospital’s chargemaster in compliance with state and federal law.” (Ibid.) Despite allegations of the hospital’s “exclusive knowledge” and “intentional concealment[,]” the Saini panel found that no other disclosure is necessary:

. . . Making the unsupported assumption that this disclosure is insufficient and does not in fact convey the necessary information to one seeking this information before receiving emergency room treatment, there nonetheless is no basis to require further disclosure. Courts have “identified four situations in which a failure to disclose a fact constitutes a deceptive practice actionable under the CLRA. [Citation.] Those situations arise when the defendant is the plaintiff's fiduciary, when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff, and when the defendant actively conceals a material fact. In addition, the duty to disclose exists ‘when the defendant makes partial representations that are misleading because some other material fact has not been disclosed.’ [Citation.] . . . In other words, a defendant has a duty to disclose when the fact is known to the defendant and the failure to disclose it is ‘“misleading in light of other facts . . . that [the defendant] did disclose.”’” [Citation.] The existence of a duty to disclose under the CLRA presents a legal question subject to our de novo review. [Citation.]

Plaintiff argues that defendant had a duty to disclose under the CLRA based on its “exclusive knowledge” and “intentional concealment” as alleged in his complaint. In this regard, plaintiff's complaint alleges that defendant had “exclusive knowledge that it would be billing plaintiff and class members such an [EMS] Fee;” that “this fact was not known or reasonably accessible to plaintiff or class members at the time of their emergency room visits”; that “[s]uch charges are effectively hidden by defendant's intentional failure to provide notice of them in its emergency rooms;” and that “defendant intentionally conceals such fees.”

In sustaining defendant's demurrer, the trial court acknowledged that defendant “had a duty to disclose medical care fees generally” based on its “exclusive knowledge of material facts not known or reasonably accessible to the plaintiff,” but concluded that defendant did not have an additional duty to disclose the EMS Fee in the manner alleged in the complaint. We agree with the trial court's reasoning. The hospital has a duty under the CLRA, as well as the many statutes cited above, to disclose the fees it intends to charge for its goods and services, including the EMS Fee. It does so in its chargemaster, to which signage in the emergency room directs those interested. The question here, however, is whether defendant has a duty to call attention to the EMS Fee by additional signage in the emergency room visible to a person seeking emergency care. The Gray court concluded that for the reasons it explained no such duty exists, and we agree.

Plaintiff faults the Gray decision for failing to distinguish between discouraging treatment by questioning patients as to their “ability to pay” for the treatment and merely providing information about the cost of treatment so that the patient can make an informed decision. He argues that neither the letter nor purpose of the state and federal statutes “is to require a hospital to withhold pricing information or fail to inform the patient as to the hospital's intent to assess an [EMS] Fee for their emergency room visit.” But there is no withholding of information that is provided on the hospital's chargemaster.

The Saini panel’s discussion of Torres is relegated to two footnotes. Footnote two notes that the Fifth District Court of Appeal issued the Torres opinion “[a]fter briefing was complete” in Saini and “affirm[ed] a judgment on the pleadings in favor of the defendant hospital on an identical claim, albeit on different grounds.” (Id. at *1 n.2.) Footnote eight states:

In Torres[], the court held that the hospital’s compliance with the statutory disclosure standards, including publication of its chargemaster, did not establish that plaintiff had reasonable access to the material facts about its EMS Fee. Relying on allegations in the plaintiff's complaint that the hospital’s “chargemaster was ‘unusable and effectively worthless for the purpose of providing pricing information to consumers’; the chargemaster failed to include the standardized [current procedural terminology] codes recognized in the industry; and the chargemaster used coding and highly abbreviated descriptions that are meaningless to consumers” [citation], the court reasoned that it could not “conclude as a matter of law that an objectively reasonable person who reviewed Hospital's chargemaster . . . could discern the circumstances in which the EMS Fee is charged or how the amount of the EMS Fee is determined” [citation]. We need not reach this issue, however, as plaintiff's complaint expressly disavows any claim that “defendant fails to list an EMS Fee as a line item in its published chargemasters, or that defendant fails to list the price of such fees in its chargemasters.” Moreover, the chargemaster is required to be filed annually with the Office of Statewide Health Planning and Development [citation] and that department is charged with investigating claims alleging a violation of the statute and requiring corrective action. [Citation.] Accordingly, we do not imply that defendant's chargemaster provides insufficient notice of the existence of the EMS Fee.

(Id. at *4 n.8, underlined case name and emphasis added.) As the italicized words show, the Saini panel determined that they did not need to decide whether the Saini plaintiff had reasonable access to material facts regarding the EMS Fee because the complaint admitted that the hospital’s chargemaster discloses the EMS Fee.

Plaintiff claims the determination is a distinction without a difference. She contends the determination “glosses over the ‘duty to disclose’ issue and is irrelevant in distinguishing Saini from the Torres case” because the Torres plaintiff “also did not claim that the defendant hospital failed to list the ER Visitation Fees as line items in its published chargemaster or that the defendant failed to list the price of such fees in the chargemasters.” (Opposition, pp. 15-16.) She asserts that Saini, Torres, and Plaintiff’s case “are all exactly the same in this regard.” (Id. at p. 16.)

The Court agrees with Plaintiff. In Torres, the hospital’s chargemaster and list of 25 common outpatient procedures were part of the record. The documents listed the “level 5 EMS Fee” charged to the Torres plaintiff. (Torres, supra, 77 Cal.App.5^th at 505, 512.) Nevertheless, the Court of Appeal held that the plaintiff “stated sufficient facts to plead a lack of reasonable access to (1) the facts that trigger Hospital’s imposition of an EMS Fee and (2) the formula used to determine which level of EMS Fee to impose on an emergency room patient.” (Id. at 512-513.) The situation here is similar. Even considering Cedars-Sinai’s July 2016 chargemaster and list of 25 common outpatient procedures (see Defendant’s RJN, Exs. A-C), the case cannot be resolved at the pleading stage. The chargemaster, for example, is more than 350 pages long. The ER Visitation Fees appear for the first time on pages 208 and 209, and it utilizes “coding and highly abbreviated descriptions” that may be “meaningless to consumers.” (Torres, supra, 77 Cal.App.5^th at 512; see also Defendant’s RJN, Ex. A, pp. 208-209.) Given comparable facts, the Torres justices held that they could not “conclude as a matter of law that an objectively reasonable person who reviewed Hospital’s chargemaster and its form of 25 common outpatient procedures could discern the circumstances in which the EMS Fee is charged or how the amount of the EMS Fee is determined.” (Torres, supra, 77 Cal.App.5^th at 513.) Similarly, the Court finds that Defendant’s demurrer should be overruled because, under Torres, “the issue of reasonable access is” a factual question “that can be decided as a matter of law only if the evidence (or facts accepted as true for pleading purposes) can support only one reasonable conclusion.” (Id. at 512.)[4]

One more point. The reason the Torres plaintiff lost was not because she failed to allege a duty to disclose or a lack of reasonable access; it was because she failed to allege reliance. (See id. at 513-514.) This Court found the same here last time and granted leave to amend. (See 6/16/22 Tentative Ruling Re: Demurrer, p. 8.) The SAC appears to cure the defective reliance allegations (see Torres, supra, 77 Cal.App.5th at 514 [requiring the plaintiff to allege that she “would have obtained treatment elsewhere”]; see also, e.g., SAC, ¶¶ 18, 42, 52 [alleging that “Plaintiff would have left and sought less expensive treatment elsewhere, such as an urgent care center[,]” if she had been “notified of the ER Visitation Fee prior to incurring treatment that would result in such a Fee”]), which is another reason to overrule the demurrer.

[1] Business & Professions Code section 17200 et seq.

[2] Civil Code section 1750 et seq.

[3] In Torres, “the plaintiff – who was represented by Plaintiff’s counsel here – alleged that the hospital failed to disclose ‘a substantial emergency room evaluation and management services fee’ (‘EMS Fee’). (Torres, supra, 77 Cal.App.5^th at 503.)” (6/16/22 Tentative Ruling Re: Demurrer, p. 8.) “The Court of Appeal found that the plaintiff adequately alleged a duty to disclose under the CLRA by alleging that (1) the hospital had exclusive knowledge of the facts, and (2) the plaintiff did not have reasonable access to the facts. (See id. at 510-513.)” (Ibid.)

The SAC contains similar allegations. (See, e.g., SAC, ¶ 52 [alleging: “Defendant’s failure to disclose its intention to bill Plaintiff and Class members a substantial ER Visitation Fee constitutes actionable consumer fraud or deceit because Defendant had exclusive knowledge that it would be billing Plaintiff and Class members such an ER Visitation Fee, and this fact was not known or reasonably accessible to Plaintiff or Class members at the time of their emergency room visits”]; see also, e.g., id. at ¶¶ 43-44 [alleging that the UCL claim is based on the CLRA claim].)

[4] The Court agrees with Plaintiff that Saini fails to materially distinguish Torres. Again, Plaintiff’s counsel was also counsel in Torres. She represents that, like Saini, the Torres plaintiff did not claim the hospital failed to publish the ER Visitation Fees in the chargemaster and the list of 25 common outpatient procedures.