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Hale v. Sharp Healthcare

California Court of Appeals, Fourth District, First Division

November 19, 2014

DAGMAR HALE, Plaintiff and Appellant,
v.
SHARP HEALTHCARE et al., Defendants and Respondents.

APPEAL from an order of the Superior Court of San Diego County, No. 37-2007-00060598- CU-BT-CTL Joel M. Pressman, Judge.

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COUNSEL

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

Higgs, Fletcher & Mack, John Morris and Alexis S. Gutierrez for Defendants and Respondents.

OPINION

McCONNELL, P. J.

INTRODUCTION

This is Dagmar Hale's second appeal in a class action against Sharp Healthcare and Sharp Grossmont Hospital (together Sharp) contending Sharp unfairly charged her and other uninsured patients more for emergency services than the fees it accepted from patients covered by private insurance or governmental plans. In the first appeal, we partially reversed a judgment of dismissal following a demurrer. The trial court thereafter certified the class. After engaging in discovery, Sharp moved to decertify the class arguing a class action is inappropriate based on lack of ascertainability and lack of predominantly common issues. The trial court considered the evidence presented and found there are no reasonable means to ascertain the members of the class without individual inquiries of more than 120, 000 patient records and continued class treatment is not appropriate because individualized issues, rather than common issues, predominate, particularly with respect to whether or not class members are entitled to recover damages. Finding no abuse of discretion, we affirm the order decertifying the class.

FACTUAL AND PROCEDURAL BACKGROUND

A

Hale was admitted to Sharp Grossmont Hospital in January 2007 and received "medical treatment, central services, lab work, medication, emergency hospital care and [CT] scans." She was uninsured at the time and signed an admission agreement, which stated, "you hereby individually obligate yourself to pay the account of the hospital in accordance with the regular rates and terms of the hospital." Sharp billed Hale $14,447.65 for the services provided. Sharp offered Hale financial assistance for her emergency room visit and substantially discounted her bill.

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B

Hale filed this action challenging "the unreasonable, unconscionable and unlawful charges billed to uninsured persons for medical treatment at Sharp hospitals and healthcare facilities." She alleges Sharp does not charge uninsured patients "regular rates" but charges "uninsured patient's [sic] significantly more for the same services than they charge other (e.g., insured or Medicare-covered) patients." She alleges Sharp engages "in a pattern and practice of charging unfair, unreasonable and inflated prices for medical care to their uninsured patients, charging them exponentially more than other patients for the very same treatment."

In Hale's first appeal, we reversed in part a judgment of dismissal because we concluded Hale sufficiently stated causes of action under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) and the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.). (Hale v Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1377 [108 Cal.Rptr.3d 669].)

C

After remand, the trial court granted Hale's motion for class certification and certified the class with the following definition: "All individuals who from August 11, 2003 to [December 16, 2011] (a) received emergent-care medical treatment at a Sharp Hospital and signed the defendant Sharp Healthcare standard form Admission Agreement; and (b) were not covered by insurance or government healthcare programs at the time of treatment (the 'Class')...." The court stated, "[t]he case presents a single common issue that predominates over any single issue, i.e., whether defendant Sharp Healthcare represented to its uninsured patients in its standard form Admission Agreement that it would provide services at defendant Sharp Healthcare 'regular rates', but failed to do so."

Sharp developed a protocol to search its electronic records and identified over 120, 000 potential class members who might have had unfunded emergency department visits between August 1, 2003 and December 16, 2011. However, Sharp advised the court it could not conclusively determine whether a potential uninsured emergency department patient signed an Admission Agreement without reviewing individual records and the potential class members included patients who had all or part of their expenses paid by a third party.

The court ordered notice be disseminated to potential class members by individual mailings and publication. A third party mailed individual notices to potential class members in May 2012 and provided publication notice.

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D

Sharp filed a motion to decertify the class in March 2013, based in part on evidence obtained from putative class members in discovery. Sharp argued the class is not ascertainable because Sharp does not keep records in such a way as to reasonably and readily identify those included in the class definition without individualized inquiries. Sharp also argued the class action device is not a superior method to litigate this matter because there is no manageable way to prove entitlement to damages on a classwide basis without individual inquiries.[1]

Sharp presented evidence all emergency room patients, whether insured, uninsured or covered by government health care benefits, are billed at rates listed on a publicly available "charge description master" commonly referred to as a "Chargemaster." It also explained, due to state law prohibiting discussion of financial issues until a patient is stabilized, many times a determination of whether a patient is insured or not does not occur until after a patient is admitted and receives treatment. Additionally, although a patient may be listed as "self-pay" or "uninsured" when they present to the emergency department, the billing department is trained to work with patients to help them determine if coverage might be available through private insurance, government programs or other financial assistance programs. Patients commonly do not believe they are eligible for government benefits and indicate "self-pay" on the intake forms, but later qualify for and receive such benefits.

Sharp does not regularly update the initial revenue code in its electronic records to correct payer status so patients who ultimately receive benefits may still be listed as "self-pay." To determine what a patient paid or to determine if a patient qualified for some form of coverage or assistance, Sharp argued it would be required to conduct individual reviews of each of the more than 120, 000 patient records initially identified during the class period.

Sharp presented evidence self-pay patients on average pay Sharp less than other payors. Sharp cited 2009 statistics indicating uninsured patients on average paid 4 percent of the Chargemaster rates whereas Medicaid paid 13 percent, Medicare paid 16 percent and private insurance companies paid 56 percent of the Chargemaster rates. Some uninsured patients pay nothing for their visits.

Sharp also presented evidence from a sample of 10 absent class members. Two paid nothing in connection with multiple emergency room visits. Two

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had their bills paid or reimbursed by third parties. The other absent class members paid less than the full Chargemaster rate for services after obtaining negotiated discounted rates from Sharp ranging from about 20 to 90 percent.

Hale opposed the motion arguing the fact all patients are charged the same Chargemaster rates is irrelevant because the issue of differing payment obligations is a matter for the trier of fact as is "the interpretation of Sharp's 'regular rates' or 'reasonable rates'." She argued Sharp's policies "show that there are several different methods of fixing Sharp's 'regular rates' or 'reasonable rates' on a class-wide basis." Hale produced a chart from Sharp outlining self-pay price quotes and discount options, including a charity care adjustment and tiered discounting based on the amount of the bill. She also submitted an excerpt of a policy regarding financial assistance for uninsured or low income patients. Hale argued she would attempt to establish a "reasonable value" for ...


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