In Kendall v. Scripps Health (D070390), filed 10/18/17, publication order 10/23/17), the California Court of Appeal, Fourth Appellate District held that a motion for class certification was properly denied in a case where the plaintiff brought a lawsuit alleging that Scripps Health (Scripps) had overcharged him and putative class members for emergency screening, stabilization, and treatment.
The plaintiff brought suit under the Consumer Legal Remedies Act (CLRA) and California’s unfair competition law (Bus. & Prof. Code, §17200) based on services rendered by Scripps. He signed Scripps’s Agreement for Services in which he agreed to pay the billed charges before receiving treatment as well as a $100 deposit. The plaintiff was uninsured and he was billed $17,511. The lawsuit, which included allegations that class action treatment was appropriate, alleged that the “Charge Masters” maintained by Scripps, which provide the amount charged for each product and service, provided for billings that were four to five times the actual costs of services. The Plaintiff alleged violations of CLRA and UCL and further argued the Agreement for Services was unconscionable.
The evidence submitted by Scripps to oppose class certification showed the amount of revenue derived in any given patient’s case depended on a multitude of factors, including external factors, such as contractual health plan rates, fixed government rates, individually negotiated pricing, discounts, and a patient’s ability to pay. Scripps further presented evidence the revenue might also be affected by the type of procedure, physician orders, comorbidities and complications, medical necessity, etc. The trial court concluded the evidence was such that the plaintiff had not satisfied the commonality requirement for class certification. Likewise, the court also determined that the plaintiff had failed to provide a reasonable method for ascertaining “self-pay” class members, those that did not receive insurance benefits, discounts, etc., absent an individualized analysis of each patient’s payment record.
The Court of Appeal found the trial court’s determination was based on substantial evidence and affirmed its order denying class certification. The decision emphasizes that where the administrative cost to identify and process self-play class members is so substantial such as to render the likely appreciable benefit de minimis, the lower court has discretion to deny certification. The court specifically stated it would not be appropriate to require Scripps to create new technology that would help it identify members of the putative class of self-pay patients. Concluding that individualized analysis of patient billings would be necessary, the court held class treatment would not be appropriate.
The cost of health care in the United States is a hotly debated topic and cases such as Kendall are indicative of a recent effort to reframe the question in terms of legal remedies available to patients as consumers. This decision, as well as an earlier decision Hale v. Sharp Health Care (2014) 232 Cal.App.4th 50, manifests the continued weariness of the judiciary to be the mechanism for addressing the serious problem of health care affordability, at least on a class-wide basis. From the standpoint of health care providers, the decision is a victory not only because class treatment would invite far broader scrutiny into billing practices and how they maintain data, but because it embraces the view that rising health care affordability is a problem that requires a legislative rather than judicial solution. The lawyers in Haight’s Risk Management & Insurance Law Practice Group are abreast of the changing landscape in both federal and California health care law, providing litigation support and risk management solutions to health care providers and insurers.
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