Claims of inflated hospital rates not actionable where financial assistance was available

Nunes v. The Hospital Committee for Livermore-Pleasanton Areas, 2012 WL 1925537 (Cal.App. 1 Dist.)

George and Travis Nunes, father and son, filed a putative class action against the hospital based on its alleged practice of billing uninsured patients its full standardized rates for services.  The court of appeals affirmed the dismissal of the claims.  Travis received medical services at the hospital while uninsured.  When he was admitted, he received and signed a Financial Assistance Notice (FAN), which states: “Financial assistance is available to low income uninsured or under insured patients at ValleyCare Health System.”  It provided a phone number that would allow him to request an application for charity care.  He also signed a Conditions of Admission form (COA), which said: “The undersigned agrees ... to pay the account of the hospital in accordance with the regular rates and terms of the hospital, including its financial assistance policies.”  Other notices about the availability of financial assistance were posted in the emergency department and registration areas. He didn’t apply for financial assistance and his father paid his $609 bill (he ultimately repaid his father).

Later, Travis again received medical care, for which he was billed $5992.  This time he applied for financial assistance.  After he provided additional information at defendant’s request, he was provided 100% financial assistance.  It was undisputed that his financial circumstances were the same both times: he was unemployed, uninsured, and couldn’t afford care.

Plaintiffs sued, alleging that the hospital charged “unfair, unreasonable, and inflated prices for medical care to its uninsured patients.”  The so-called “regular rates” were actually the starting point for negotiations with health insurance providers, who negotiated reduced rates.  The hospital’s charitable policies allegedly failed to disclose that its financial assistance program merely offered reductions from already inflated prices.

The court of appeals affirmed the dismissal of George’s claims because he didn’t have standing; he just voluntarily loaned Travis the money and he was insured and never qualified for or applied for financial assistance from the hospital during the class period.  Travis, by contrast, had standing but raised no issues of material fact.

The breach of contract claim failed because it indicated that Travis would be charged the regular rate, subject to the financial assistance policies.  Though Travis argued that an ordinary person wouldn’t understand that “regular rate” meant a rate many times the regular-in-the-lay-sense rate, the courts didn’t agree.  Undisputedly, the hospital provided him financial assistance the second time, and would almost certainly have done so the first time if he’d applied given his circumstances.  Since he voluntarily failed to avail himself of the financial assistance policies, he couldn’t prove a breach of contractual duty to bill at less than the “regular” rate.  Nor could he show a breach of the duty of good faith and fair dealing, since nothing suggested that the hospital did anything to frustrate or interfere with his ability to apply for or receive financial assistance.

Travis lacked standing to raise an unfair business practices claim under the UCL because he couldn’t show causation for his claim that, by charging uninsured patients higher rates than those it charges insured patients, and by failing “to reasonably allow qualifying patients to understand and avail themselves of [the financial assistance] policies,” the hospital violated the law.  The facts showed that the hospital didn’t unfairly cause him injury or lost money.  He didn’t rely on any alleged misrepresentation, since the document he signed explicitly stated that the regular rate included a potential for reduction through financial assistance, nor did he allege any violation of a statute or regulation.  Travis argued that the hospital failed to disclose the full effect of failing to apply for financial assistance, but the hospital complied with its statutory obligation to tell patients that they had that option and was protected by the statutory safe harbor for UCL violations.  His CLRA claim failed for the same reason: he couldn’t show that his harm stemmed from reliance on the hospital’s deception; his problem arose solely because he failed to use the opportunity to apply for financial assistance.