Kendall v. Scripps Health (Oct. 18, 2017, No. D070390) __ Cal.App.5th __ [2017 WL 4791986]

Paul Kendall, an uninsured patient, filed an action against Scripps Health asserting several class-wide claims challenging Scripps’s billing and collection practices for emergency services to self-pay patients. When Kendall received emergency treatment at Scripps he had signed an agreement stating he was responsible for paying all billed charges as listed in the hospital’s Charge Description Master. Scripps subsequently billed Kendall $17,511, the Charge Master rates for the services provided. Kendall sued Scripps, seeking injunctive relief from Scripps’s alleged illegal billing and collection practices, as well as damages and restitution based on California’s Unfair Competition Law (UCL) and the Consumer Legal Remedies Act (CLRA). The trial court denied Kendall’s motion for class certification on the ground he had not demonstrated the proposed class was ascertainable or that common issues predominated. Kendall appealed.

The Court of Appeal affirmed the order denying class certification. First, the court affirmed the trial court’s determination that common issues did not predominate. “[I]ndividualized inquiries would be necessary to calculate liability and damages, by generating a hypothetical reasonable rate for emergency services, and determining what portion of it each patient should be held liable to pay, after treatment was completed.” Moreover, “numerous factors affect the amounts that will be sequentially billed, depending on later findings about availability of coverage from insurance, governmental benefits, charity or discounts.” Second, the court affirmed the trial court’s determination that the proposed class was not ascertainable because “Kendall did not show the existence of a reasonable method for Scripps ‘to ascertain who has claims and who does not without an individualized analysis of each patient’s payment record.’ ” Finally, the court rejected Kendall’s argument that a class should be certified regarding his declaratory relief cause of action under federal law (using a FRCP 23 analysis). Application of federal law was unnecessary because Kendall had failed to identify any characteristics of the proposed class that could not properly be analyzed through the use of California law. Additionally, “[c]ertifying a class to issue declaratory relief . . . could not properly be granted in a theoretical vacuum that disregards not only the related substantive statutory claims, but also the existence of specialized regulations of emergency services billing that allow the use of the Charge Master format. Accordingly, the trial court did not abuse its discretion by determining that class certification was inappropriate.

This bulletin was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission.