Moran v. Prime Healthcare Management, Inc. (Oct. 5, 2016, G051391) ___ Cal.App.5th ___ [2016 WL 5815785].
Gene Moran, an uninsured patient, filed a class action against related Prime Healthcare hospital entities alleging that their “grossly excessive” charges and price discrimination against self-pay patients violated California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA). Moran had visited an emergency room three times and was billed over $10,000. During each visit, Moran signed contracts stating he was responsible for all reasonable charges listed in the hospital description master, but might be eligible for a charity or discounted payment program. The trial court sustained Prime Healthcare’s demurrer without leave to amend and dismissed Moran’s complaint.
The Court of Appeal affirmed in part and reversed in part. The court held that, while most of Moran’s claims lacked merit, he had adequately alleged facts supporting his claim that the hospital’s bills were unconscionable. The fees were procedurally unconscionable because the hospital’s pre-printed contracts had to be signed by self-pay patients before they could receive even emergency treatment. The fees were substantively unconscionable because the alleged purpose of the excessive rates was to increase the profit margin on the treatment of vulnerable self-pay patients requiring emergency care. The court agreed that the Hospital Fair Pricing Act allows hospitals to charge variable pricing, but held that unconscionably high prices would violate both the UCL and CLRA. The court rejected the hospital’s argument that its fees were fair because Moran could apply for a price reduction or elimination, since the application process constituted a tangible burden in the court’s view. Finally, the court held that plaintiff’s price discrimination claim was barred by a safe harbor provision in Business and Professions Code section 17042, and his fraud and misrepresentation claims lacked merit because he failed to allege reasonable reliance on alleged misrepresentations.
Thomas Watson
htwatson@horvitzlevy.com
Horvitz & Levy LLP
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