Hefczyc v. Rady Children's Hospital-San Diego
This text of 225 Cal. Rptr. 3d 641 (Hefczyc v. Rady Children's Hospital-San Diego) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
IRION, J.
*522Artur Hefczyc appeals from an order denying his motion for class certification in his lawsuit against Rady Children's Hospital-San Diego (Rady). On behalf of a proposed class, Hefczyc seeks declaratory relief *647to establish that Rady's form contract, signed by patients or guarantors of patients who receive emergency room care, authorizes Rady to charge only for the reasonable value of its services, and that Rady therefore is not authorized to bill self-pay patients based on its master list of itemized charge rates, commonly referred to as the "Chargemaster" schedule of rates, which Hefczyc alleges is "artificial" and "grossly inflated." The trial court denied Hefczyc's motion for class certification, concluding that the class was not ascertainable, that common issues did not predominate, and that class action litigation was not a superior means of proceeding.
Hefczyc contends that the trial court erred in denying class certification because, as the complaint seeks only declaratory relief, the motion for class certification was brought under the equivalent of Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.), for which he was not required to establish the ascertainability of the class, that common issues predominate and that class action litigation is a superior means of proceeding. Hefczyc also contends that even if the trial court properly imposed those three requirements in this action, the trial court abused its discretion in concluding that those requirements were not met. We conclude that Hefczyc's arguments lack merit, and accordingly we affirm the order denying class certification.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. Hefczyc's Complaint
On November 10, 2015, Hefczyc filed a complaint against Rady, in which he alleged that his minor child was treated on October 8, 2015, at Rady's emergency room. Hefczyc alleged that he had no outside source of payment for the emergency room visit, such as insurance, and thus was a "self-pay" guarantor of his child's financial obligation to Rady. The total amount that Rady billed to Hefczyc for the emergency room visit was $9,831.34.
According to Hefczyc, the amount of the bill he received was based on "Chargemaster" rates developed by Rady. As alleged in the complaint, a "Chargemaster," as maintained by Rady and by other hospitals, is a spreadsheet "which include code numbers, descriptions, and gross charges for each of the thousands of items that are provided to patients." Rady explains that its *523Chargemaster contains thousands of different line items, relating to procedures, services and goods that are either bundled or specific. The Chargemaster and the number of line items on it changes each year.1 *648According to Hefczyc, the Chargemaster "provide[s] a convenient reference point for negotiating contracts and pricing schedules with commercial insurance carriers and with non-emergency care patients seeking elective treatment and service" but it "is not a pricing schedule which patients are expected to pay." The complaint alleges that Rady's actual reimbursement rates "are set forth in separate governmental regulations, contracts with commercial insurers, agreements with HMOs, etc."
As alleged by Hefczyc, when a patient seeks care in Rady's emergency room, all guarantors of emergency care patients are required by Rady to sign an agreement titled "Conditions of Treatment/Admission" (the COTA). The COTA contains a section relating to financial obligations, which states, among other things, that "Hospital charges will be in accordance with the Hospital's regular rates and terms." According to the complaint, "each patient is requested to sign" the COTA, "regardless of whether a patient is a Medicaid, privately insured, HMO, or self-pay patient."2 Hefczyc alleges that *524"the actual pricing terms that determine the reimbursement rates of the Hospital vary by category of patient" and depend on "governmental regulations and privately negotiated contracts." Hefczyc alleges that unlike other categories of patients, self-pay patients are billed at Chargemaster rates. Further, Hefczyc alleges that Chargemaster rates are "artificially inflated" and "unconscionable," are "at least three times what other patients pay for the same treatment and services," and "bear no relation to the Hospital's actual costs for providing treatment or services."
In interpreting the COTA's financial obligation provision, Hefczyc alleges that "the fact that all patients, regardless of category, are subject to the exact same pricing guarantee to pay 'in accordance with the Hospital's regular rates and terms,' despite the fact that each category of patients is charged differently, shows that the term 'the Hospital's regular rates and terms,' as a pricing term for the Hospital's services and treatment, is inherently vague, ambiguous and meaningless." According to the complaint, "[s]ince [the COTA] itself contains no pricing terms for the self-pay patients which are certain or *649readily identifiable, and fails to identify any means by which such pricing terms for self-pay patients can be made certain (i.e., it contains an 'open' pricing term), applicable law implies a contractual obligation to pay the reasonable value of the services and treatment rendered, and for [Rady] to charge guarantors of self-pay patients no more than such reasonable value."3
Hefczyc alleges that the billed amount of $9,831.34 for his child's emergency care treatment was based on Chargemaster rates that were "grossly excessive, unfair, and unreasonable." Further, he alleges that because the COTA purportedly contains an " 'open' pricing term," under the law governing contracts with open pricing terms, Rady is authorized to charge only "the reasonable value of such services."
*525Hefczyc brought this action on behalf of himself and a class of persons defined as follows:
"The guarantors of all persons who within the last four years, had one or more 'eligible patient hospital visits' to [Rady's] emergency department.
"For purposes of this class definition, an 'eligible patient hospital visit' is defined as one for which (1) the patient was billed at the hospital's full Chargemaster rates; (2) there have been no full writeoffs, discounts or adjustments to the full Chargemaster billing under [Rady's] charity care policies; (3) the bill has not otherwise been waived or written off in full by [Rady]; and (4) no payments for the hospital visit have been made by other than the guarantor, the patient or the patient's representatives."4
The single cause of action alleged in the complaint is for declaratory judgment. Specifically, the complaint seeks the following declarations on behalf of the alleged class: (1) "a declaration ...
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IRION, J.
*522Artur Hefczyc appeals from an order denying his motion for class certification in his lawsuit against Rady Children's Hospital-San Diego (Rady). On behalf of a proposed class, Hefczyc seeks declaratory relief *647to establish that Rady's form contract, signed by patients or guarantors of patients who receive emergency room care, authorizes Rady to charge only for the reasonable value of its services, and that Rady therefore is not authorized to bill self-pay patients based on its master list of itemized charge rates, commonly referred to as the "Chargemaster" schedule of rates, which Hefczyc alleges is "artificial" and "grossly inflated." The trial court denied Hefczyc's motion for class certification, concluding that the class was not ascertainable, that common issues did not predominate, and that class action litigation was not a superior means of proceeding.
Hefczyc contends that the trial court erred in denying class certification because, as the complaint seeks only declaratory relief, the motion for class certification was brought under the equivalent of Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.), for which he was not required to establish the ascertainability of the class, that common issues predominate and that class action litigation is a superior means of proceeding. Hefczyc also contends that even if the trial court properly imposed those three requirements in this action, the trial court abused its discretion in concluding that those requirements were not met. We conclude that Hefczyc's arguments lack merit, and accordingly we affirm the order denying class certification.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. Hefczyc's Complaint
On November 10, 2015, Hefczyc filed a complaint against Rady, in which he alleged that his minor child was treated on October 8, 2015, at Rady's emergency room. Hefczyc alleged that he had no outside source of payment for the emergency room visit, such as insurance, and thus was a "self-pay" guarantor of his child's financial obligation to Rady. The total amount that Rady billed to Hefczyc for the emergency room visit was $9,831.34.
According to Hefczyc, the amount of the bill he received was based on "Chargemaster" rates developed by Rady. As alleged in the complaint, a "Chargemaster," as maintained by Rady and by other hospitals, is a spreadsheet "which include code numbers, descriptions, and gross charges for each of the thousands of items that are provided to patients." Rady explains that its *523Chargemaster contains thousands of different line items, relating to procedures, services and goods that are either bundled or specific. The Chargemaster and the number of line items on it changes each year.1 *648According to Hefczyc, the Chargemaster "provide[s] a convenient reference point for negotiating contracts and pricing schedules with commercial insurance carriers and with non-emergency care patients seeking elective treatment and service" but it "is not a pricing schedule which patients are expected to pay." The complaint alleges that Rady's actual reimbursement rates "are set forth in separate governmental regulations, contracts with commercial insurers, agreements with HMOs, etc."
As alleged by Hefczyc, when a patient seeks care in Rady's emergency room, all guarantors of emergency care patients are required by Rady to sign an agreement titled "Conditions of Treatment/Admission" (the COTA). The COTA contains a section relating to financial obligations, which states, among other things, that "Hospital charges will be in accordance with the Hospital's regular rates and terms." According to the complaint, "each patient is requested to sign" the COTA, "regardless of whether a patient is a Medicaid, privately insured, HMO, or self-pay patient."2 Hefczyc alleges that *524"the actual pricing terms that determine the reimbursement rates of the Hospital vary by category of patient" and depend on "governmental regulations and privately negotiated contracts." Hefczyc alleges that unlike other categories of patients, self-pay patients are billed at Chargemaster rates. Further, Hefczyc alleges that Chargemaster rates are "artificially inflated" and "unconscionable," are "at least three times what other patients pay for the same treatment and services," and "bear no relation to the Hospital's actual costs for providing treatment or services."
In interpreting the COTA's financial obligation provision, Hefczyc alleges that "the fact that all patients, regardless of category, are subject to the exact same pricing guarantee to pay 'in accordance with the Hospital's regular rates and terms,' despite the fact that each category of patients is charged differently, shows that the term 'the Hospital's regular rates and terms,' as a pricing term for the Hospital's services and treatment, is inherently vague, ambiguous and meaningless." According to the complaint, "[s]ince [the COTA] itself contains no pricing terms for the self-pay patients which are certain or *649readily identifiable, and fails to identify any means by which such pricing terms for self-pay patients can be made certain (i.e., it contains an 'open' pricing term), applicable law implies a contractual obligation to pay the reasonable value of the services and treatment rendered, and for [Rady] to charge guarantors of self-pay patients no more than such reasonable value."3
Hefczyc alleges that the billed amount of $9,831.34 for his child's emergency care treatment was based on Chargemaster rates that were "grossly excessive, unfair, and unreasonable." Further, he alleges that because the COTA purportedly contains an " 'open' pricing term," under the law governing contracts with open pricing terms, Rady is authorized to charge only "the reasonable value of such services."
*525Hefczyc brought this action on behalf of himself and a class of persons defined as follows:
"The guarantors of all persons who within the last four years, had one or more 'eligible patient hospital visits' to [Rady's] emergency department.
"For purposes of this class definition, an 'eligible patient hospital visit' is defined as one for which (1) the patient was billed at the hospital's full Chargemaster rates; (2) there have been no full writeoffs, discounts or adjustments to the full Chargemaster billing under [Rady's] charity care policies; (3) the bill has not otherwise been waived or written off in full by [Rady]; and (4) no payments for the hospital visit have been made by other than the guarantor, the patient or the patient's representatives."4
The single cause of action alleged in the complaint is for declaratory judgment. Specifically, the complaint seeks the following declarations on behalf of the alleged class: (1) "a declaration ... with respect to their payment obligations to [Rady], including a determination of the construction and validity of the financial obligation provision of their [COTA] with [Rady], specifically finding that [Rady's COTA] contains an 'open price' term, and does not permit [Rady] to bill and demand payment from self-pay emergency care patients based upon its Chargemaster rates"; (2) "a declaration that they are liable to [Rady], under [the COTA], for no more than the reasonable value of the treatment/services provided"; and (3) "a declaration that [Rady's] billing practices as they relate to Class members are unfair, unconscionable, and/or unreasonable."
In relating these prayers for declaratory relief to the request for class treatment in this action, the complaint alleges that a determination as to whether the COTA should be interpreted to "only require[ ] payment at a reasonable rate and for no more than the reasonable value of the services rendered" "should be made only once, and should be equally applicable to *650all Class members." The complaint alleges that "[w]hile such a Declaratory Judgment would not, in itself, determine the reasonable value of services rendered, it would allow a patient the ability to dispute [Rady's] unreasonable demands, and provide the ability to negotiate an appropriate payment amount and reasonable payment terms."
B. The Class Action Certification Motion
Hefczyc filed a motion for class certification, in which he sought an order certifying a class pursuant to Code of Civil Procedure section 382, "the *526equivalents of Rules 23(b)(1) and/or 23(b)(2) of the Federal Rules of Civil Procedure," or in the alternative, an order certifying a class based on a single issue pursuant to California Rules of Court, rule 3.765(b).5 In opposition, Rady argued, among other things, that certification under the equivalent of Federal Rules of Civil Procedure, rule 23(b)(1) or (b)(2) (28 U.S.C.) was not appropriate and that Hefczyc had not satisfied the requirements for class certification applied by California courts.
The trial court issued a ruling denying class certification. With respect to Hefczyc's contention that a class should be certified under Federal Rules of Civil Procedure, rule 23(b)(1) and/or (b)(2) (28 U.S.C.), the trial court's ruling stated that it "disagrees" with Hefczyc's position. At the hearing on the class certification motion, the trial court provided the further explanation that "given the facts of this case, it's ... this Court's opinion" that the provisions in the Federal Rules of Civil Procedure cited by Hefczyc did not apply, "so the analysis ... has to be done under the California rule." The trial court therefore, "examine[d] this motion under principles that generally guide California courts in deciding whether to certify a class." Applying the applicable California case law, the trial court concluded that (1) the class was not ascertainable because "to identify class members could not be accomplished without unreasonable expense or time"; (2) "common questions of fact do not predominate over individualized questions"; and (3) class certification "would not provide substantial benefits that would render proceeding as a class superior to the alternatives." The trial court further rejected the argument "that an issue should be certified in this case pursuant to [California Rules of Court, rule] 3.765(b)."
Hefczyc appeals from the order denying class certification.6
II
DISCUSSION
A. Standard of Review
We review the order denying class certification for an abuse of discretion. ( Sav-on Drug Stores, Inc. v. Superior Court (2004)
" 'The certification question is "essentially a procedural one that does not ask whether an action is legally or factually meritorious." ' " ( Brinker Restaurant Corp. v. Superior Court (2012)
B. There Is No Merit to Hefczyc's Contention That the Requirements of Federal Rules of Civil Procedure, Rule 23 (28 U.S.C.) Should Apply Here, Rather than the Requirements Set Out in California Case Law
1. Applicable California and Federal Standards for Class Certification
Hefczyc's main appellate argument is that because his complaint seeks only declaratory relief, the trial court should have applied the class certification requirements set forth in Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.) rather than the requirements set forth in California case law.
a. Class Certification Requirements in California Courts
The authority for class action litigation in California is set forth in Code of Civil Procedure section 382, which provides that "when the question *528is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of all." For several decades, our Supreme Court has consistently "articulated clear requirements for the certification of a class. The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives. ... 'In turn, the "community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class." ' " ( Brinker , supra , 53 Cal.4th at p. 1021,
These standards have been set forth and consistently applied numerous times by our Supreme Court. (See, e.g., Daar v. Yellow Cab Co . (1967)
*652City of San Jose v. Superior Court (1974)
Our Supreme Court has also consistently applied the long-standing and well-settled requirement that the proponent of class certification must establish that there are substantial benefits from certification that render proceeding as a class superior to the alternatives. (See, e.g., Occidental Land, supra , 18 Cal.3d at p. 360,
In this case, as we have explained, the trial court applied the long-settled standards for class certification set forth in our Supreme Court's opinions, and it denied class certification because it found that three of the requirements were lacking: (1) the class was not ascertainable; (2) common questions of law or fact did not predominate; and (3) Hefczyc had not established that substantial benefits from certification would render proceeding as a class superior to the alternatives.7
b. Class Certification Requirements in Federal Court
In contrast, Federal Rules of Civil Procedure, rule 23 (28 U.S.C.) does not require that ascertainability, predominance and superiority be established to obtain *653certification in every type of case. As relevant here, Federal Rules of Civil Procedure, rule 23 (28 U.S.C.) provides as follows:
"(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
"(1) the class is so numerous that joinder of all members is impracticable;
"(2) there are questions of law or fact common to the class;
"(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
"(4) the representative parties will fairly and adequately protect the interests of the class.
"(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if:
*530"(1) prosecuting separate actions by or against individual class members would create a risk of:
"(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or
"(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests;
"(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
"(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."
As set forth in this rule, only if a class action is certified under Federal Rules of Civil Procedure, rule 23(b)(3) (28 U.S.C.) is the court required to make a finding similar to the predominance and superiority requirements under California law, namely, that "questions of law or fact common to class members predominate over any questions affecting only individual members," and "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." (Ibid. ; Wal-Mart Stores, Inc. v. Dukes (2011)
*654*531c California Courts May Look to Federal Rules of Civil Procedure, Rule 23 (28 U.S.C.) in the Absence of State Precedent
"It is well established that in the absence of relevant state precedents our trial courts are urged to follow the procedures prescribed in rule 23 of the Federal Rules of Civil Procedure for conducting class actions." ( Green v. Obledo (1981)
d. Hefczyc Contends That the Trial Court Should Have Applied the Equivalent of Federal Rules of Civil Procedure, Rule 23(b)(1)(A) or (b)(2) (28 U.S.C.)
Characterizing the relief sought in his complaint as simply "a declaration as to the meaning of a single Contract provision" which would "interpret a few lines of [Rady's COTA] on a class[-]wide basis," Hefczyc contends that the trial court should have applied the "equivalent" of Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.) when deciding the class certification motion because California lacks precedent as to which class certification standards apply when the plaintiff seeks nothing more than declaratory relief on a class-wide basis.
Specifically, *655pointing out that Federal Rules of Civil Procedure, rule 23(b)(1)(A) (28 U.S.C.) authorizes class certification when "prosecuting separate actions by or against individual class members would create a risk of ... inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class" (ibid. ), Hefczyc contends that provision applies here because, in the absence of a certified class, Rady "could be limited to enforcing collection for no more than the reasonable value of its services in one legal action ... while being authorized to enforce collection of its full *532Chargemaster rates in a different action."9 Further, pointing out that Federal Rules of Civil Procedure, rule 23(b)(2) (28 U.S.C.) authorizes class certification when "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole" (ibid. ), Hefczyc argues that provision applies here because Rady has "used common Contract language and admittedly charged all Class members its Chargemaster rates." According to Hefczyc, "[Rady] has acted on grounds that apply generally to the Class, and final relief of an injunctive nature or of a corresponding declaratory nature, settling the legality of the behavior with respect to the Class as a whole, is appropriate under the standard set forth in [Federal Rules of Civil Procedure,] rule 23(b)(2)."10
Hefczyc argues that because the trial court should have applied Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.) in deciding the class certification motion, it also should not have required that Hefczyc establish ascertainability, predominance and superiority as a prerequisite for *533obtaining class certification. As Hefczyc contends, because ascertainability, predominance and superiority would not be required in a federal court proceeding when a class is certified pursuant to Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.), the trial court should not have applied those requirements here.
As we will explain, we reject Hefczyc's argument. No California authority supports the contention that ascertainability, predominance and superiority are not required when a proposed class action would be certified under Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.) if it were proceeding in federal court . On the contrary, case law consistently holds that ascertainability, predominance and superiority are always required to certify a class action in California under Code of Civil Procedure section 382.
2. No California Authority Supports Hefczyc's Contention That He Is Not Required to Establish Ascertainability, Predominance and Superiority in a Proposed Class Action Seeking Only Declaratory Relief
As we have explained, in a long list of opinions, our Supreme Court has "
*656uniformly " required a plaintiff seeking class certification to establish ascertainability, predominance and superiority "in order to sustain any class action." ( Daar, supra , 67 Cal.2d at p. 704,
Several intermediate appellate court opinions in California, including one case on which Hefczyc heavily relies ( Capitol People First v. Department of Developmental Services (2007)
In Capitol People First , the relief requested consisted of "declaratory and injunctive relief as well as orders pursuant to a writ of mandate compelling defendants to comply with enumerated duties" requiring government departments and officials to comply with the laws applicable to persons with developmental disabilities. ( Capitol People First , supra , 155 Cal.App.4th at p. 686,
Rady cites other California cases in which the relief sought was solely declaratory or injunctive, but which did not diverge from the standard class action certification *658requirements that our Supreme Court has consistently applied. ( Mendoza v. County of Tulare (1982)
In support of Hefczyc's position that because he seeks only declaratory relief, the trial court should have applied the class certification standards set forth in Federal Rules of Civil Procedure, rule 23(b)(1) or (b)(2) (28 U.S.C.), Hefczyc cites Frazier v. City of Richmond (1986)
In sum, there is no gap in California precedent to be filled by reference to Federal Rules of Civil Procedure, rule 23(b)(1)(A) or (b)(2) (28 U.S.C.) on the issue of what class certification standards must be met when a plaintiff seeks only declaratory or injunctive relief on behalf of a class. Even when the plaintiff seeks solely declaratory or injunctive relief, *536California case law follows the well-established requirements that our Supreme Court has consistently stated, namely, (as relevant here) that the plaintiff must establish that (1) the class is ascertainable; (2) common questions predominate; and (3) a class action would provide substantial benefits, making it superior to other procedures for resolving the controversy. Therefore, the trial court did not err in concluding that class action certification should be denied if Hefczyc did not establish those requirements.13
C. The Trial Court Did Not Abuse Its Discretion in Determining That Hefczyc Did Not Establish Ascertainability, Predominance and Superiority
Having concluded that the trial court properly required Hefczyc to establish ascertainability, predominance and superiority to prevail in his class certification motion, we next consider whether the trial court abused its discretion in concluding that those requirements were not met.
1. Ascertainability
" 'A class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself or herself as having a right to recover based on the description.' ... 'Ascertainability is achieved "by defining the class in terms of objective characteristics and common transactional facts making the ultimate identification of class members possible when that identification becomes necessary." ' ... 'Whether a class is ascertainable is determined by examining (1) the class definition, (2) the size of the class, and (3) the means available for identifying class members' at the remedial stage." ( Aguirre v. Amscan Holdings, Inc. (2015)
*537" 'While often it is said that "[c]lass members are 'ascertainable' where they may be readily identified without unreasonable *659expense or time by reference to official records" [citations], that statement must be considered in light of the purpose of the ascertainability requirement.' ... 'Ascertainability is required in order to give notice to putative class members as to whom the judgment in the action will be res judicata.' ... The goal in defining an ascertainable class 'is to use terminology that will convey "sufficient meaning to enable persons hearing it to determine whether they are members of the class plaintiffs wish to represent." [Citation.] "... Otherwise, it is not possible to give adequate notice to class members or to determine after the litigation has concluded who is barred from relitigating." ' " ( Aguirre , supra , 234 Cal.App.4th at pp. 1300-1301,
Here, Hefczyc defined the proposed class as follows: "The guarantors of all persons, who, within the last four years, had one or more 'eligible patient hospital visits' to [Rady's] emergency department. [¶] For purposes of this class definition, an 'eligible patient hospital visit' is defined as one for which (1) the patient was billed at the hospital's full Chargemaster rates; (2) there have been no full writeoffs, discounts or adjustments to the full Chargemaster billing under [Rady's] charity care policies; (3) the bill has not otherwise been waived or written off in full by [Rady]; and (4) no payments for the hospital visit have been made by other than the guarantor, the patient or the patient's representatives."
*538In opposition to the class certification motion, Rady submitted an extensive declaration from Michael Hester, Rady's Senior Director of Revenue Cycle. Hester explained that "each patient account's history has to be manually evaluated individually to determine whether the rates collected and those that are outstanding are the full Chargemaster amounts or some other amount." This is because self-pay patients may obtain a variety of different discounts based on their unique circumstances. Further, patients originally may have been billed at full Chargemaster rates, only to later establish they were covered by insurance or qualified for governmental health benefits. Rady would have to manually review each individual account to determine if that is the case. Moreover, even patients *660who are covered by insurance may have paid Chargemaster rates for some services that were not covered by insurance. That circumstance also can be determined only by a manual review of each patient's account. Another problem in ascertaining whether a patient paid the full Chargemaster rate arises because "if a patient's account is sent to collections for debt collection, the vendor has authority in certain situations to provide a discount to encourage payment."
Hester explained that given all of these complexities and the limitations of Rady's billing system, it would take an individual inquiry into hundreds of thousands of patient records to determine whether a patient falls under the class definition. Hester explained, that "[Rady] does not maintain patient information in a manner that permits access to certain data points (including whether the patient was finally determined to be self-pay) on an aggregated basis. To figure out what a patient/guarantor has paid for his/her encounter, if anything, or to assess whether the patient later qualified for Medicare, Medi-Cal or other governmental assistance program, [Rady] would have to conduct an individual inquiry into hundreds of thousands of patient's records. The same is true if [Rady] was asked whether and to what extent a patient was offered and accepted any discount based on any financial assistance or charity program, and the resulting payments made, if any. A manual, line-by-line, document by document review would be required, and the results of that review could change moment by moment as more is learned about patients and financial classes are updated." Hester summarized, "This would be extremely overly burdensome for [Rady] and would take hundreds to thousands of hours to review individual accounts. ... The information requested by plaintiff to define plaintiff's purported class would require individual inquiries into thousands to millions of individual records."
Based on Hester's declaration, the trial court concluded that "the class here is not ascertainable because to identify class members could not be accomplished without unreasonable expense or time."
*539Hefczyc takes issue with the trial court's conclusion, contending that it is not supported by substantial evidence. Hefczyc contends that Hester's explanation of the time-consuming nature of determining the membership of the class purportedly ignores that the class definition is "based on [Rady's] electronic payment records, and no 'individual' review is required, except to the extent an electronic database query is considered an 'individual review.' " Hefczyc cites no evidentiary support for his contention that no individual review of Rady's records is required, and he does not cite to any portion of the class definition that would limit the inquiry required to Rady's electronic database. Indeed, Hefczyc refers to no evidence to dispute Hester's statement that it would be extremely time-consuming for Rady to review its records to determine the membership of the class. Therefore, Hester's declaration constitutes substantial evidence to support the trial court's finding that it would unreasonably burden Rady to identify the members of the class.
Relying on case law establishing that, in certain instances, a class may be ascertainable if members are able to self-identify that they belong to a class ( Nicodemus v. Saint Francis Memorial Hospital (2016)
We reject the argument because the proposed class definition is not drafted in such a way that class members would be able to identify for themselves that they fall within the class by reviewing the class definition. Specifically, the first requirement for class membership as set forth in Hefczyc's proposed class definition is that "the patient was billed at the hospital's full Chargemaster rates." The class definition does not explain the term "full Chargemaster rates," and it is unlikely that a person reading the class definition would understand what is meant by that term. Further, as shown by the bills that Rady sent to Hefczyc, which are included in the record, the term "Chargemaster" does not appear anywhere in the bills to inform the recipient that he or she is being billed based on Chargemaster rates. Accordingly, we conclude that the class cannot be made ascertainable by relying on members of the public to self-identify whether they fall within the class definition in the event that notice is given by publication to the general public.
*540In sum, we conclude that the trial court did not abuse its discretion in ruling that Hefczyc failed to establish the ascertainability of the class.15
2. Predominance
The requirement of predominance arises because "[p]laintiffs' burden on moving for class certification ... is not merely to show that some common issues exist, but, rather, to place substantial evidence in the record that common issues predominate." ( Lockheed, supra , 29 Cal.4th at p. 1108,
As we are required to inquire " 'whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment' " ( Brinker, supra , 53 Cal.4th at p. 1021,
*541As we have explained, the complaint seeks the following declaratory relief on behalf of the proposed class: (1) "a declaration ... with respect to their payment obligations to [Rady], including a determination of the construction and validity of the financial obligation provision of their [COTA] with [Rady], specifically finding that [Rady's COTA] contains an 'open price' term, and does not permit [Rady] to bill and demand payment from self-pay emergency care patients based upon its Chargemaster rates"; (2) "a declaration that they are liable to [Rady], under [the COTA], for no more than the reasonable value of the treatment/services provided"; and (3) "a declaration that [Rady's] billing practices as they relate *663to Class members are unfair, unconscionable, and/or unreasonable."
Although Hefczyc claims that he is not requesting a ruling on *664the reasonable value of Rady's services, as we will explain, in order to afford relief under the first and third requests made in Hefczyc's complaint, the trial court will necessarily be required to determine whether Rady's Chargemaster rates are reasonable, creating an unmanageable individualized factual inquiry that differs as to each class member and that is accordingly unsuited to resolution in a class action proceeding.
Specifically, turning to the first declaration sought by Hefczyc, in order to issue a declaration that the COTA contains an " 'open price' term" and thus "does not permit [Rady] to bill and demand payment ... based upon its Chargemaster rates," the trial court will have to determine that the Chargemaster rates do not represent the reasonable value of Rady's services. This is because, as Hefczyc explains in his appellate brief, his legal theory is that because the COTA purportedly contains an open price term, Rady "is limited to charging no more than the reasonable value of the services it provides." In order to issue the declaratory relief requested by Hefczyc that the COTA "does not permit [Rady] to bill and demand payment ... based upon its Chargemaster rates," the trial court will necessarily be required to decide whether the Chargemaster rates represent the reasonable value of Rady's services. Only if the Chargemaster rates do not represent the reasonable value of Rady's services would there be any merit to Hefczyc's position that the purported " 'open price' term" in the COTA precludes Rady from billing at its Chargemaster rates.
A similar finding as to whether the Chargemaster rates represent the reasonable value of Rady's services is required as part of the declaration sought by Hefczyc that "[Rady's] billing practices as they relate to Class members are unfair, unconscionable, and/or unreasonable." Self-evidently, because Hefczyc expressly seeks a declaration that Rady's billing practices are "unreasonable," in order to issue such a declaration the trial court would be required to consider the reasonableness of Rady's Chargemaster rates. In a *542similar case considering a challenge to the unconscionability of another hospital's Chargemaster rates, the court explained a determination regarding the unconscionability of the rates requires that the court " 'look to the basis and justification for the price [citation], including "the price actually being paid by ... other similarly situated consumers in a similar transaction." ' [Citation.] In addition, 'courts consider not only the market price, but also the cost of the goods or services to the seller [citations], the inconvenience imposed on the seller [citation], and the true value of the product or service .' " ( Moran v. Prime Healthcare Management, Inc. (2016)
As Rady has made clear in its appellate brief, it believes its Chargemaster rates represent the reasonable value of its services. Thus, to issue the declaratory relief sought by Hefczyc, the trial court will have to resolve the disputed issue of whether Rady's Chargemaster rates represent the reasonable value of those services.
The reasonable value of Rady's services is not a common issue that is amenable to class treatment. As the evidence submitted by Rady establishes, Rady's Chargemaster contains thousands of individual line-item charges. Each individual class member will have received a different set of services from Rady, corresponding to different rates on Rady's Chargemaster. As case law explains, the evidence required for a determination of the reasonable value of a hospital's services is wide-ranging and differs based on the type of service at issue. "[T]he facts and circumstances of the particular case dictate what evidence is relevant to show the reasonable market value of the services at issue, i.e., the price that would be agreed upon by a willing buyer and a willing seller negotiating at arm's length. Specific criteria might or might not be appropriate for a given set of facts." ( Children's Hospital Central California v. Blue Cross of California (2014)
In numerous other cases in which plaintiffs have sought to certify a class to challenge the reasonableness of Chargemaster rates charged by the defendant, courts have recognized that the reasonableness of the Chargemaster rates is an issue that will require individual determination on a case-by-case basis rather than presenting a common question suitable for class determination. ( Hale , supra , 232 Cal.App.4th at pp. 61-67,
Hefczyc relies on cases holding that interpretation of a form contract entered into by each of the class members is an appropriate subject for class *544treatment because the meaning of the form contract is a common issue that predominates in the action. (See Kleiner v. First National Bank of Atlanta (N.D.Ga. 1983)
3. Superiority
"[T]he proponent of class certification bears the burden of establishing that a class action will be a superior means of resolving the dispute. ... In determining the superiority of class treatment, the trial court must weigh the respective benefits and burdens of class litigation." ( Soderstedt v. CBIZ Southern California, LLC (2011)
As we have explained, to issue the declaratory relief sought by Hefczyc, the trial court will necessarily have to decide whether each of the Chargemaster rates appearing on each of the bills received by the class members represented the reasonable value of Rady's services. That determination is not *545suitable for class-wide treatment because it would require the court to examine extensive evidence on the thousands of different services appearing on the Chargemaster and the different services rendered to individual patients. It would be much more manageable for the courts and litigants if each person who wishes to challenge the reasonableness of a bill based on Rady's Chargemaster rates brings an individual proceeding, where the evidence can be manageably limited to the specific services at issue. Accordingly, the trial court was within its discretion to conclude that class treatment was not a superior method for resolving the issue presented in the complaint.
D. The Trial Court Properly Denied Issue Certification
In his motion for class certification, Hefczyc requested, in the alternative, that the trial court certify a single class issue pursuant to California Rules of Court, rule 3.765(b). Hefczyc sought certification of the following issue: "whether [the COTA] allows [Rady] to charge self-pay patients its Chargemaster rates, or whether [the COTA] contains an 'open' price term which limits [Rady] to charging no more than the reasonable value of the services provided." Hefczyc contends that the trial court erred in denying certification on this single issue.
The single issue that Hefczyc identifies is substantially similar to the first item of declaratory relief set forth in the complaint, which seeks a declaration that "[Rady's COTA] contains an 'open price'
*666term, and does not permit [Rady] to bill and demand payment from self-pay emergency care patients based upon its Chargemaster rates." In one instance Hefczyc is seeking a declaration that the COTA "does not permit" Rady to bill at Chargemaster rates; in the other instance, Hefczyc is seeking a declaration as to whether, the COTA "allows" Rady to bill at Chargemaster rates. However, the substance of the declaratory relief sought in both instances is the same.
We have thoroughly discussed why this type of declaratory relief is not appropriate for class certification. Specifically, to issue a declaration that the COTA either "does not permit" or does not "allow" Rady to bill at Chargemaster rates, the trial court would be required to determine whether the Chargemaster represents the reasonable value of Rady's services. That inquiry presents individualized and complicated issues unique to each class member, each of whom received different bills based on different services. Accordingly, the single issue that Hefczyc has identified is not appropriate for class certification. Moreover, even if Hefczyc had identified an issue appropriate for class treatment, he still has not established the existence of an ascertainable class.
*546DISPOSITION
The order denying class certification is affirmed.
WE CONCUR:
McCONNELL, P.J.
HUFFMAN, J.
Related
Cite This Page — Counsel Stack
225 Cal. Rptr. 3d 641, 17 Cal. App. 5th 518, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hefczyc-v-rady-childrens-hospital-san-diego-calctapp5d-2017.