Kendall v. Scripps Health

Filed 10/18/17; Certified for Publication 10/23/17 (order attached)

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

PAUL KENDALL, D070390

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2013-00073680-
CU-BT-CTL)
SCRIPPS HEALTH,

Defendant and Respondent.

APPEAL from an order of the Superior Court of San Diego County, Richard E. L.

Strauss, Judge. Affirmed.

Carpenter Law, Gretchen A. Carpenter; Law Office of Barry Kramer and Barry L.

Kramer for Plaintiff and Appellant.

Hooper, Lundy & Bookman, Jennifer A. Hansen and Sansan Lin for Defendant

and Respondent.

Plaintiff and appellant Paul Kendall's second amended complaint asserts several

types of class-wide claims that challenge the billing and collection practices of the health

facility operating an emergency room where he received care, defendant and respondent
Scripps Health (Scripps). As relevant here, Kendall seeks declaratory relief on contract

interpretation theories, and remedies under the Consumers Legal Remedies Act (CLRA;

Civ. Code, § 1750 et seq.) and the unfair competition law (UCL; Bus. & Prof. Code,

§ 17200 et seq.; both are sometimes designated the statutory claims). Under the latter

theories, Kendall seeks injunctive relief and damages or restitution of amounts charged to

emergency care patients, such as himself, who do not have insurance or similar

governmental benefits such as Medicare or Medi-Cal. Kendall contends that such "self-

pay" patients, who signed a form during the reception process at the emergency room (an

"Agreement for Services at a Scripps Facility," hereafter Agreement for Services), are

being unfairly billed under that contractual agreement at prescribed rates that are listed on

a publicly available "charge description master" (Charge Master). Such Charge Master

rates are alleged to be higher than the reimbursement amounts that such hospitals

customarily receive from the insurers for patients who have policy coverage, or from

medical governmental benefits providers. Kendall objects that self-pay patients such as

himself are harmed when they receive medical bills reflecting Charge Master rates. 1

This appeal arises from the trial court's order denying Kendall's motion to certify a

proposed class of self-pay patients for the pursuit of two overriding legal theories that

1 As a licensed hospital, Scripps is required to comply with the provisions of Health
and Safety Code section 127400 et seq., the Hospital Fair Pricing Policies Act, on
notifications to patients of available discounts and charity care options. (Health & Saf.
Code, §§ 127401, 127410; all further statutory references are to the Health & Saf. Code
unless noted.) This Act's provisions are to be construed as allowing hospitals to
communicate their otherwise established uniform Charge Master or published rates, when
such notifications are implemented. (§ 127444.)
2
apply to both the declaratory relief and statutory claims. (Code Civ. Proc., §§ 382, 1060,

1061; Civ. Code, § 1781.) These two theories request class-wide contractual

interpretation of the payment terms of the Agreement for Services, to limit Scripps to

billing or charging such patients no more than the reasonable value of the services

rendered, and/or to establish that the listed Charge Master rates are unconscionable as a

matter of law. In support, Kendall provided declarations from expert witnesses giving

their opinions about usage of typical hospital billing systems and the feasibility of

identifying potential self-pay class members. 2

Scripps opposed the motion, arguing a class action was not shown to be an

appropriate method to pursue the case because of a lack of predominant common issues

and of any convincing showing of an ability to ascertain the identity of all the proposed

class members. Scripps provided declarations from expert witnesses and its financial

services manager that described the variability and complexity of its billing arrangements

for individualized patient care, in light of applicable government regulations on

availability of and reimbursement for emergency hospital care. (E.g., § 1317, subd. (d)

[restricting emergency care providers from requiring payment arrangements from a

patient until the emergency condition is stabilized, but requiring the patient to agree in

writing to supply financial information to the providers after services are rendered].)

The trial court denied the motion for class certification, concluding that Kendall

had not presented any substantial evidence showing there were predominant common

2 As to Kendall's individual theories of intentional and negligent concealment that
challenge the same Scripps billing activity, no class treatment is sought.
3
issues of law and fact among the putative class members. The court next addressed the

concerns Scripps raised about the difficulty of ascertaining class membership for

individual patients' payment records, in terms of recent authority from this court, Hale v.

Sharp HealthCare (2014) 232 Cal.App.4th 50 (Hale II). The trial court concluded

Kendall had not shown there were objectively feasible ways of identifying members of

the proposed class. The court ruled that the proposed declaratory relief on contract

interpretation issues was unsuitable for class-wide treatment, because no actual

controversy about the terms of the Agreement for Services was presented, and any such

relief would be cumulative to the underlying determinations requested on the statutory

claims. (Code Civ. Proc., § 1061.)

On appeal, Kendall contends the trial court's order denying class certification of

his statutory claims reflects the use of improper criteria and an incorrect legal analysis.

(Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1022 (Brinker).)

To the extent the court found there were no predominantly common questions existing

and that no reasonably ascertainable class had been defined, Kendall argues there was no

substantial evidence to support the order. (Nicodemus v. St. Francis Memorial Hospital

(2016) 3 Cal.App.5th 1200, 1211 (Nicodemus).) He further claims the trial court erred in

applying California analytical standards to evaluate the propriety of permitting his

declaratory relief claim to proceed as a class action, because he believes federal standards

developed for dealing with illegal system-wide practices or policies would be preferable.

(Fed. Rules of Civ. Proc., rule 23(b) (FRCP); see, e.g., Briseno v. ConAgra Foods, Inc.

4
(9th Cir. 2017) 844 F.3d 1121, 1124-1125 [wide variations exist in judicial

interpretations of "ascertainability"].)

We conclude the trial court correctly determined that class treatment is not

appropriate for any of the identified causes of action. The court analyzed the proposed

class definition in terms of well-established class action criteria that require commonality

of interests and ascertainability. The court's ruling did not exceed the scope of a proper

class determination or impermissibly resolve the merits of the ultimate issues presented.

(Hall v. Rite Aid Corporation (2014) 226 Cal.App.4th 278, 292 (Hall) [" 'for purposes of

certification, the proper inquiry is "whether the theory of recovery advanced by the

plaintiff is likely to prove amenable to class treatment." ' "].) Finding no abuse of

discretion or lack of substantial evidence, we affirm the order denying class certification.

FACTUAL AND PROCEDURAL BACKGROUND

A. Emergency Treatment Provided; Action Filed

Scripps is a nonprofit, integrated health system owning and operating several local

hospitals that have emergency rooms. On July 9, 2013, Kendall received emergency

treatment at one of these health facilities. At reception, he signed Scripps's Agreement

for Services containing numerous provisions, particularly the following "Financial

Arrangements" paragraph:

"If signing as the patient or legal representative, I agree, in
consideration for services received, to pay the Facility's billed
charges as contained in the Facility's Charge Description Master
and, if the account is referred to a collection agency or attorney,
reasonable attorneys' fees and collection expenses. I authorize the
Facility, a collection agency or other entity contracting with the
Facility, to obtain my credit report from consumer reporting

5
 agencies for use in obtaining payment for services or determining
eligibility under the Facility's financial assistance programs. Call 1-
800-690-9070 for more information regarding financial assistance."
(Italics added.) 3

Kendall paid a $100 deposit and received treatment, then left the hospital. He was

not covered by any commercial medical insurance plan or governmental health program

for his treatment, and no payments have been made for his visit by outside sources. 4

Over the next few months, Scripps billed him at Charge Master rates for the services

provided in the amount of $17,511, less his deposit. The bills showed coverage

determinations were pending and he was otherwise a self-pay patient. The bills sent in

October and November 2013 notified him the matter would be sent to collections if no

payments were made.

After Kendall filed this action in October 2013, Scripps brought demurrers that

were sustained in part. Kendall's operative pleading is the second amended complaint

(the complaint), which asserts his statutory claims as potential class action causes of

action (CLRA and UCL) and pleads declaratory relief theories. He begins with general

allegations that within the hospital industry, hospitals maintain spreadsheets called

3 For purposes of this action, Kendall defines patients as including signers of the
Agreement for Services, or alternatively, a patient's legal guardian who signed and was
billed on the patient's behalf.
4 "A hospital with an emergency department must provide a patient with 'an
appropriate medical screening examination' and 'such treatment as may be required to
stabilize' any emergency medical condition without regard to the patient's insurance or
ability to pay. [Citations.] Further, a hospital generally may not transfer or discharge a
patient until it has been determined that the emergency medical condition has been
stabilized." (Children's Hospital Central California v. Blue Cross of California (2014)
226 Cal.App.4th 1260, 1266 (Children's Hospital).)
6
"Charge Masters," which contain code numbers, descriptions, and gross billing charges

for each product and service offered to patients. He contends "these gross billing charges

are neither regular payment rates, nor usual and customary payment rates, nor reasonable

payment rates. [Scripps's] Charge Masters do not constitute a pricing schedule which any

category of hospital patient is expected to pay." He contends the Charge Master rates are

not published on the Scripps website, but are made available for review at its offices by

appointment during normal business hours. He alleges those Charge Master rates "are

several times its internal costs for providing treatment/services. Indeed, according to the

most recent annual statistics filed with the California Office of Statewide Health Planning

and Development, the Cost-to-Charge ratios (i.e., the overall cost of providing

treatment/services compared to the overall [Charge Master] rates for such

treatment/services) for [Scripps's] Hospitals ranged from approximately 0.192 to 0.253,

which indicates that [Scripps's Charge Master] rates were approximately four to five

times its actual costs of providing services." 5

Kendall seeks injunctive relief from such allegedly illegal billing behavior, as well

as damages and restitution, based on CLRA and UCL provisions. As suggested

declaratory relief, he requests that the trial court apply a flat percentage reduction from

5 The Office of Statewide Health Planning and Development (OSHPD) is a
California state agency which administers health policy and planning efforts. (§§ 127000
et seq., 127125 et seq.) Among other things, OSHPD requires hospitals to post in
emergency rooms information about how its charge description master is made available
to patients on hospital websites or at their locations. (§ 1339.51, subds. (a)(1), (c).)
Hospitals are required yearly to submit their charges to the OSHPD, pursuant to section
1339.55, subdivision (a). OSHPD publishes selected hospital charge data publicly on its
website. (§§ 1339.55, subd. (b), 1339.56, 1339.58.)
7
the gross billed Charge Master charges, as a means of arriving at the reasonable value of

the services rendered. This reduction would be grounded in a comparison of Charge

Master rates and the hospital's costs in providing services, and of the reimbursement rates

for various categories of patients covered by other benefits plans.

The parties engaged in discovery. In interrogatory responses, Scripps estimated

that for the type of treatment Kendall received, Medicare would have paid $1,842.69,

while Medi-Cal would have paid $2,101.32, according to their government rate

schedules. The court did not require Scripps to estimate what reimbursements could have

been received under sample insurance arrangements, as Kendall had requested.

Notably, Kendall took the deposition of the "Person Most Knowledgeable" about

Scripps's billing activity, Daniel Kehl, its director of patient financial services.

B. Motion for Class Certification and Opposition

In his motion for certification, Kendall proposed the following definition of the

class:

"All individuals (or their guardians or representatives) who, from
November 1, 2009 to the date of class certification: (a) received
emergency screening, stabilization, and treatment/services at one of
Defendant's emergency care facilities in California; (b) did not have
payments for such care made by an insurer or government health
care program; and (c) were billed at the Hospital's full [Charge
Master] rates (the 'Class'). [¶] Excluded from the Class are those
patients who paid nothing on their account, whose balances have
been permanently written off in full, and who are not subject to any
current or future collection activity or negative credit reporting. [¶]

8
 Also excluded from the Class are [officers of Defendants and
judicial officers assigned to this matter, etc.]." 6

Kendall contended the motion was authorized by California law, including CLRA

provisions and "the equivalents of Rule 23(b)(1) and/or (b)(2) of the Federal Rules of

Civil Procedure." He requested another hearing for the court to decide on discretionary

notice to class members. He argued the predominance requirement was met for

determining whether all class members should be required under the contract and

applicable law to pay Charge Master rates, as opposed to the reasonable value of the

services provided, as he was contending.

As support for the certification request, Kendall supplied a declaration from a

consultant specializing in health care financing and operations, Nathan S. Basseen, who

has expertise in analyzing the reasonable value of health care services. Basseen reviewed

Scripps's filings with the OSHPD, as well as information provided by the Centers for

Medicare and Medicaid Services (CMS), a federal agency which supplies provider-

specific data for public use. Basseen reviewed deposition testimony from Kehl, Scripps's

director of patient financial services. Among other opinions, Basseen drew preliminary

conclusions that the Charge Master rates exceeded the costs of providing emergency care

6 In the Hale II case and its predecessor, the language of the hospital's admissions
contract referred to payment at "regular rates." (Hale v. Sharp Healthcare (2010) 183
Cal.App.4th 1373, 1378 (Hale I); Hale II, supra, 232 Cal.App.4th at pp. 53-55.) Hale
had contended the Charge Master rates billed to uninsured patients were unreasonable
and unconscionable, because insured patients were effectively charged less, at insurance
or Medicare rates. (Id. at p. 54.) By comparison, Kendall attacks the Agreement for
Services and its reference to paying the hospital's "billed charges as contained in the
Facility's Charge Description Master and, if the account is referred to a collection agency
or attorney, reasonable attorneys' fees and collection expenses."
9
services, and also exceeded reimbursement levels from governmental benefits or

commercial payers. He believed additional discovery was needed.

Kendall also supplied a declaration from Gerald O'Connell, an expert consultant in

health care data management, who evaluated the resources needed to extract and process

paid claims data available to Scripps for its emergency room services provided. He

described his review of deposition testimony from Scripps's director of patient financial

services, Kehl, about its Eclipsys patient accounting software system. O'Connell

described common protocols in such accounting systems, concluding that about 10-12

hours of work would be required for a Scripps manager to produce and format the

requested data, by utilizing the "report writer" function that Kehl had mentioned at his

deposition.

Scripps opposed the motion and filed objections to Kendall's expert declarations,

for lack of foundation and other grounds. Scripps argued the proposed class was not

reasonably ascertainable, and Kendall had not shown the requisite common issues of law

and fact. Scripps submitted a declaration from Kehl, explaining his views on how

Kendall's expert witnesses had misinterpreted his deposition testimony about the

capabilities of the Eclipsys accounting software, which he said was not able to capture all

the individual claims detail that was maintained in Scripps's other main recordkeeping

system, "File CD," which deals with imaging hard copy documents. Contrary to what

Kendall was claiming, Scripps could not run queries on a single system to identify class

members and establish their entitlement to recovery. The "report writer" function Kehl

had described at his deposition required exact information about the field of inquiry and

10
the electronic pathway needed to get to such fields, and he had testified such detailed data

were not always attainable. Extensive manual review of other systems (e.g., File CD)

would be necessary to get the desired information with respect to over one million

emergency department encounters during the time periods at issue (not including trauma

patients).

Kehl's declaration also stated that Scripps reports financial information to OSHPD,

including revenue it receives from various payer groups, but those reports do not show

the variations in the amounts billed to patients or received in any particular payer class.

Kehl said that instead, "the amount Scripps is paid is influenced by a variety of internal

and external factors, including but not limited to the contractual health plan rates [from

insurers], fixed governmental rates, individually negotiated package pricing, prompt

payment discounts, and the ability of patients to pay their bills, etc. [¶] The revenue

received for any particular payer class could also be influenced by whether a procedure

was performed on an inpatient or outpatient basis, physicians' orders, comorbidities and

complications, medical necessity and specialty services and procedures."

Scripps submitted additional declarations from Tzvi Hefter, an expert health

policy consultant, and Michael Heil, a management consultant in the health care field,

describing different cost centers within the hospital system, and explaining the levels to

which hospital costs during the provision of care sometimes exceed the reimbursement

amounts received from government or insurance benefit systems.

In reply, Kendall contended he had set forth an adequate methodology to calculate

the estimated reasonable value of emergency services received, on an aggregate basis

11
based on data Scripps could provide about its payments received from patients' benefits

or insurance providers. He proposed unspecified amendments to the class definition. On

appeal, Kendall clarifies that the class membership could now include only those self-pay

patients who were directly billed by the hospital at Charge Master rates, for emergency

services they received during the defined period of time.

C. Ruling

After a reported hearing, the trial court denied the motion to certify the class. The

court first addressed the issue of whether the proposed class was ascertainable, observing

that the requirement of numerosity of the class had been satisfied, because during the

approximate class period, there were over 875,000 emergency room patients treated, of

whom about 121,000 were self-pay patients. Even though Scripps possesses all the

pertinent billing and reimbursement information, the court said Kendall had not

established that this information was electronically managed in a manner by which there

were reasonably objective and feasible ways of identifying class members. Although

Kendall presented evidence that the Scripps computer programs had "report writer"

functions available for certain parameters, Scripps had rebutted that showing with

evidence that the information necessary to identify potential class members was not

contained within a single information system. Both the Eclipsys accounting software and

the imaging system that dealt with hard copies of agreements and medical records would

have to be utilized to obtain such information, in a lengthy process. The court relied on

evidence from Scripps's official Kehl to conclude that "individual records would need to

be reviewed for hundreds of thousands of patients to determine the status of them as

12
putative class members. Further, the Eclipsys records and image records would have to

be cross-referenced to determine which patient signed the Agreement at issue in this case

[and] a review of insurance coverages would also need to be made on an individualized

basis."

Scripps's objections to portions of the Basseen declaration were sustained for lack

of foundation (addressing his characterization of emergency room charges as not

representing objectively reasonable fair market valuations of services, and his description

of how to obtain the requested paid claims data). The court also sustained objections to

portions of the expert declaration submitted by O'Connell, concerning his conclusions

about how to utilize Scripps's systems for managing patient data and records, for

purposes of ascertaining class membership. The court found no foundation was shown

for O'Connell's "inadmissible and unpersuasive" conclusions that the data requested

about visits and payments could be obtained in about 10 hours. 7 The court relied on the

analysis in Hale II, supra, 232 Cal.App.4th 50, on similar facts, finding that where

overriding individualized analyses were required to determine class membership, the

ascertainability requirement for a class of patients based on payment records was not

satisfied. There, as here, any benefits to be gained from utilizing the class action process

would be de minimis. (Id. at p. 61.)

7 Kendall does not make any effective attempt to show any of the evidentiary
rulings were erroneous or an abuse of discretion. We accept them as operative for
purposes of evaluating the arguments on appeal.
13
 The trial court went on to analyze whether Kendall had demonstrated there was a

well-defined community of interest in the questions of law and fact involving the

potential class members. The court found he could not establish that common issues

would predominate over individualized issues. The court determined that "even if [] self-

pay emergency room patients received a bill for full [Charge Master] rates, there is no

evidence all self-pay emergency room patients were required to pay or that Scripps

exclusively sought full reimbursement of full [Charge Master] rates." 8

In addressing Kendall's declaratory judgment causes of action, the trial court ruled

that no actual controversy had been demonstrated about the terms of the Agreement for

Services. The court commented that simply because Kendall "does not believe he should

be required to pay [Charge Master] rates pursuant to the agreement does not create a

controversy . . . between each putative class member and Defendant since that [would]

require[] individualized inquiry as to how much each of those putative class members

was required to pay and what a reasonable amount would be." The court relied on

Allstate Ins. Co. v. Fisher (1973) 31 Cal.App.3d 391, 395 in concluding declaratory relief

in this case would provide findings that were only cumulative to the underlying

determinations requested under the CLRA and UCL. Kendall appeals the order.

8 Because of its conclusions on the lack of predominance of common questions, the
trial court was not required to decide two other factors on community of interest, the
typicality of the class representative and the adequacy of his representation. (Thompson
v. Automobile Club of Southern California (2013) 217 Cal.App.4th 719, 727
(Thompson).) No issues on appeal exist on those factors.
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 DISCUSSION

I

STANDARDS RELATING TO CLASS CERTIFICATION DECISIONS

" 'Because trial courts are ideally situated to evaluate the efficiencies and

practicalities of permitting group action, they are afforded great discretion in granting or

denying certification.' " (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th

319, 326 (Sav-On Drug Stores); Hale II, supra, 232 Cal.App.4th at p. 57.) Since group

litigation has the potential to create injustice, trial courts are required to " ' "carefully

weigh respective benefits and burdens and to allow maintenance of the class action only

where substantial benefits accrue both to litigants and the courts." ' " (Linder v. Thrifty

Oil Co. (2000) 23 Cal.4th 429, 435.)

" 'On review of a class certification order, an appellate court's inquiry is narrowly

circumscribed. "The decision to certify a class rests squarely within the discretion of the

trial court, and we afford that decision great deference on appeal, reversing only for a

manifest abuse of discretion . . . ." ' " (Hall, supra, 226 Cal.App.4th at p. 291; Brinker,

supra, 53 Cal.4th at p. 1022.) " 'A certification order generally will not be disturbed

unless (1) it is unsupported by substantial evidence, (2) it rests on improper criteria, or (3)

it rests on erroneous legal assumptions. [Citations.]' [Citations.] Predominance is a

factual question; accordingly, the trial court's finding that common issues predominate

generally is reviewed for substantial evidence. [Citation.] We must '[p]resum[e] in favor

of the certification order . . . the existence of every fact the trial court could reasonably

deduce from the record . . . .' " (Ibid.)

15
 Class certification rulings are procedural in nature and do not decide if an action is

"legally or factually meritorious." (Linder v. Thrifty Oil Co., supra, 23 Cal.4th at pp.

439-440.) Although the trial court must "examine the plaintiff's theory of recovery,

assess the nature of the legal and factual disputes likely to be presented, and decide

whether individual or common issues predominate" (Brinker, supra, 53 Cal.4th 1004,

1025), it does not resolve disputed threshold legal or factual questions, unless necessary

for resolution of the class definition questions. (Ibid.; Hall, supra, 226 Cal.App.4th at

pp. 286-288.) "It is far better from a fairness perspective to determine class certification

independent of threshold questions disposing of the merits, and thus permit defendants

who prevail on those merits, equally with those who lose on the merits, to obtain the

preclusive benefits of such victories against an entire class and not just a named

plaintiff." (Brinker, supra, at p. 1034.)

Where necessary, the trial court has some flexibility to allow amendments to class

definitions that will allow an appropriate class action to be resolved on its merits. (Hicks

v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 925-926.) "We review the

trial court's actual reasons for granting or denying certification; if they are erroneous, we

must reverse, whether or not other reasons not relied upon might have supported the

ruling." (Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 530 (Ayala).)

However, "[a]ny valid, pertinent reason will be sufficient to uphold the trial court's

order." (Thompson, supra, 217 Cal.App.4th at p. 726.)

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 II

PREDOMINANT COMMON ISSUES REQUIREMENT: CLRA AND UCL

A. Introduction

Kendall seeks relief under CLRA statutory principles prohibiting unconscionable

contract terms. (Civ. Code, § 1770, subd. (a)(19).) He also cites to Civil Code section

1770, subdivision (a)(5), (13) and (14), prohibiting the furnishing of goods or services

through misrepresentations, misleading statements of fact, or imposition of illegal

obligations. The CLRA relief sought includes compensatory and punitive damages, along

with injunctive relief, as well as attorney fees. These CLRA allegations serve as the

predicate or "borrowed" other law being violated, under the UCL. (Hale I, supra,

183 Cal.App.4th at pp. 1382-1383; Cel-Tech Communications, Inc. v. Los Angeles

Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) The UCL relief sought includes

restitution and disgorgement of funds, along with an injunction and attorney fees.

In addition to the class action requirements set forth in Code of Civil Procedure

section 382, the CLRA also requires consideration of whether it is impracticable to bring

all members of the class before the court. (Civ. Code, § 1781, subd. (b); Thompson,

supra, 217 Cal.App.4th at pp. 727-728.) " ' " 'As a general rule if the defendant's liability

can be determined by facts common to all members of the class, a class will be certified

even if the members must individually prove their damages.' " ' " (Hall, supra, 226

Cal.App.4th at p. 287; Bradley v. Networkers Internat., LLC (2012) 211 Cal.App.4th

1129, 1141-1142.)

17
 On the community of interest criterion, we consider " 'whether . . . the issues

which may be jointly tried, when compared with those requiring separate adjudication,

are so numerous or substantial that the maintenance of a class action would be

advantageous to the judicial process and to the litigants.' " (Sav-On Drug Stores, supra,

34 Cal.4th at p. 326.) This process examines the plaintiff's theory of recovery and

assesses what kind of legal and factual disputes about the legality of the defendant's

conduct will likely be presented. (Hall, supra, 226 Cal.App.4th at p. 289.)

B. Actual Injury or Damage

" ' "Relief under the CLRA is specifically limited to those who suffer damage,

making causation a necessary element of proof." [Citation.] Accordingly, "plaintiffs in a

CLRA action [must] show not only that a defendant's conduct was deceptive but that the

deception caused them harm." ' " (Hale I, supra, 183 Cal.App.4th 1373, 1386.) We

assume here, as there, that a patient's receipt of a hospital bill that reflects the existence of

an enforceable agreement and an obligation may constitute actual injury. (Id. at

pp. 1383-1384.)

For purposes of alleging there should be class-wide liability for conduct in

violation of the CLRA and UCL, Kendall's complaint characterized Scripps's pricing,

billing and collection practices for self-pay patients, at Charge Master rates, as unfair,

unreasonable and unconscionable. (See Meyer v. Sprint Spectrum, L.P. (2009) 45 Cal.4th

634, 641 ["to bring a CLRA action, not only must a consumer be exposed to an unlawful

practice, but some kind of damage must result].") At argument before the trial court,

Kendall's attorney acknowledged that the common questions on obligations to pay under

18
the Agreement for Services included not only the requirements of the Agreement, but

also applicable law.

Kendall now complains that the trial court relied on impermissible criteria when

determining that no community of interest among class members had been shown. The

court said he had failed to establish that all class members were damaged "simply by

receiving a bill with the [Charge Master] rates, rather than receiving a bill with the

alleged reasonable value of services provided." In this respect, the court was not making

a finding that Kendall or class members would lack standing to bring a statutory claim,

and was instead appropriately analyzing whether class treatment was appropriate. This

required the court to make decisions on preliminary legal issues relevant to class

certification. (Brinker, supra, 53 Cal.4th at p. 1025.)

When an Agreement for Services is signed, the proposed treatment is unknown, as

is its cost. The trial court was presented with threshold determinations, for certification

purposes only, on whether an ascertainable group of class members had common

interests in obtaining relief for injury occurring when they received their initial bills that

referenced Charge Master rates. The gravamen of the alleged wrongs drives the analysis

of the appropriate definition of a class who may seek remedies to address those wrongs.

We next examine the record on the validity of Kendall's evident assumption that the

publicly available Charge Master rates provide accurate benchmarks that allow class-

wide estimates and determinations of patient liabilities to pay for treatment rendered.

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 C. Evidence on Billing and Payment Processes

Scripps's senior director of patient financial services, Kehl, testified at his

deposition that he oversees the business office's departments, including collections and

customer service, electronic data interchange, and transactions or revenue management,

each of which has its own manager. The business office works with other Scripps

departments, including the health information department, which is responsible for

maintaining the standard Charge Master system and medical records. There is one

Eclipsys patient accounting system for Scripps, but each hospital has its own segment of

that Eclipsys system. Billing to patients states the applicable service areas, such as room

and board or laboratory work, and lists them at standard Charge Master rates. The bills

do not list specific line items of treatment, but only basic service areas.

Typically, if patients do not give the emergency room staff any insurance

information up front, then they will be registered as self-pay patients. Once a self-pay

patient is discharged from the emergency room, the first billing item that he or she would

get, within three days of discharge, would be an informational statement that has no

charges, payments, or adjustments on it, and instead has the words superimposed over the

front, "This is not a bill." The statement shows what information Scripps has in the

patient accounting system, asking the person to call and correct incorrect items.

Kehl testified that such a self-pay patient would, 15 days after that initial letter,

receive the first patient statement with charges, and could render payment. Another bill

would go out roughly 30 days after the 15-day bill, reflecting any payment activity or

other adjustments that had been made since the first bill, that were manually input into

20
the patient accounting system for that specific patient. To record any such payment

activity or adjustments, the accounting system breaks down reimbursements by using

about 25 different codes to identify patient payments made (a) at the facilities, (b) by

credit cards online, (c) received over the phone by customer service staff, and (d) mailed

payments. Only a total adjustments number will show up on a patient's bill, but specific

adjustments are input into the Eclipsys system to reflect contractual or charity

adjustments. Scripps uses outside vendors for billing purposes and also has an internal

collections department for obtaining reimbursement to adjust bills, from insurance

companies and other programs such as Medicare and Medi-Cal. Kehl also testified that if

an account were sent to an outside collections agency, the Eclipsys system would make a

notation of that action, and the bills would be written off the accounts receivable, but not

removed from the Eclipsys system.

In his declaration prepared after the deposition, Kehl described the Charge Master

that Scripps, like all California hospital systems, is required to use to make public a

comprehensive listing of items that are billed by the hospital to a payer or patient. He

states that the Charge Master list in effect during Kendall's July 2013 visit contained over

60,000 different line items, each relating to specific or bundled procedures, services, and

goods. The charges on the list are individually derived by Scripps. During the billing

process, "Scripps's billing employees are trained to work with patients to help them

determine whether there might be coverage for the medical bills through private

insurance, governmental programs, or other financial assistance programs, even if they do

21
not affirmatively request it at the time they seek treatment." Discounts may be afforded

for qualifying patients by comparing their incomes to the federal poverty level.

Kehl explained that because of the complexity of the financial adjustments

required, Scripps would have to conduct "an individual inquiry into hundreds of

thousands of patients' records" "to figure out what a patient has paid for his/her

encounter, if anything, or to assess whether the patient later qualified for Medicare, CMS

[Medicaid], or other governmental assistance program. . . . The same is true if Scripps

were 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."

On the subject of placing a value on medical services rendered, Scripps submitted

declarations from an expert health policy consultant, Tzvi Hefter, and Michael Heil, a

health care management consultant. They disagreed with the conclusory statements by

Kendall's experts about the accuracy of using an overall cost-to-charge ratio, obtained

from OSHPD, to determine what emergency room care actually costs and therefore what

reasonable charges for such services would be. Hospitals report their cost and charge

data to OSHPD, but such reports do not provide sufficient information for determining

the actual costs of providing particular services to particular patients. OSHPD does not

ask hospitals to determine costs at a particular charge or revenue code level, because that

would be impractical. A typical Charge Master document has between 10,000 to 20,000

individual charges listed, and there is no regulatory or business requirement that a

hospital create any breakdown of actual costs for each individual charge. The actual cost

22
of rendering services to any particular patient usually involves resources from different

cost centers, which have both fixed and variable costs. There is no direct correlation

between each charge that a hospital makes and the actual costs it incurs for services

provided.

D. Reasonableness of Charge Master or Other Rates

Kendall argues that the Charge Master rates appearing on bills are unlawful or

unconscionable as applied to self-pay patients, because his expert calculates that those

rates are an average of four to five times the actual costs of delivering the services. His

expert also calculated that the Charge Master rates amount to more than double of what

Scripps actually receives as reimbursement from different categories of patients and

programs. Kendall points out that Scripps is a nonprofit entity and contends that such

status should preclude high charges for its services.

We first observe that Kendall's argument continues to disregard the trial court's

rulings that sustained Scripps's objections to portions of the Basseen and O'Connell

declarations, as making statements without adequate foundation. Although Kendall

argues that more evidence was provided to the court than in the case of Hale II, supra,

232 Cal.App.4th 50, not all of his proffered evidence was admissible, and not all of it

favored his position. Scripps's objections were sustained to the Basseen and O'Connell

declarations, to the extent that they gave opinions without foundation (e.g., how to

determine reasonable value of services based on paid claims data; how to extract data).

Kehl's declaration explained that Kendall's proposed means of identifying the proposed

class had misinterpreted his own deposition testimony about the existence and

23
capabilities of a "report writer" function. Kendall has no evident basis to argue that his

experts know more about Scripps's electronic data system and how it can be manipulated

than do its own managers and experts. It is not enough for Kendall to repeat his experts'

conclusory statements here, without showing how the trial court erred in sustaining the

objections to them. (Summers v. A. L. Gilbert Co. (1999) 69 Cal.App.4th 1155, 1168-

1169 [evidentiary rulings subject to trial court's discretion].)

There is authority that the reasonable value of medical services is a factual issue to

be determined by the trier of fact, considering not only costs but also reimbursement rates

and other relevant information. (Children's Hospital, supra, 226 Cal.App.4th at

pp. 1274-1275.) That case did not involve a class of self-pay patients, but rather was a

dispute between a hospital and a health care benefits program, about how to determine

the reasonable value of certain medical services the hospital provided to covered patients,

during a time period when there was no existing written contract in effect. It was in that

context that the court was discussing evidentiary factors for determining the amount of

compensation at stake. (Id. at p. 1264.) In a proper case, the courts will have authority

" 'to set specific reimbursement rates under theories of quantum meruit and the

jurisdiction to enforce a reimbursement determination on both the provider and the health

plan.' " (Id. at p. 1273.) That authority does not support a conclusion that class treatment

to resolve such specific questions for patients is appropriate.

Kendall seeks to have a legal ruling issued on reasonableness or unconscionability

grounds, to tie the charges billed to those self-pay patients who lack any coverage, to

reimbursement rates received from patients who do have coverage. However, to make a

24
showing that the price term of the Agreement for Services is substantively

unconscionable, Kendall must provide a context about the basis and justification for the

price, which may include similar prices for similarly situated patients. (See Moran v.

Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131, 1148 (Moran).) "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.' " (Ibid.)

The expert evidence provided by Scripps greatly undermines Kendall's proposed

pure legal analysis, by showing that hospital costs will vary, depending on economies of

scale and other relevant factors. During the provision of care, costs incurred sometimes

exceed the reimbursement amounts received from government or insurance benefit

systems. Imposition of liability to pay for services will vary, based on policies developed

by providers for dealing with insurance or governmental benefit reimbursement rates.

Kehl stated that in the bills sent to individual patients, "the line-items are individually

generated. Itemized billing statements for each patient visit can range from one page to

hundreds of pages long for each individual encounter. A patient may have insurance

coverage, but not have coverage for particular services at issue. For example, some line

items may be excluded from coverage or a particular hospital stay could be excluded due

to coverage exclusions . . . . In order to differentiate a patient with insurance coverage

from a self-pay patient under these circumstances, an individual review of every patient's

account would have to be conducted to determine the reason for lack of payment. . . .

25
This could include a manual review of scanned documents in [imaging hard copy system

File CD] for hundreds of thousands of Scripps patients' individual accounts."

Once the accounts were reviewed, individualized analyses would then be

necessary on how a self-pay patient should be held financially responsible, compared to

other patients. As explained in Children's Hospital, supra, 226 Cal.App.4th 1260, "the

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." (Id. at p. 1275.) Moreover,

" '[A] medical care provider's billed price for particular services is not necessarily

representative of either the cost of providing those services or their market value.'

[Citation.] Rather, the full billed charges reflect what the provider unilaterally says its

services are worth. In a given case, the reasonable and customary amount that the health

care service plan has a duty to pay 'might be the bill the [medical provider] submits, or

the amount the [health care service plan] chooses to pay, or some amount in between.' "

(Ibid.)

In Hale II, supra, 232 Cal.App.4th 50, this court rejected the class proponent's

claims that the amount of regular rates that could properly be billed could be established

on a class-wide basis through the use of " 'a fixed percentage of the Chargemaster rates.' "

(Id. at p. 65.) The class proponent was unable to show it would be easy to calculate such

rates, and also could not show that "shortcutting the determination of liability" would

allow the hospital to present all its proper defenses. (Id. at p. 66.) Here too, it is

26
unrealistic for Kendall to suggest that a class-wide reduction in fees can be ordered as a

matter of law, based on a proposed percentage of the Charge Master rates, because

substantial evidence is required to establish commonality of issues on liability, such as

entitlement to damages or restitution.

It is significant here that under the UCL, conduct permitted by statute is not to be

declared illegal by the courts: " ' "There is a difference between (1) not making an

activity unlawful, and (2) making that activity lawful." ' " (Hale I, supra, 183

Cal.App.4th at p. 1380.) The Health and Safety Code permits Scripps to create, report

and publicize its Charge Master rates, and section 1317, subdivision (d) requires patients

to sign an agreement that acknowledges payment obligations under those terms. Section

127444 directs that this body of law be construed to require hospitals to give notice of

their uniform Charge Master or published rates before communicating them to patients.

(Moran, supra, 3 Cal.App.5th 1131, 1141-1142 [Hospital Fair Pricing Policies Act

requires licensed hospitals to promulgate written policies on discount and charity

payments; § 127405, subd. (a)(1)(A)].) Pursuant to its section 127443, the rights and

remedies created by this Act are intended to be cumulative and not to supersede other

legal rights and remedies. The Agreement for Services legitimately begins the billing

process, and the process allows for various adjustments and credits to be made on an

individualized basis.

As Kendall originally defined the proposed class, individualized 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

27
held liable to pay, after treatment was completed. The evidence showed that 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. In Kendall's newly proposed amended class definition, he appears to be

focusing on alleged injury in fact that occurs promptly upon a patient's receipt of a bill at

Charge Master rates. His new definition "would be based on to whom the hospital sent

its billing, rather than who made the payment on the individual patient's account," such as

a paying entity (e.g., Medicare, Medi-Cal, or commercial insurers).

Even if we accept that Kendall actually presented his proposed amendment to the

trial court, which is not entirely clear from the record, it would not solve the existing

problems about a lack of community of interest among class members on actual injury

incurred. An emergency patient cannot anticipate the extent of treatment that will be

needed until stabilization. Likewise, the extent of the enforceability of each patient's bill

will be determined over time. Kendall has raised only speculation that each and every

bill will go to the collections stage, or that harassment or improper practices may occur.

(Civ. Code, § 1788.1 [purposes of California Fair Debt Collection Practices Act include

preventing unfair or deceptive collection practices].) There are presumably different

levels of creditworthiness among self-pay patients and thus potentially different levels of

damage among class members.

We conclude the trial court had a sufficient basis in the record to determine that

class certification was not an appropriate format for pursuing the imposition of a legal

duty upon Scripps to refrain from utilizing the Charge Master billing information, in its

28
initiation of billing and collection activity. Any reasonable value determinations

concerning the services provided to Kendall and to putative class members must involve

considerations not only of the individual variations among the patients' treatment, but of

the effect of regulatory schemes, all of which are beyond the scope of the current

pleadings to resolve.

Even accepting that "the power to reach the merits as part of the certification

process is at most a discretionary power to be employed in exceptional cases" (Hall,

supra, 226 Cal.App.4th at p. 296), we see no indication the trial court overreached by

going to the merits when denying the requested class certification. The trial court did not

dismiss the action as a whole, but properly analyzed the class allegations to find that the

required community of interest had not been shown to exist. Substantial evidence

supports its analysis.

III

ASCERTAINABILITY REQUIREMENT: CLRA AND UCL

"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." (Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1271.)

" ' " 'Class members are "ascertainable" where they may be readily identified without

unreasonable expense or time by reference to official records.' " ' " (Thompson, supra,

217 Cal.App.4th at p. 728.) " 'Class certification is properly denied for lack of

ascertainability when the proposed definition is overbroad and the plaintiff offers no

means by which only those class members who have claims can be identified from those

29
who should not be included in the class.' " (Hale II, supra, 232 Cal.App.4th at pp. 58-59;

Miller v. Bank of America, N.A. (2013) 213 Cal.App.4th 1, 7.)

Kendall contends that either his original class definition, or his proposed

amendment, sufficiently identifies an ascertainable class that is not overinclusive. In his

experts' declarations, he proposed methods for analyzing Scripps's records for billing and

payments, to identify class members who have claims based on the allegedly excessive

Charge Master billings. (See Thompson, supra, 217 Cal.App.4th at pp. 727-728

[overbroad class definitions may be rejected].) He argues that the trial court erroneously

imposed a burdensome "administrative feasibility" requirement, beyond what California

law allows. (Nicodemus, supra, 3 Cal.App.5th at pp. 1216-1217 [identifying different

mechanisms that were available to find and give notice to class members].) He contends

that if the class as currently defined is overbroad, such problems can be dealt with at a

later time (e.g., through subclasses). (See Aguiar v. Cintas Corp. No. 2 (2006) 144

Cal.App.4th 121, 136.) Alternatively, he requests that if the current class definition is too

broad, we should reverse the order with instructions to allow him to modify his class

definition. Kendall also questions whether any notice to the class members is actually

necessary for his requested decrees.

Where the administrative cost to identify and process certain self-pay patients'

claims would be " 'so substantial to render the likely appreciable benefits to the class de

minimis in comparison,' " the trial court has the discretion to deny the class certification

request. (Hale II, supra, 232 Cal.App.4th at p. 61.) Scripps showed, through its financial

services director Kehl's deposition and declaration, that even though a financial

30
department manager could run a database inquiry to obtain certain information, Scripps

does not have an expert in running database inquiries. When its managers utilize the

report writer function to input the specifics that identify the data elements to be examined

concerning a particular visit, "you have to be very specific as to the exact fields and the

pathway that you're in to get to those fields, if they are attainable." (Italics added.) It is

not appropriate to require Scripps to create new computer programs to satisfy Kendall's

demands. (See id. at pp. 67-68.)

Kendall cannot explain how potential self-pay class members, who have claims of

injury from their receipt of bills containing allegedly excessive Charge Master amounts,

can be found through his suggested methods and then distinguished from those patients

who should not be included in the class (e.g., if the nonmembers' care costs were

ultimately subject to discounting or payment in full by insurers, governmental benefits

providers, or charity). The trial court correctly determined from the evidence that

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." (Hale II, supra, 232 Cal.App.4th at p. 59.)

In view of Kendall's shifting theories about whether receipt of billing alone creates

class-wide damage to self-pay patients, and whether data on patient payments or other

reimbursements received for services are even relevant to defining the class, it is difficult

to make any realistic evaluation of the ascertainability criterion. Neither the trial court

nor this court can issue advisory opinions on a class basis about how to solve the serious

affordability problems in the health care industry, which are matters of public policy

31
much in the news and commonly considered to be subject to legislative and executive

controls. There was no abuse of discretion in the ruling denying certification of the class

on this ground.

IV

RELATIONSHIP OF DECLARATORY RELIEF AND STATUTORY CLAIMS

A. Introduction to Theories Pled

" ' " 'The purpose of a declaratory judgment is to "serve some practical end in

quieting or stabilizing an uncertain or disputed jural relation." [Citation.] "Another

purpose is to liquidate doubts with respect to uncertainties or controversies which might

otherwise result in subsequent litigation [citation]." [Citation.]' [Citation.] " 'One test of

the right to institute proceedings for declaratory judgment is the necessity of present

adjudication as a guide for plaintiff's future conduct in order to preserve his legal

rights.' " ' " (Moran, supra, 3 Cal.App.5th 1131, 1153.)

In pleading his causes of action for declaratory judgments, Kendall incorporates

his previous allegations from his CLRA and UCL claims and contends he is entitled to a

declaration of rights and duties about the binding effect of the price terms of the

Agreement for Services. He contends the declaratory relief allegations are stand-alone

causes of action that should justify the issuance of a declaration as to the meaning of a

single contract provision, which he interprets as allowing only the reasonable value of

services to be billed to self-pay patients. Alternatively, he seeks a declaration that the

Charge Master rates are grossly excessive or unconscionably high, when measured

against the backdrop of CLRA and UCL statutory law. He contends each cause of action

32
should be analyzed separately for its relevant class action standard, and that federal rules

would permit him to obtain declaratory relief without regard to California requirements

of community of interest and ascertainability of the class.

Although the language of the Agreement for Services is common to all class

members, and they were all charged the Charge Master rates, Kendall is not pleading

breach of contract. That was an appropriate concession under Hale I, supra, 183

Cal.App.4th 1373, 1387, in which this court sustained a demurrer ruling to disallow a

former patient from bringing a breach of contract action based upon one hospital's

agreement for services. By failing to pay more than a token amount toward her bill, that

patient had failed to establish the contractual element of performance or excuse from

performance. (Ibid.) Kendall also has not shown he paid anywhere close to the

reasonable value of services he received. 9

Instead, Kendall pursues a contract interpretation through declaratory relief, to

settle the legality of Scripps's billing behavior with respect to the class as a whole. In

addition to his contractual arguments, he cites to CLRA statutory principles prohibiting

unconscionable terms. (Civ. Code, § 1770, subd. (a)(19).) Even though Kendall says he

does not seek certification of CLRA class on declaratory relief, he still relies on all the

CLRA allegations both as a declaratory relief foundation, and to serve as the predicate or

"borrowed" other law being violated as the UCL claim alleges. (Hale I, supra, 183

9 One of Kendall's declaratory relief theories is that he should not be required to
apply for financial assistance before challenging the Charge Master rates, although that
particular issue has not been argued on appeal. (See Sarum v. Dignity Health (2014) 232
Cal.App.4th 1159, 1169 [some burden is involved in applying for financial assistance].)
33
Cal.App.4th at pp. 1382-1383; Cel-Tech Communications, Inc. v. Los Angeles Cellular

Telephone Co., supra, 20 Cal.4th at p. 180.)

B. Alternative FRCP Rule 23 Analysis

Kendall argues the trial court applied the wrong standard to determine the class

certification question for declaratory relief, when it focused on California law requiring

ascertainability and the predominance of common issues. Instead, Kendall seeks to have

this court analyze his request pursuant to the requirements of FRCP rule 23(b), on the

grounds that California law does not provide adequate guidance in this area. (Capitol

People First v. State Dept. of Developmental Services (2007) 155 Cal.App.4th 676, 692,

fn. 12 ["In the absence of relevant state precedent, trial courts are urged to follow the

procedures set forth in rule 23 of the [FRCP] for conducting class actions"]; Carter v.

City of Los Angeles (2014) 224 Cal.App.4th 808, 823–824 (Carter) ["California class

actions can neither be certified pursuant to [FRCP] Rule 23(b)(2) [] nor barred from

certification by the rule," but FRCP rule 23(b)(2) provisions are advisory].) For example,

lawsuits challenging as illegal certain system-wide practices or policies, affecting all

putative class members, may proceed under federal standards giving a broad

interpretation to the community of interest requirement. "In such circumstances,

individual factual differences among the individual litigants or groups of litigants will not

preclude a finding of commonality." (Capitol People First, supra, p. 691, fn. 11; see

Armstrong v. Davis (9th Cir. 2001) 275 F.3d 849, 868.) This federal rule certification

approach will accommodate cases in which all class members have suffered similar harm

from a systemic failure to accommodate their situations, and where prosecution of

34
separate actions would be so difficult as to be impossible. (Capitol People First, supra,

at p. 691, fn. 12; In re Yahoo Mail Litigation (N.D. Cal. 2015) 308 F.R.D. 577, 582

[alleging class-wide violations of state and federal wiretapping laws and seeking

injunctive relief].)

As a licensed hospital, Scripps is required to refrain from discriminating against

persons seeking emergency services on the basis of their personal characteristics or their

ability to pay for medical services. (§ 1317, subds. (b), (d) [emergency room regulations

found within licensing provisions for health facilities' "other services")].) We have found

no support in the record for Kendall's argument that Scripps is engaging in illegal billing

behavior, after such services are rendered, that controverts applicable statutory standards

for hospital billing and reimbursement. (See Brinker, supra, 53 Cal.4th at pp. 1033-1034

[evaluating the class's theory of liability that the employer's uniform policy, when

measured against applicable legal requirements such as a wage order, is allegedly

unlawful].) Kendall is essentially requesting an abstract contract interpretation ruling that

excludes consideration of existing provisions of law that govern the financial

arrangements that hospitals may make for recipients of emergency care.

Kendall suggests that under federal law, ascertainability questions need not be

addressed regarding the proposed declaratory relief class, and he states that notice to class

members "may never be required in this case," or that publication notice would be

sufficient. But if the proposed rulings are significant enough to affect class members and

their relationships with Scripps, he cannot explain why standard notice requirements

should be disregarded. (Carter, supra, 224 Cal.App.4th 808, 823-824 [due process

35
concerns require notice and opt-out rights to class members unless " 'the relief sought

must perforce affect the entire class at once' "].) The ordinary notice requirements cannot

be avoided simply by citing to FRCP rule 23(b).

Because of the comprehensive California case law applicable to Kendall's

substantive claims under CLRA and the UCL, and the very closely related nature of his

declaratory relief claims, we see no need to look to federal law for guidance in evaluating

his requests for certification of the declaratory judgment causes of action. Kendall has

not identified any characteristics of the proposed class, such as financial status, that

cannot properly be analyzed through the use of California law, with regard to his

declaratory relief arguments. (Bell v. American Title Ins. Co. (1991) 226 Cal.App.3d

1589, 1602-1603.) This record did not require the trial court to expressly discuss or

apply FRCP rule 23.

C. Analysis

" '[F]or purposes of certification, the proper inquiry is "whether the theory of

recovery advanced by the plaintiff is likely to prove amenable to class treatment." ' "

(Hall, supra, 226 Cal.App.4th at p. 292.) Kendall believes that the Agreement for

Services lacks any valid price term, as a matter of pure contract interpretation, and

instead, the Agreement for Services should not be permitted to make references to Charge

Master billings. He invokes equitable principles of quantum meruit and suggests the

court apply a flat percentage reduction from the gross Charge Master charges, to arrive at

the reasonable value of the services rendered, through a comparison of the Charge Master

rates either to the hospital's costs in providing services, or to the reimbursement rates for

36
various categories of patients covered by other benefits plans. This approach would

effectively place the burden on Scripps to prove the value of its services before billing for

them.

Kendall finds support for his position in a demurrer case, Moran, supra,

3 Cal.App.5th 1131, 1142. There, the court observed that the Hospital Fair Pricing

Policies Act (§ 127400 et seq.) "imposes on licensed hospitals the requirement that they

establish, give notice of, and administer financial aid and charity care policies, and allows

a hospital to bill for treatment and services based on its own schedule of fees. However,

it does not preclude claims based on what a patient allegedly expected to pay or authorize

costs that are allegedly exorbitant. Consequently, the Act neither ' "bar[s]" [an] action'

under the UCL, nor does it 'clearly permit' a hospital to charge self-pay emergency care

patients 'artificial and grossly excessive rates.' " (Moran, supra, at p. 1142; § 127444

[hospitals must give notice of uniform Charge Master or published rates].)

For the class as presently defined, the certification decision on the declaratory

relief theories must also take into account Kendall's pleaded statutory claims. Assuming

patients are exposed to financial liability upon receiving notice of the billed amounts,

there are many other factors that may affect Scripps's potential liability to each patient for

the allegedly wrongful billing practices. Some self-pay patients are ultimately

determined to be eligible for some kind of insurance, governmental benefits coverage, or

charity or discount assistance. (See Children's Hospital, supra, 226 Cal.App.4th at

p. 1278 [factual disputes remained about "reasonable and customary value" of hospital

services, when accepted payments had varied, depending on contracted-for insurance

37
charges and government reimbursement rates].) There are significant remaining factual

and logistical problems in identifying members of the proposed class, for purposes of

ascertaining their identity and billing status.

Nor does Kendall's proposed modification of the class definition, to restrict it to all

self-pay patients who received bills from Scripps and omit any further consideration of

whether some other entity made payments on the individual patient's account, make this a

proper declaratory relief request. Kendall can show no support for his theory that, "at the

very least," the trial court should have discussed and certified a declaratory relief "issue"

class with respect to his contractual interpretation and/or unconscionability claims. (Cal.

Rules of Court, rule 3.765(b) ["[w]hen appropriate, an action may be maintained as a

class action limited to particular issues"].) The court did not find it was appropriate to do

so, based on the type of generalized decrees being requested and the availability of other

forms of relief, and this was a reasonable determination under the circumstances.

Certifying a class to issue declaratory relief, that would resolve the proper extent

of some self-pay patients' remaining contractual and equitable payment obligations, 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. (§ 1317,

subd. (d) [allowing emergency room patients to be required to sign an agreement to

provide information on payment options; § 1339.51 [notifications on allowable Charge

Master rates]; § 127444 [uniform charges allowed under Hospital Fair Pricing Policies

Act].) Under Code of Civil Procedure section 1061, the trial court could appropriately

38
refuse to exercise the power to grant declaratory relief, where it was unnecessary or

inappropriate under all of the circumstances. This was a discretionary decision within the

authority of the court, and it will not be disturbed on appeal. (Allstate Ins. Co. v. Fisher,

supra, 31 Cal.App.3d at p. 395.)

DISPOSITION

The order is affirmed. Costs on appeal to Scripps.

HUFFMAN, J.

WE CONCUR:

McCONNELL, P. J.

HALLER, J.

39
Filed 10/23/17
CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

PAUL KENDALL, D070390

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2013-00073680-
CU-BT-CTL)
SCRIPPS HEALTH,
ORDER CERTIFYING OPINION
Defendant and Respondent. FOR PUBLICATION

THE COURT:

The opinion in this case filed October 18, 2017 was not certified for publication.
It appearing the opinion meets the standards for publication specified in California Rules
of Court, rule 8.1105(c), the request pursuant to California Rules of Court, rule 8.1120(a),
for publication is GRANTED.

IT IS HEREBY CERTIFIED that the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c); and

ORDERED that the words "Not to Be Published in the Official Reports" appearing
on page one of said opinion be deleted and the opinion herein be published in the Official
Reports.

McCONNELL, P.J.

cc: All Parties