Hospitals cannot be subject to fraud lawsuits when patients seek to hold them to higher standards than the legal minimum, the California Supreme Court has ruled.
The underlying litigation involving San Jose Healthcare System made its way through Santa Clara County Superior Court Judge Sunil Kulkarni and the California Sixth District Appellate Court. Justice Goodwin Liu wrote the top court’s unanimous opinion, filed Dec. 23.
“An extensive scheme of state and federal law obligates hospitals to make specific disclosures about the prices of medical services, including fees for evaluation and management services for emergency room patients,” Liu wrote.
California also has a Payers’ Bill of Rights requiring most hospitals to list its uniform charges with a special notice in emergency departments telling patients how to obtain the information.
Plaintiff Taylor Capito alleged Regional Medical Center San Jose violated the state’s Unfair Competition Law and Consumers Legal Remedies Act by not offering notice of “evaluation and management services” fees before providing emergency room services. She did not allege Regional charged excessive fees, nor for a service it didn’t render. Neither did she accuse the hospital of failing to comply with disclosure obligations.
The Supreme Court affirmed the lower court rulings, saying adopting Capito’s position on additional “disclosure would alter the careful balance of competing interests, including price transparency and provision of emergency care without regard to cost, reflected in the multifaceted scheme developed by state and federal authorities.”
California Attorney General Rob Bonta opposed the decision. His office filed a support brief on behalf of Capito, asking the Supreme Court to agree compliance with disclosure regulations specific to a certain industry doesn’t confer immunization from liability from deceptive marketing and sales practices litigation.
“To be sure, emergency room billing disclosure rules reflect important policy considerations about informed consent to the cost of care and access to emergency medical services,” according to the brief. “But no legislative or regulatory enactment bars the application of California’s generally applicable consumer laws here, so they operate as they ordinarily do.”
Capito’s allegations involve two June 2019 emergency room visits and fees on each bill of $3,780. Her total obligation was $41,016, which Regional reduced to $8,855.38.
Liu wrote that Regional presented a form for admission and outpatient care including a financial agreement, noting: “Some special items will be priced separately if there is no price listed on the Charge Master. An estimate of the anticipated charges for services to be provided to the Patient is available upon request from the hospital. Estimates may vary significantly from the final charges based on a variety of factors, including, but not limited to, the course of treatment, intensity of care, physician practices, and the necessity of providing additional goods and services.”
The court said laws also require hospitals to stabilize emergency patients before discussing costs or ability to pay. It said California lawmakers “specifically exempted emergency rooms from mandatory, specific disclosures of costs to uninsured patients — individuals who would arguably benefit the most from additional disclosures of EMS fees.”
Liu said Capito failed to make a convincing argument that either state or federal lawmakers didn’t actually balance the competing interests involved in provision of emergency medical care. The court found it plausible that the disclosures Capito suggested might discourage some patients for seeking emergency care and said her emphasis on patient choice presumes an ability to diagnose the severity of a condition and the appropriate venue for treatment.
“Even if we were to focus on price transparency to the exclusion of competing considerations, we are doubtful that a posting of five possible EMS fees — which run from $672 to $5635 depending on the severity of the patient’s condition — would provide reliable notice of actual costs,” Liu wrote. “First, it is questionable whether such a broad range would inform patient choice when hospitals do not know which level will be charged prior to treatment. Second, the EMS fee is only one of many charges an emergency room patient may incur.”
Beyond that, Liu wrote, the complaint doesn’t adequately allege how Regional was unfair or unethical. The court rejected her position the appellate opinion improperly protects hospitals from UCL litigation and her allegation Regional’s failure to disclose the contested fee is not a condition actionable under the Consumers Legal Remedies Act.
Even if a failure to disclose did subject Regional to liability, Liu wrote, the evidence shows the hospital did cite the fee in its chargemaster document and a list of 25 common procedures. Regional gave both documents to the California Department of Health Care Access and Information, which put the information on its website. Regional also uses “descriptors exceed HCAI’s guidelines and are almost identical to what Capito says would be adequate,” Liu wrote.
Hospitals aren’t obligated to provide idealized notice in order to avoid liability for fraud, Liu concluded, especially so when legislative bodies “have already made a reasoned determination of what constitutes sufficient notice in the emergency room context in light of competing concerns.”
Capito is represented by the Law Offices of Barry L. Kramer and Carpenter Law.
Regional is represented by attorneys from the firm of King & Spalding.
Bonta’s press office declined to issue an additional comment on the ruling.