Business Law

Gray v. Dignity Health (Oct. 13, 2021, A158648) __ Cal. App.5th __ [2021 WL 4771982]

Hospitals are not required by consumer-protection laws to make price disclosures beyond what state and federal healthcare laws mandate

After Gordon Gray received emergency medical care at a Dignity hospital, he received a bill that included an $880 ER Charge, which was intended to cover the costs of initial patient evaluation and operating a 24-hour emergency department. Gray filed a putative class action against Dignity seeking declaratory and injunctive relief. He claimed Dignity violated the Unfair Competition Law (UCL) and the Consumers Legal Remedies Act (CLRA) by failing to inform him of the ER Charge before providing emergency medical services. The trial court sustained Dignity’s demurrer and entered judgment.  Gray appealed.

The Court of Appeal affirmed. The court emphasized that Gray alleged no violations of the extensive scheme of statutes and regulations governing disclosure of hospital billing information and emergency medical treatment. For example, California’s “Payers’ Bill of Rights” (Health & Saf. Code, § 1339.50 et seq.) requires all hospitals to publicize their chargemaster prices and rates (including separate information on the 25 most common outpatient procedures and charges). Section 1317 requires hospitals to provide needed emergency medical services without regard to (and before inquiring about) the patient’s ability to pay. Federal law imposes similar requirements on hospitals participating in Medicare, and prohibits tax-exempt hospitals from doing anything to discourage emergency room patients from receiving needed treatment. The Affordable Care Act also requires Medicare hospitals to disclose chargemaster rates, payer-specific negotiated charges, and a “consumer-friendly” list of charges for three hundred non-urgent “shoppable” services. During federal rulemaking, the Center for Medicare and Medicaid Services (CMA) explained that the new Hospital Pricing Transparency regulation did not conflict with the Emergency Medical Treatment and Active Labor Act (EMTALA) because hospitals are not required to post signage or make statements about prices related to emergency care.

As to the UCL claim, the Court of Appeal held that Dignity’s alleged failure to disclose its ER charge did not constitute an unfair business practice as a matter of law because Dignity complied with all statutory disclosure requirements. Requiring Dignity to make an extra disclosure about this specific charge before providing emergency care would conflict with state and federal laws requiring immediate emergency medical treatment. The court similarly held that Gray’s CLRA claim failed as a matter of law because Dignity did not breach any duty to disclose material facts regarding its charges.

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

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.


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