Tuesday, December 16, 2014

Uninsured and Unascertainable

Hale v. Sharp Healthcare, No. D064023 (D4d1 Dec. 5, 2014)

In this UCL and CLRA case brought as a putative class action, plaintiff alleges that defendant, a hospital group, charged her and her fellow class members higher fees for medical services because they were uninsured. The trial court initially certified a class based on a common question: whether the defendant represented to uninsured patients that they would be charged “regular rates,” but failed to do so.

But defendant later filed a motion to decertify.  It claimed that the class was not ascertainable, because its members could not be identified without an individualized examination of 120,000 patients’ billing records. Further, it said that class treatment was not a superior method to litigate the case because there was no manageable way to determine class-wide entitlement to damages. The trial court granted the motion and the plaintiff appealed.

The court of appeal affirms on both grounds. Because of the way the class was defined and the hospital’s practice of not obtaining insurance information until after treatment was provided, the class was unascertainable. The evidence showed that in many instances, uninsured patients ultimately paid rates that were far below what the hospital obtained from insurance companies, Medicare, and Medicaid. This could be due to rate reductions, charity payments, undiscovered coverage, or payments by third parties. But the hospital didn’t maintain information on ultimate payment outcomes on an aggregate basis, and, despite their efforts, the parties were unable to come up with a methodology for identifying patients who paid more than insured payments.

Further, there was a lack of predominance of common issues as to whether the class members were entitled to damages. In coming to this result, the court distinguishes a number of wage and hour cases requiring certification where the common issue is whether the employer maintained an unlawful policy. According to the court, these cases might have differed in the amount of damages, but if the plaintiff theory proved correct, the fact of damages could be determined on a classwide basis.  In contrast, in this case, whether or not each plaintiff was damaged at all required a case-by-case assessment, which precluded any liability determination on a classwide basis.

This result seems mostly reasonable. But I don’t know if I’m entirely comfortable with a ruling that denies class certification based largely on the fact that the defendant maintained its business records in a way that makes it tough to ascertain who is in a plaintiff class. Seems like a bad incentive. 


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