Filed 12/15/14; pub. order 1/6/15 (see end of opn.)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

TONY SARUN,

Plaintiff and Appellant,

v.

DIGNITY HEALTH,

Defendant and Respondent. B251767

(Los Angeles County Super. Ct. No. BC483764)

APPEAL from a judgment of the Supe rior Court of Los Angeles County, Lee Smalley Edmon, Judge. Reversed and remanded. Law Offices of Barry L. Kramer, Barry L. Kramer; Strange & Carpenter, Barry R. Strange and Gretchen Carpente r, for Plaintiff and Appellant. Ogloza Fortney, Darius Ogloza, David Fo rtney and Brian D. Berry, for Defendant and Respondent.

_____________ ____________2 Tony Sarun was uninsured when he recei ved emergency healthcare services from a hospital owned and operated by Dignity Health. Upon admission Sarun signed an agreement to pay the hospita l’s “full charges, unless other discounts apply.” The agreement explained uninsured patients might qualify for government aid programs or financial assistance from Dignity. After r eceiving an invoice for $23,487.90, which reflected a $7,871 “uninsured discount,” and without applyi ng for any other discount or financial assistance, Sarun filed a putativ e class action complaint asserting claims including unfair and/or deceptive business pr actices under Business and Professions Code section 17200 (UCL) and viola tion of the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.). The complaint allege d Dignity had failed to disclose uninsured patients would be required to pay several times more than other patients receiving the same services, the charges se t forth on the invoice were not readily available or discernable from the agreement, and the in voiced charges exceeded the reasonable value

of the services. The trial court sustained Dignity’s demurre r to Sarun’s second amended complaint

without leave to amend and dismissed the ac tion on the ground Sarun had not adequately alleged “actual injury,” and, therefore, lacked standing. We reverse.

FACTUAL AND PROCED URAL BACKGROUND

1. The Terms of the Ad missions Agreement According to the allegations of the se cond amended complain t, Sarun was taken by ambulance to Northridge Hospital Medical Center after a motor vehicle accident. He

was released three to four hours later af ter receiving various diagnostic tests. While at the hospital Sarun signed a “C onditions of Admissi ons and Treatment” agreement, which included terms governing paym ent for services. Paragraph 8.b. stated, “Patients who do not have insurance must pa y us for the services at our full charges, unless other discounts apply. However, unin sured patients may be able to qualify for government programs or financial assistan ce. Financial assistance may include a discount from the Hospital’s full charges, free care, interest free payment plans or other

assistance. Patients seekin g government or financial assistance must complete an3 application ( see Paragraph 9 below ).” “Full charges” was defined as “the Hospital’s published rates (called the chargemaster), prior to any discounts or reductions.” Paragraph 8.c., “Additional Terms,” provide d the patient would be responsible for attorney fees and collection expe nses if it was necessary to re fer the matter for collection. Paragraph 9, “Financial Assistance,” expl ained Dignity could help uninsured patients enroll in government health care programs, and, if the patient did not qualify, might provide financial assistance under its own financial assistance policy. Paragraph 9 reiterated an uninsured patient was required to complete an app lication and provide certain personal and household financial information to dete rmine eligibility for financial

assistance. Sarun subsequently received a “Balance Due Notice,” reflecting total charges of $31,359, an uninsured discount of $7,871. 10 and a balance due of $23,487.90. The invoice directed Sarun to make his check pa yable to Northridge Hospital Medical Center, contained spaces for use of a credit card, and also provided a website address to access, manage or pay his account onlin e. It also invited Sarun to call a customer service representative if he wanted to set up a payment plan. The invoice further stated, in addition to the uninsured discount, “you may be eligible for other forms of financial assistan ce such as government sponsored programs” and provided a telephone numbe r for further information. A document included with the

invoice described the financial assistan ce options, provided an application and enumerated the necessary documentation. 1 It provided in part, “If you are unable to supply one of the documents, or there are additional factors that may influence the evaluation, please submit a written statem ent explaining your situation. [¶] If any of the [required documents] are not included, the app lication cannot be processed. After all

1 Required documents includ ed proof of monetary asse ts—that is, the last three months of statements from checking, savi ngs, credit union and investment account—and proof of income. For example, if employed, the patient was required to provide his or her previous year tax return, as well as copies of paychecks or stubs for the three months prior to treatment.4 documents have been r eceived, your application will be re viewed and you will be notified

as soon as a decision has been made.” Sarun did not seek any further discount or apply for financial assistance. He did, however, make a partial payment toward the balance due.

2. The Second Amen ded Complaint

After a demurrer to Sarun’s first amende d complaint was sustai ned with leave to

amend, 2 on January 24, 2013 Sarun filed a se cond amended class action complaint asserting causes of action for violations of the UCL and CLRA. Sarun alleged Dignity was “charging and seeking to enforce collec tion of unreasonable, unfair, and grossly inflated prices for emergency care provided to its uninsured patients” and “bills and takes action to force uninsured emergency care pa tients to pay substan tially more than the

reasonable value of its treatment and services.” Sa run averred Dignity’s “full charges” were grossly inflated prices, which coul d not be ascertained from the admissions agreement itself and were several times hi gher than the reimbursement rates for other patients and more than quadrupl e the hospital’s actual costs. 3 Although Sarun acknowledged in his second amended compla int that “discounts ” are an “essential component in the determ ination of an uninsured’s paymen t liability,” the pleading further alleged Sarun “had no intention of paying, or seeking financ ial aid in order to pay an

2 Sarun’s original and first amended compla ints had included causes of action for breach of contract and breach of the covenant of good fa ith and fair dealing.

3 According to the second amended complaint, the phrase “ full charges, unless other discounts apply ” could not be made certain because the several discounts potentially available were “b ased on numerous factors, complex formulas, prior acceptance or rejection of claims for govern mental assistance, a government program eligibility screening process, a patient’s income and assets which may be difficult or impossible to quantify and/or verify, and vari ous subjective criteria such as a patient’s ‘financial need’ or the hospitals’ discretiona ry case-by-case determination of specific circumstances . . . .”5 outlandish bill . . . particularly where he felt that the cost of the services and treatment rendered should have cost, at most, in the area of $3,000.” 4

3. The Trial Court’s Order Sustaining Di gnity’s Demurrer Without Leave To Amend Dignity demurred to the second amende d complaint on grounds including Sarun lacked standing under the UCL and CLRA beca use he failed to adequately allege he had suffered an economic injury o r, to the extent he had, th at it was caused by Dignity’s business practices. Dignity argued Sarun had co nceded he would be willing to pay approximately $3,000 a nd, until he applied for financia l assistance, it was speculative whether he would be required to pay more th an that amount. Dignity further argued

Sarun’s refusal to seek financial assistance made it impossible to determine whether he was in fact injured and rendere d injury, if any, self-inflicted, not traceable to unfair business practices or conduct proscribed by the CLRA. The trial court sustained Dignity’s demu rrer without leave to amend, finding Sarun had failed to allege injury in fact: “Even assuming, arguendo, that [Dignity] was required to charge the reasonable value of the servic es provided, and assumi ng that the invoice

reflected an amount in excess of the reasonabl e value of those services, [Sarun] does not allege that he has been required to pay an y amount in excess of the reasonable value of the medical services provided. . . . The [second amended complaint] notably does not allege that the amount [Sarun] has already pa id is unreasonable or in excess of the $3,000 that [Sarun] ‘felt’ was a reasonable price. Nor does the [second amended complaint] allege that [Sarun’s] medical bill has been referred to a collection agency or that [Dignity] has taken other informal steps to coerce payment. [¶] Moreover, the [second amended complaint] does not allege that [S arun] sought and was denied a discounted rate. . . . Rather than purs uing the remedy presented to him for avoiding the inchoate

4 Notwithstanding Sarun’s refusal to requ est any additional discount or financial assistance and his insistence he was not obligat ed to do so, the proposed class consisted of uninsured individuals who received emerge ncy care medical treatment at a hospital in California owned by Dignity after May 3, 2008 and “were not given a payment assistance discount under Dignity’s Paymen t Assistance Policy . . . .”6 injury, the second amended complaint allege s that [Sarun] immediately sought legal

counsel.” The trial court did not address the other grounds asse rted in Dignity’s

demurrer. 5

DISCUSSION

1. Standard of Review A demurrer tests the legal suffi ciency of the factual alle gations in a complaint. We independently review the superior c ourt’s ruling on a demurre r and determine de novo whether the compla int alleges facts sufficient to stat e a cause of action or discloses a complete defense. ( McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal. 4th 412, 415; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of which judicial notice has been taken. ( Evans v. City of Berkeley (2006) 38 Cal.4th 1, 20; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) We liberally construe the pl eading with a view to substantial justice between the parties. (C ode Civ. Proc., § 452; Schifando , at p. 1081.)

2. Standing Under the UCL and CLRA Unfair competition under the UCL mean s “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising . . . .” Written in the disjunctive, section 17200 establishes “three varieties of unfair competition—acts or practices which are unlawful, unfair, or fraudulent.” ( Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 ( Cel-Tech ); accord, Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) The CLRA prohibits specified unfair and deceptive acts and practices in a “transaction in tended to result or which results in the sale or lease of goods or services to any consumer.” (Civ. Code, § 1770, subd. (a).)

5 Dignity had argued the cl aims failed as a matter of law and it was immune from liability because its discounti ng policy and price structure we re authorized by California law.7 “Historically, the UCL author ized any person acting for th e interests of the general public to sue for relief notwithst anding any lack of injury or damages. [Citation.] At the November 2, 2004, General Election, th e voters approved Proposition 64, which amended the UCL to provide that a privat e person has standing to bring a UCL action only if he or she ‘has suffered injury in fact and has lost money or property as a result of the unfair competition.’” ( Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1381 ( Hale ).) Similarly, to have stan ding under the CLRA, a plaintiff must allege he or she suffered damage as the result of the unlawful practice. ( Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 644- 645; Civ. Code, § 1780.) “‘In approving Proposition 64, the voters found and declared that the amendments were necessary to prevent abusive UCL actions by attorneys whose clients had not been “injured in fact” or used the defendant’s product or service, and to ensure “that only the California Attorney General and local public officials [are] authorized to file and prosecute actions on behalf of the general public.”’” ( Troyk v. Farmers Group, Inc

. (2009) 171 Cal.App.4t h 1305, 1345; see Kwikset Corporation v. Superior Court (2011) 51 Cal.4th 310, 320 ( Kwikset ) [“[w]hile the subs tantive reach of [the UCL] remains expansive, the electorate has materially curt ailed the universe of those who may enforce their provisions”].) To satisfy Proposition 64 a plaintiff “must now establish a loss or deprivation of money or property sufficien t to qualify as inju ry in fact, i.e., economic injury , and (2) show that that economic injury was the result of, i.e. caused by , the unfair practice or false advertising that is the gravamen of the claim.” ( Kwikset , at p. 322.) “Injury in fact” as used in Proposition 64 has the same meaning as under federal law: “‘[A]n invasion of a legally protect ed interest which is (a) concrete and particularized, [citations]; and (b) “act ual or imminent, not ‘conjectural’ or ‘hypothetical,’” [citations].’” ( Kwikset

, supra , 51 Cal.4th at p. 322.) Proposition 64, however, imposes the additional requirement that the plaintiff have lost money or property. ( Ibid. ) Indeed, loss of money or propert y—that is, “economic injury”— “is

itself a classic form of injury in fact.” ( Id. at p. 323; see id. at p. 325, fn. 8 [“proof of lost money or property will generally satisfy the element of inju ry in fact”].) Economic8 injury may be shown in many wa ys including a plaintiff “surrender[ing] in a transaction more, or acquir[ing] in a transaction less, than he or she othe rwise would have”; “hav[ing] a present or future pr operty interest diminished”; and “be[ing] required to enter into a transaction, costing money or pr operty, that would otherwise have been unnecessary.” ( Id . at p. 323.) Although Proposition 64’s st anding requirement is more restrictive than the federal law requirement because the injury must be economic, “the quantum of lost money or property necessary to show standing is only so much as would suffice to establish injury in fact . . . . [F]ederal courts have reiterated that injury in fact is not a substantial or insurmountable hurdle; as then Judge Alito put it: ‘I njury-in-fact is not Mount Everest.’ [Citation.] Ra ther, it suffices for federal st anding purposes to ‘“allege[] some specific, ‘identifiable trifle’ of injury.”’” ( Kwikset

, supra , 51 Cal.4th at p. 324.)

“‘“The basic idea that comes out in numerous ca ses is that an identifia ble trifle is enough for standing to fight out a question of principle; the trifle is the basis for standing and the principle supplies the motivation.”’” ( Id. at p. 325, fn. 7.)

3. The Second Amended Co mplaint Adequately Alle ges Injury in Fact Sarun alleged he received an invoice fro m Dignity showing a balance due (“total amount you owe”) of $23,487.90 that he was obligated to pay unde r the terms of the Conditions of Admission and Treatment agre ement he had signed. Specifically, Paragraph 36 of the second amended compla int alleged, “Plaintiff Sarun has already made a partial payment toward his account, and had a financia l liability for the remaining balance of his account.” As discussed, the invoice even included instructions as to the proper payee of a check, provided space for payment by credit card and supplied information for paymen t online. Although Dignity had not begun any collection activity,

the existence of an enforcea ble obligation, without more, ordinarily constitutes actual injury or injury in fact. (See Hale

, supra , 183 Cal.App.4th at pp. 1383-1384; see generally Adams v. Paul (1995) 11 Cal.4th 5 83, 591, fn. 5 [“actual injury . . . may well precede quantifiable financial costs”].)9 Like Sarun, Dagmar Hale was uninsured when sh e received emergency hospital care. The admissions agreement she signed pr ovided, “‘you hereby i ndividually obligate yourself to pay the account of the hospital in accord ance with the regular rates and terms of the hospital.’” ( Hale

, supra , 183 Cal.App.4th at p. 1378.) After she had received a bill for more than $14,0 00 and paid $500 toward it, Hale filed an action asserting claims for violation of the UCL and CLRA alleging the hospital, contrary to its promise to charge “regular rates,” had charged uninsu red patients exponentially more than the amount it accepted from patients covered by Medicare or private insurance. ( Ibid .) Although the hospital did not challenge the trial court’s finding Hale ha d adequately alleged injury in fact, the court neverthe less explained the reas on it believed Hale had done so: “Even though the SAC alleges Hale has paid only $5 00 of her $14,447.65 medical bill, it also alleges the Admission Ag reement obligates her to pay [the hospital]

the balance on her account. T hus, she faces at least an imminent invasion or injury to a legally protected interest. [Citation.] The te rm ‘imminent’ is defined as ‘ready to take place,’ ‘hanging threateningl y over one’s head,’ and ‘menac ingly near.’ [Citation.] Certainly, this is not the type of action Prop osition 64 was intended to squelch. Hale was a bona fide consumer of medical services.” ( Id. at pp. 1383-1384.) As Dignity argues, Hale is distinguishable. Unlike the situation in Hale , Dignity expressly gave Sarun the info rmation necessary to apply fo r a discounted billing rate. The issue, then, is whether Sarun’s failure to seek financial assist ance, which may have eliminated any further financial obligation to Dignity, vitiated his standing to challenge Dignity’s billing practices for uninsured emergency care patient s under the UCL and

CLRA. The trial court conclu ded the answer was “yes,” ba sed in part on the holding in Meyer v. Sprint Spectrum, L.P., supra , 45 Cal.4th 634, that “t o bring a CLRA action, not only must a consumer be exposed to an unlawf ul practice, but some kind of damage must result.” ( Id . at p. 641; see also id. at p. 643 [no standing un der CLRA if the allegedly10 unlawful practice “has not resulted in some kind of tangible increased cost or burden to the consumer”].) 6

We recognize this difference in the billing practices at issue in Hale and those in the case at bar. However, a lthough a further discount from Dignity’s “full charges”— even a complete elimination of the charges in excess of what Sarun already had paid— may have been available, the invoice as pres ented to Sarun (which was before the trial court after it granted Dignity’s unopposed motio n for judicial notice) stated a $23,487.90 balance was due. Sarun was not merely “e xposed” to the allegedly unlawful pricing system—that is, a list price expressly subjec t to negotiation like the sticker price on an

automobile on a dealer’s lot or a shouted offer at the souk— Dignity’s invoice told him to pay the full remaining sum unless he sough t relief. Indeed, the form admissions agreement Sarun had signed afte r arriving by ambulance at th e hospital obligated him to pay Dignity’s full charges unless other disco unts applied, but did not obligate him to apply for such discounts, and further provided he would be liable for attorney fees and collection expenses if the matter was referred for collection. As in Hale , upon receipt of

this bill Sarun faced at least an imminent invasion of a legally protected interest. Moreover, the Meyer Court, in discussing its earlier decision in Kagan v.

Gibraltar Sav. & Loan Assn . (1984) 35 Cal.3d 582, also explained that incurring transaction costs to avoid the consequences of a deceptive practice “falls within the broad meaning of suffering ‘any damage as a result of the use or employment’ of an unlawful practice, whether or not those transaction co sts are cognizable as ‘actual damages.’” ( Meyer v. Sprint Spectrum, L.P, supra , 45 Cal.4th at p. 643.) Sarun was faced with just

such transaction costs: To avoid the cons equences of its allegedly unlawful “full

6 As the trial court emphatically phrased it, “The [second amended complaint] did not allege that Plaintiff faced an imminent th reat of any injury. It merely alleges that Plaintiff received an invoice that he did not pay, that he could ha ve sought to have reduced, and that was not sent to collections . But opening a piece of mail that had no other appreciable impact on Plai ntiff’s financial, mental, or physical well being is not itself an injury that confers standing unde r the sweeping provisions of the UCL and CLRA.”11 charges” pricing structure for uninsured emer gency care patients, Dignity required Sarun to apply for financial assist ance, including providing tax return information and other personal financial data. The tangible burden of such an application process is far more than the “identifiable trifle” required to confer injury-in-fact standing. Our conclusion is reinforced by Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758 in which the Supreme Court held retail pharmacies had standing to assert UCL claims against pharmaceutical companies that had allegedly engaged in price fixing even though the retail pharmacies were able to pass on any overcharges to their customers. ( Id. at p. 788 [pharmacies “lost money: the overch arges they paid”].) Th e Court rejected the pharmaceutical companies’ argument the pharmacies ultimately “suffered no compensable loss because they were able to mitigate full y any injury by passing on the overcharges,” explaining “[t]he doctrine of mitigation, where it applies, is a limitation on liability for damages, not a basis for extingui shing standing. [Citation.] This is so because mitigation, while it might diminish a party’s recovery, does not diminish the party’s interest in proving it is entitled to recovery.” ( Id. at p. 789.) Dignity’s argument Sarun was required to apply for financial assistan ce to perfect his claim (that is, to allege injury in fact) would be akin to requiring Sarun to mitigat e his damages as a precondition

to suit. As in Clayworth , that is unnecessary here. Although Dignity Health has asserted seve ral other grounds for affirming the trial court’s order, primarily arguments addressing th e merits of Sarun’s claims, those issues are best addressed by the trial court in the first instance.12 DISPOSITION The judgment is reversed, and the matt er remanded for further proceedings not inconsistent with this opinion. Sar un is to recover his costs on appeal.

PERLUSS, P. J.

We concur:

WOODS, J.

SEGAL, J. *

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.13 Filed 1/6/15 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

TONY SARUN,

Plaintiff and Appellant,

v.

DIGNITY HEALTH,

Defendant and Respondent. B251767

(Los Angeles County Super. Ct. No. BC483764)

ORDER CERTIFYING OPINION FOR PUBLICATION (No Change in Judgment)

THE COURT: The opinion in this case filed December 15, 2014 was not certified for publication. The court has read and considered appellant’s request for publication and resp ondent’s opposition. It appearing the opinion meets the stan dards for publication specified in California Rules of Court, rule 8.1105(c), appellant’s request pursuant to California Rules of Court, rule 8.1120(a) for publication is granted. IT IS HEREBY CERTIFIED that the opi nion meets the standards for publication specified in California Rules of Court, rule 8.1105(c); and

ORDERED that the words “Not to be Publis hed in the Official Reports” appearing on page 1 of said opinion be delete d and the opinion herein be publis hed in the Official Reports.

_________________________________________________________________________ PERLUSS, P. J. WOODS, J. SEGAL, J. *

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.