Court Opinion

ID: 4455102
Source: CourtListenerOpinion
Date Created: 2019-11-12 22:02:08.661903+00
Date Added: 2024-06-11T13:27:11.180492
License: Public Domain

Filed 11/12/19
                 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                        DIVISION SEVEN

TONY SARUN et al.,                  B288062

       Plaintiffs and Appellants,   (Los Angeles County
                                    Super. Ct. No. BC483764)
       v.

DIGNITY HEALTH,

       Defendant and Respondent.

     APPEAL from an order of the Superior Court of
Los Angeles County, Maren E. Nelson, Judge. Reversed and
remanded with directions.
     Law Offices of Barry Kramer, Barry L. Kramer; Carpenter
Law and Gretchen Carpenter for Plaintiffs and Appellants.
     Ogloza Fortney, Darius Ogloza and David Fortney for
Defendant and Respondent.
                ____________________________
      Tony Sarun had no health insurance in March 2012 when
he received emergency care at Northridge Hospital Medical
                                                    1
Center, then owned and operated by Dignity Health. Upon
admission Sarun signed an agreement to pay the hospital’s “full
charges, unless other discounts apply.” “Full charges” were
defined as “the Hospital’s published rates (called the
chargemaster), prior to any discounts or reductions.” The
admissions contract explained uninsured patients might qualify
for government aid programs or financial assistance from Dignity
Health.
      After receiving an invoice for $23,487.90, which reflected a
chargemaster rate of $31,359 and a $7,871.10 “uninsured
discount,” and without applying for any other discount or
financial assistance, Sarun filed this putative class action
lawsuit. In his third amended complaint, filed in May 2015,
Sarun asserts claims for unfair and/or deceptive business
practices under Business and Professions Code section 17200
(UCL) and violation of the Consumers Legal Remedies Act
(CLRA) (Civ. Code, § 1750 et seq.) and seeks declarations that
Dignity Health’s billing practices as they relate to uninsured
individuals who received emergency care at a Dignity Health
hospital in California are “unfair, unconscionable and/or
unreasonable” and that, because the prices to be charged are not

1
      On February 1, 2019 Dignity Health merged with Catholic
Health Initiatives and adopted the name CommonSpirit Health.
With this reorganization ownership of Northridge Hospital
Medical Center and several other Dignity Health community
hospitals was transferred to Dignity Community Care, a
Colorado not-for-profit corporation. Dignity Community Care’s
sole member is CommonSpirit Health.

                                2
adequately disclosed or readily available to those individuals, its
admissions contract contains an “open price” term within the
                                     2                         3
meaning of Civil Code section 1611, so that self-pay patients are
liable only for the reasonable value of the services or treatment
provided.
       In June 2017 Sarun moved for class certification of his
cause of action for declaratory relief, now defining the proposed
class as individuals who had received treatment at Northridge
Hospital Medical Center during the proposed class period and
who were directly billed for such treatment at chargemaster rates
or chargemaster rates less an uninsured discount. In December
2017 the trial court denied Sarun’s motion, finding the class was
not ascertainable; common issues of fact did not predominate
because it would be necessary to determine whether thousands of
individual chargemaster rates were reasonable or unconscionable
to provide meaningful relief; and, for the same reason, a class
action was neither manageable nor a superior method for
resolving the litigation. The court’s order did not address Sarun’s

2
      Civil Code section 1611 provides, “When a contract does not
determine the amount of the consideration, nor the method by
which it is to be ascertained, or when it leaves the amount
thereof to the discretion of an interested party, the consideration
must be so much money as the object of the contract is reasonably
worth.”
3
      “‘Self-pay patient’ means a patient who does not have third-
party coverage from a health insurer, health care service plan,
Medicare, or Medicaid, and whose injury is not a compensable
injury for purposes of workers’ compensation, automobile
insurance, or other insurance . . . . Self-pay patients may include
charity care patients.” (Health & Saf. Code, § 127400, subd. (f).)

                                 3
alternate request for certification of an issue class, limited to the
question whether Dignity Health’s admissions contract included
an “open price” term.
       We exercise our inherent authority to modify the class
definition, combining elements of the definition in Sarun’s third
amended complaint and his motion for class certification and
limiting it to uninsured individuals who, during the relevant time
period, received emergency care at Northridge Hospital Medical
Center and who signed (personally or through an authorized
agent) the admissions contract and were thereafter directly billed
for that treatment at chargemaster rates or chargemaster rates
less the uninsured discount. As to that redefined class, we
reverse in part the trial court’s order denying class certification
and direct it to certify as a class issue whether Dignity Health’s
admissions contract contains an open price term, so that patients
within the class are obligated to pay no more than the reasonable
value of the services provided.
      FACTUAL AND PROCEDURAL BACKGROUND
      1. Sarun’s Emergency Room Treatment and the Admissions
         Contract
      According to the allegations of the third amended
complaint, Sarun was taken by ambulance to the emergency
room at Northridge Hospital Medical Center following a motor
vehicle accident. He was released three to four hours later after
being examined and receiving various diagnostic tests.
      While at the hospital Sarun signed a standard form
“Conditions of Admissions and Treatment,” which included terms
governing payment for services. Paragraph 8(b) of the
admissions contract stated, “Patients who do not have insurance
must pay us for the services at our full charges, unless other

                                  4
discounts apply. However, uninsured patients may be able to
qualify for government programs or financial assistance.
Financial assistance may include a discount from the Hospital’s
full charges, free care, interest free payment plans or other
assistance. Patients seeking government or financial assistance
must complete an application.” The term “full charges” was
defined at the beginning of the agreement as “the Hospital’s
published rates (called the chargemaster), prior to any discounts
or reductions.” Paragraph 9, “Financial Assistance,” explained
the hospital 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.
       Sometime following his treatment, Sarun received a
“Balance Due Notice,” reflecting total charges of $31,359, the
chargemaster rate; an uninsured discount of $7,871.10; and a
balance due of $23,487.90. The invoice stated, in addition to the
uninsured discount, “you may be eligible for other forms of
financial assistance such as government sponsored programs”
and provided a telephone number for further information. A
document included with the invoice described the financial
assistance options, provided an application and enumerated the
necessary documentation. (See Sarun v. Dignity Health (2014)
                             4
232 Cal.App.4th 1159, 1163.) Sarun did not seek any further
discount or apply for financial assistance. (Ibid.) However, a
second invoice was sent to Sarun, showing that a “prompt pay”

4
     In Sarun v. Dignity Health, supra, 232 Cal.App.4th 1159
we held Sarun had standing under the UCL to challenge Dignity
Health’s billing practices for uninsured emergency care patients.

                                 5
discount would reduce the balance due to $15,648.15 if he paid
                            5
the total within 30 days.
      2. The Chargemaster List of Billable Medical Goods and
         Services
       Northridge Hospital Medical Center, like hospitals across
the country, uses a charge description master or “chargemaster,”
which is a list of all the billable medical goods or services
provided by the hospital. (See Health & Saf. Code, § 1339.51,
subd. (b)(1) [“‘[c]harge description master’ means a uniform
schedule of charges represented by the hospital as its gross billed
charge for a given service or item, regardless of payer type”].) As
explained by Dignity Health, a chargemaster is a list, “generally
contained in a spreadsheet, of every single patient-billable item
or service available at a particular hospital. . . . The
Chargemaster identifies each of these items and contains charge
descriptions, billing codes, prices, and other information
necessary for patient care and billing.” Each of Dignity Health’s
hospitals had its own chargemaster; each hospital set its own
prices for items and services on its chargemaster list; and
“[p]rices and markups over ‘cost,’ vary widely not only by hospital
but also by item or service. . . . Prices for procedures will vary
with a number of factors, including staff resources, equipment
resources, costs incurred related to the procedure and time
elements.” Indeed, as the Supreme Court observed,
“Chargemaster prices for a given service can vary tremendously,

5
      Additional invoices sent to Sarun further reduced the
balance due to just over $4,000 based on Dignity Health’s patient
payment assistance policy and financial information Sarun
provided in his deposition testimony.

                                 6
sometimes by a factor of five or more, from hospital to hospital in
California.” (Howell v. Hamilton Meats & Provisions, Inc. (2011)
52 Cal.4th 541, 561 (Howell).)
       A hospital is not prohibited from using its chargemaster for
billing purposes (see Health & Saf. Code, § 127444) and is
authorized to negotiate and charge alternative rates (see Bus. &
Prof. Code, § 16770, subd. (f)). As Dignity Health acknowledges,
contracts between hospitals and commercial insurance companies
include a variety of negotiated price terms for different services
and supplies, including percentage discounts from chargemaster
rates, flat fees for certain services, per diem rates, “not to exceed”
pricing and special payment terms for specific services such as
trauma or burn care.
       A hospital’s chargemaster must be posted on its website or
made available at the hospital’s physical location (Health & Saf.
Code, § 1339.51, subd. (a)(1)) and must be filed with California’s
Office of Statewide Health Planning and Development (see
Health & Saf. Code, § 1339.55), which makes chargemasters
available to the public on its website.
      3. Sarun’s Third Amended Complaint
     Sarun’s third amended complaint alleges causes of action
under the UCL and the CLRA and for declaratory relief under
                                       6
Code of Civil Procedure section 1060. Addressing uninsured
emergency care patients at Dignity Health generally and the
32 acute-care hospitals it owned or operated throughout
California, not at just Northridge Hospital Medical Center, Sarun
alleged Dignity Health used the same adhesive admissions

6
      Statutory references are to this code unless otherwise
stated.

                                  7
contract at all its hospitals and required all emergency care
patients or their agents to sign it. Sarun further alleged the
admissions contract contains “no fixed or definite pricing terms”
because the phrase “full charges, unless other discounts apply” is
inadequately explained and cannot be made certain. Accordingly,
the admissions contract has an open price term, obligating
patients to pay only the reasonable value of the care received.
Alternatively, Sarun alleges Dignity Health’s chargemaster
prices are several times greater than the reasonable value of the
services provided, as well as the reimbursement amounts
received from other categories of patients, and bear no relation to
the hospital’s actual costs for providing treatment or services. As
a result, the chargemaster prices, if billed to an uninsured
emergency care patient, are unconscionable.
      Sarun alleged he was bringing his action pursuant to Code
of Civil Procedure section 382 and Civil Code section 1781 on
behalf of himself and a class of all other persons similarly
situated, defined as, “All individuals (or their guardians or
representatives) who, on or after May 3, 2008, (a) received
emergency care medical treatment at a Dignity hospital in
California; (b) were not covered by commercial insurance or
governmental healthcare programs at the time of treatment; and
(c) were not given a payment assistance discount under Dignity's
                             7
Payment Assistance Po1icy.” He further alleged Dignity Health
had acted or refused to act on grounds generally applicable to all

7
      Sarun excluded from the class definition “Defendant and
Defendant’s hospitals, any officers or directors thereof, together
with the legal representatives, heirs, successors, or assigns of any
of Defendant’s hospitals, and any judicial officer assigned to this
matter and his or her immediate family.”

                                 8
members of the class, making final injunctive or declaratory
relief appropriate for the class as a whole.
       For his UCL cause of action, Sarun alleged Dignity
Health’s conduct was both unfair and deceptive because the
prices charged “were unduly excessive, were not disclosed or
readily available to Dignity’s patients, and the parties had
unequal bargaining powers that led Sarun and the Class
members to enter into their Contracts without knowledge of their
terms.” Sarun also alleged Dignity Health’s practices toward its
uninsured emergency care patients were deceptive because it
failed to disclose that those patients would be required to pay
approximately three times more than other patients signing the
same admissions contract and receiving the same treatment and
services.
       For his CLRA cause of action, Sarun alleged Dignity Health
misrepresented the characteristics, uses and benefits of the
services it provided (including by representing it provides
“affordable” care at the “lowest possible cost”) and advertised its
services with an intent not to sell them as advertised.
       Sarun’s third cause of action for declaratory relief sought a
declaration that Dignity Health’s billing practices as they relate
to class members are “unfair, unconscionable, and/or
unreasonable.” He also sought a declaration that Dignity
Health’s admissions contract “contains an ‘open price’ term with
respect to self-pay emergency care patients and thus [they] are
liable to [Dignity Health] for no more than the reasonable value
of the treatment/services provided.”

                                 9
      4. Sarun’s Motion for Class Certification; Dignity Health’s
         Opposition
       On June 26, 2017 Sarun moved for certification of a class
for purposes of his cause of action for declaratory relief,
redefining the proposed class as “all individuals who, from
March 1, 2011 to the date of class certification, received
treatment at Northridge Hospital Medical Center and who were
directly billed for such treatment at Chargemaster rates or
Chargemaster rates less an ‘uninsured discount,’ on one or more
occasions. (For purposes of this action, patients who were
‘directly billed’ means the patient or, where applicable, the
                          8
patient’s legal guardian.)” As in his third amended complaint,
Sarun described two primary theories of liability on behalf of his
putative class. First, the admissions contract contains an open
price term: It does not adequately incorporate the chargemaster
and its rates; and, even if it did, the price for services is not
readily ascertainable because the various potential discounts that
may be applied to reduce the actual bill received by patients are
not reflected on the face of the chargemaster or otherwise
disclosed in the admissions contract. Second, the chargemaster
rates, even after the uninsured discount, are unconscionable.
Under either theory, Sarun contended, class members are liable
only for the reasonable value of the services they received. In the
alternative, pursuant to California Rules of Court, rule 3.765(b)
               9
(rule 3.765(b)), Sarun requested certification of the class limited
to the issue whether the admissions contract contains an open
price term.

8
      The proposed class definition again excluded “any officers
or directors of Defendant, together with the legal representatives,

                                 10
      In his motion Sarun argued the class was numerous, citing
evidence that, between April 1, 2011 and March 31, 2017, there
were more than 38,000 emergency room visits at Northridge
Hospital Medical Center by self-pay patients, although Sarun
acknowledged that not all those patients were necessarily
directly billed at chargemaster rates or chargemaster rates less
the uninsured discount. Sarun next contended the element of
commonality was satisfied since all class members were subject
to the same language in their admissions contract. He then
presented evidence that his claims were typical of the claims of
the class and that he and his counsel would adequately protect
the class.
      Relying on standards applied by federal courts when
evaluating proposed class actions under rule 23(b)(1) and (b)(2) of
the Federal Rules of Civil Procedure (28 U.S.C.), Sarun argued
ascertainability of the proposed class, the predominance of
common questions of fact or law and the superiority of the class
action device, all generally required for certification of a class
action under state law, were not necessary for the type of class-
wide declaratory relief he was seeking. Nonetheless, while
maintaining it was not required, Sarun asserted the proposed
class was ascertainable because it described a set of common
characteristics that were sufficient to allow a member of the class
to identify himself or herself as having a right to recover based on

heirs, successors, or assigns of Defendant, and any judicial officer
assigned to this matter and his or her immediate family.”
9
      Rule 3.765(b) provides, “When appropriate, an action may
be maintained as a class action limited to particular issues. A
class may be divided into subclasses.”

                                 11
the class definition; he specifically argued the administrative
feasibility of individually identifying class members should not be
part of the ascertainability determination. Similarly, although
not required, Sarun contended common issues predominated over
individual issues because Dignity Health used a standard form,
adhesive contract, and “only a contract interpretation by the
Court is sought herein.” And, while insisting he did not need to
demonstrate a class action was the superior means to pursue this
litigation, Sarun argued a class action was needed for a fair and
efficient adjudication of the issues presented.
       In its opposition Dignity Health argued, except for
numerosity, Sarun’s putative class failed to meet any of the
requirements for a California class action. In particular, Dignity
Health emphasized the ascertainability element of the class
certification analysis, submitting evidence concerning its records
systems and billing practices to support its argument that a
manual review of each individual patient account would be
necessary to determine who was included within the proposed
class. Dignity Health also submitted an expert declaration
explaining that no uniform determinations could be made
regarding the reasonableness (or unconscionability) of
chargemaster rates; any such analysis would be intensely fact-
specific and not amenable to common proof. Thus, Dignity
Health insisted, individual issues overwhelmed the few common
issues identified by Sarun. The opposition papers did not address
Sarun’s alternate request for a limited issue class.
       5. The Trial Court’s Order Denying Class Certification
       Following a hearing on December 7, 2017 the trial court
entered its order denying class certification. The court rejected
Sarun’s argument the certification issue should be evaluated

                                12
under standards governing federal class actions and ruled,
although the requirement of numerosity had been met, the
proposed class was not ascertainable, individual issues
predominated over common issues and a class action was neither
manageable nor the superior method for litigating the dispute.
       Focusing initially on the question of ascertainability, the
court summarized at length information provided by Dignity
Health’s director of revenue cycle management concerning
collection and maintenance of patient information. The court
found ascertainment of members of the class as defined would
require manual review of data, which “would be extremely
expensive and time consuming.” Accordingly, the court concluded
the proposed class definition “‘runs afoul of the requirement that
class members be “readily identified without unreasonable
expense or time by reference to official records,’” citing Thompson
v. Automobile Club of Southern California (2013) 217 Cal.App.4th
719, 728, a case that has subsequently been disapproved in part
in Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 955, 986, fn. 15
(Noel) [disapproving the standard quoted by the superior court
from Thompson “insofar as it could be perceived as exclusive”;
“this is one way but not the only way to show an ascertainable
class”].)
       With respect to predominance of common or separate
issues, the court rejected Sarun’s disclaimer of any need to
determine the reasonable value of the various services and
procedures on the chargemaster in connection with the request
                          10
for declaratory relief.        To declare Dignity Health could not

10
      Sarun insisted his request for declaratory relief only
required a determination that the admissions contract contained
an open price term and that, as a result, Dignity Health could

                                      13
utilize the chargemaster rates, the court reasoned, would
necessarily require it to determine whether those rates
represented the reasonable value of the services at issue: “As
such, the reasonableness of thousands of chargemaster rates
must be considered at trial.” Moreover, the court observed that
without a determination of what reasonable value is and whether
chargemaster rates less the uninsured discount exceeded that
reasonable value, “this case would have only limited utility as
future litigation as to the amount owed would still be necessary,
in contravention of one of the fundamental purposes of
declaratory relief.” Sarun’s alternate theory, that the
chargemaster rates or chargemaster rates less uninsured
discount are unconscionable, the court continued, has the same
problem of individual issues overwhelming any common
questions presented.
       The need to decide whether individual items on the
chargemaster were appropriately priced and whether the charges
for particular patients were unconscionable in order to resolve
the ultimate issue of Dignity Health’s liability, the court further
found, demonstrated that a class action was neither manageable
nor the superior method for handling the litigation.
       In a final section of its order, the trial court observed that
Sarun’s claims may be not be typical of the class and he may not

only recover the reasonable value of the services and treatment
provided. According to Sarun, Dignity Health would have to
establish the reasonable value of particular services and
treatments, not in this lawsuit, but in separate litigation against
each class member for whom it sought to collect unpaid invoices.

                                 14
                                      11
be an adequate class representative. However, the court
declined to deny class certification on that basis: “Having
already determined that ascertainability, commonality, and
manageability/superiority have not been shown, there is no need
                                                   12
to decide adequacy or typicality at this junction.”
       Sarun filed a timely notice of appeal. (See In re Baycol
Cases I & II (2011) 51 Cal.4th 751, 762 [“an order that denies
class certification or otherwise extinguishes class claims in their
entirety is appealable, but only in cases in which individual
claims survived”]; Cortez v. Doty Bros. Equipment Co. (2017)
15 Cal.App.5th 1, 8.)

11
      Dignity Health argued in its opposition papers, because
Sarun had refused to communicate with it regarding his bill and
actively avoided seeking financial assistance, his claims were not
typical (if, indeed, there were any “typical” claims within the
proposed class). It also asserted, because Sarun had received
substantial discounts and financial assistance from Dignity
Health, he was not even a member of the class and not an
adequate representative for it.
12
       In its tentative ruling, which is substantially similar to its
final order denying class certification, the court had stated, “For
all the reasons already articulated, Sarun’s request for
certification in the alternative pursuant to Cal. Rule of Court,
Rule 3.765(b) is denied.” The final order, however, contains no
reference to Sarun’s request for a rule 3.765(b) limited issue
class. (Cf. Silverado Modjeska Recreation & Park Dist. v. County
of Orange (2011) 197 Cal.App.4th 282, 300 [“the court’s final
order supersedes the tentative ruling”].)

                                 15
                          DISCUSSION
       1. Governing Law and Standard of Review
       Class actions are statutorily authorized “when the question
is one of a common or general interest, of many persons, or when
the parties are numerous, and it is impracticable to bring them
all before the court . . . .” (§ 382.) The party seeking class
certification must establish (1) “the existence of an ascertainable
and sufficiently numerous class”; (2) “a well-defined community
of interest”; and (3) “substantial benefits from certification that
render proceeding as a class superior to the alternatives.”
(Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th
1004, 1021 (Brinker); accord, Noel, supra, 7 Cal.5th at p. 968.)
“The community of interest requirement involves three factors:
‘(1) predominant common questions of law or fact; (2) class
representatives with claims or defenses typical of the class; and
(3) class representatives who can adequately represent the
class.’” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435;
                                            13
accord, Noel, at p. 968; Brinker, at p. 1021.)
      “The certification question is ‘essentially a procedural one’”
(Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th
319, 326 (Sav-On)) that examines “whether the theory of recovery
advanced by the proponents of certification is, as an analytical
matter, likely to prove amenable to class treatment” (id. at

13
       The CLRA includes its own set of requirements for class
certification under Civil Code section 1781. (See Noel, supra,
7 Cal.5th at p. 969.) Because Sarun sought class certification
only for his declaratory relief cause of action, any differences
between the requirements for class certification under Code of
Civil Procedure section 382 and Civil Code section 1781 are not
pertinent to this appeal.

                                 16
p. 327). A certification motion “‘does not ask whether an action is
legally or factually meritorious’ [citation],” but rather whether
the common issues it presents “‘are so numerous or substantial
that the maintenance of a class action would be advantageous to
the judicial process and to the litigants.’” (Id. at p. 326.) The
court must assume the class claims have merit and resolve
disputes regarding the claims’ merits only when necessary to
determine whether an element for class certification is satisfied.
(Brinker, supra, 53 Cal.4th at pp. 1023-1025.) “‘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.’” (Id. at
pp. 1021-1022; see Sav-On, at p. 334 [“‘the necessity for class
members to individually establish eligibility and damages does
not mean individual fact questions predominate’”].)
       A trial court is generally afforded great latitude in granting
or denying class certification, and we normally review a ruling on
certification for an abuse of discretion. (Sav-On, supra,
34 Cal.4th at pp. 326-327; see Brinker, supra, 53 Cal.4th at
p. 1022 [“‘[b]ecause 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’”].) This deferential standard of review, however, is
inapplicable if the trial court has evaluated class certification
using improper criteria or an incorrect legal analysis: “[A] trial
court ruling supported by substantial evidence generally will not
be disturbed ‘unless (1) improper criteria were used [citation]; or
(2) erroneous legal assumptions were made.’” (Sav-On, at
pp. 326-327; accord, Noel, supra, 7 Cal.5th at p. 968; Fireside
Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.) In

                                 17
conducting our review, we consider only the grounds articulated
by the trial court for its certification decision: “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;
accord, Franchise Tax Bd. Limited Liability Corp. Tax Refund
Cases (2018) 25 Cal.App.5th 369, 388; Alberts v. Aurora
Behavioral Health Care (2015) 241 Cal.App.4th 388, 399.)
      2. The Trial Court Used an Unduly Restrictive Standard
         To Evaluate the Proposed Class’s Ascertainability
       As discussed, after summarizing portions of the declaration
submitted by Dignity Health’s director of revenue cycle
management concerning the manner in which a patient’s billing
and insurance information may change over time, the trial court
observed, “While the class definition appears straightforward on
its face (either a person received treatment at Northridge
Hospital and was billed at chargemaster rates, or chargemaster
rates with uninsured discounts, or not), the actual determination
of persons who were billed at such rates is not clearly or easily
determined.” To the contrary, the court determined, “[t]here does
not appear to be any way to ascertain who is actually in the class
without manual review of [the] data.” Because class members
could not be “‘readily identified without unreasonable expense or
time by reference to official records,’” the court concluded, Sarun
had failed to establish the class can be ascertained, obligating the
court to deny class certification. The trial court justified its use of
this restrictive ascertainability standard by explaining, “The
primary purpose of the ascertainability requirement is to provide

                                  18
notice to all potential class members as to whom the judgment in
the action will be res judicata.”
       Shortly after the trial court’s decision denying class
certification, the Supreme Court in Noel, supra, 7 Cal.5th 955
disapproved the stringent approach to ascertainability utilized by
the trial court here and articulated in numerous court of appeal
decisions “insofar as it could be perceived as exclusive.” (Id. at
              14
p. 986, fn. 15.) Instead, the Court held the threshold
requirement of ascertainability for class certification is satisfied
when the class “is defined ‘in terms of objective characteristics
and common transactional facts’ that make ‘the ultimate
identification of class members possible when that identification
becomes necessary.’ [Citation.] We regard this standard as
including class definitions that are ‘sufficient to allow a member
of [the class] to identify himself or herself as having a right to
recover based on the [class] description.’” (Id. at p. 980.)
       With respect to the concerns for the feasibility of personal
notice underlying use of a more restrictive standard, the Noel
Court held, “[D]ue process does not invariably require that
personal notice be directed to all members of a class for a class
action to proceed, or for that matter that an individual member of
a certified class must receive notice to be bound by a judgment.
[Citations.] It follows that a construction of the ascertainability
requirement that presumes such notice is necessary to satisfy due

14
      The Court noted a number of court of appeal decisions
applying this standard, including several from this division, had
determined the identity of the class was ascertainable, “a
conclusion that did not necessarily rule out other avenues for
showing an ascertainable class.” (Noel, supra, 7 Cal.5th at
p. 974, fn. 8.)

                                19
process, and demands that the plaintiff show how it can be
accomplished, threatens to demand too much, too soon. It is
likewise mistaken to take a categorical view that the relevant
due process interests can be satisfied only when ‘official records’
[citation] supply the means of identifying class members, and for
a similar reason: due process is not that inflexible.” (Noel, supra,
7 Cal.5th at p. 984.) The Court further explained, “Our
jurisprudence addressing class certification has stressed the
importance of a careful weighing of both the benefits and the
burdens that may be associated with a proposed class action.
[Citation.] A conception of ascertainability as concerned with
whether class members can be identified without an
unreasonable commitment of expense or time is at cross purposes
with this direction.” (Id. at p. 985.)
       It follows from the Supreme Court’s holding and analysis in
Noel that the trial court erred when it found no ascertainable
             15
class existed. As the trial court observed, the class definition is
straightforward on its face: It is defined in objective terms—
patients who received treatment at Northridge Hospital Medical
Center and were billed for such treatment at chargemaster rates

15
      We reject any suggestion the ascertainability requirement,
as most recently articulated in Noel, supra, 7 Cal.5th 955, does
not apply to California class actions that are the equivalent of a
class action under rule 23(b)(1) or (b)(2) of the Federal Rules of
Civil Procedure (28 U.S.C.). (See Hefczyc v. Rady Children’s
Hospital-San Diego (2017) 17 Cal.App.5th 518, 535 [“there is no
gap in California precedent to be filled by reference to Federal
Rules of Civil Procedure, rule 23(b)(1)(A) or (2) (28 U.S.C.) on the
issue of what class certification standards must be met when a
plaintiff seeks only declaratory or injunctive relief on behalf of a
class”], disapproved on other grounds in Noel, at p. 986, fn. 15.)

                                 20
or chargemaster rates less an uninsured discount—that are, in
the language of Noel, “‘“sufficient to allow a member of [the class]
to identify himself [or herself] as having a right to recover based
                                                                16
on the [class] description.”’” (Noel, supra, 7 Cal.5th at p. 980.)
“To the extent that the trial court had concerns regarding the
state of the record as it pertained to matters such as the
provision of notice to class members or how burdensome it would
be to identify class members, those issues should not have been
resolved in the context of ascertainability.” (Id. at p. 987;
cf. Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th
908, 915.)
       3. The Trial Court Misperceived Sarun’s Primary Theory of
          Liability in Evaluating Whether Common Issues of Law
          or Fact Predominate
      Although the trial court acknowledged its responsibility to
assess whether common issues predominate by considering the
method by which the putative class representative seeks to
impose liability, it incorrectly defined Sarun’s principal claim for
declaratory relief and thereby erred in its analysis of the common

16
      In articulating the correct standard for determining
ascertainability, the Supreme Court disapproved of the analysis
in Hefczyc v. Rady Children’s Hospital–San Diego, supra,
17 Cal.App.5th 518, Kendall v. Scripps Health (2017)
16 Cal.App.5th 553 and Hale v. Sharp Healthcare (2014)
232 Cal.App.4th 50, cases relied upon by the trial court and by
Dignity Health on appeal that denied class certification in
lawsuits challenging the use of chargemaster rates for uninsured
patients. (Noel, supra, 7 Cal.5th at p. 986, fn. 15.) In each of
those cases the lack-of-ascertainability finding was a significant
factor in the court’s related findings that individual issues
predominated.

                                 21
issue question. According to the trial court, Sarun was seeking a
declaration (1) that Dignity Health’s standard form admissions
contract contained an open price term, permitting it to directly
bill patients only for the reasonable value of the treatment or
services provided; and (2) that the chargemaster rates actually
used at Northridge Hospital Medical Center (or the chargemaster
rates less an uninsured discount) are unreasonable. Because
trying that issue would require consideration of the
reasonableness of thousands of individual chargemaster rates,
the court reasoned, those individual issues overwhelmed the
common contract interpretation issue presented.
       As Sarun repeatedly emphasized, however, as to this
theory of liability, which also is the basis for his alternate request
for certification of a limited issue class under rule 3.765(b), he
seeks only a declaration that Dignity Health’s admissions
contract included an open price term and that Northridge
Hospital Medical Center may only directly bill patients the
reasonable value of the treatment received or services provided.
If Sarun’s contract interpretation theory is correct, whether a
particular chargemaster rate, or chargemaster rate less
uninsured discount, in fact, represents the reasonable value of
the treatment or service provided would be determined, if at all,
in separate litigation between Dignity Health and directly billed
patients from whom it seeks to collect unpaid invoices. Since it
appears to be undisputed on this record that patients are all
required to sign an identical form admissions contract at
Northridge Hospital Medical Center, Sarun’s theory of liability
included no individual issues.
       In contrast, the second prong of Sarun’s request for
declaratory relief—a declaration the chargemaster rates or

                                  22
chargemaster rates less the uninsured discount are
unconscionable—would, as the trial court found, necessarily
require a determination whether those rates represent the
reasonable value of the hospital’s services. (See Hefczyc v. Rady
Children’s Hospital–San Diego (2017) 17 Cal.App.5th 518, 544
[“[t]o issue a declaration that Rady is not permitted to bill based
on its Chargemaster rates and that its billing practices are
unconscionable, the trial court would be required to decide
whether each and every item on Rady’s Chargemaster represents
the reasonable value of Rady’s services provided to individual
patients in any given year. That determination does not present
a common issue amenable to a simple class-wide declaration”],
disapproved on another ground in Noel, supra, 7 Cal.5th at
p. 986, fn. 15.)
        Sarun disputes this reasoning, insisting he intends to prove
any use of chargemaster rates by Dignity Health is
unconscionable based on statistical evidence that will involve an
overall comparison of chargemaster rates to the aggregate cost to
Dignity Health of providing treatment and services and the
average reimbursements received by Dignity Health from all
types of payors. Sarun’s argument fundamentally
misapprehends the nature of an unconscionability finding. As
the Supreme Court has explained, when a price term is alleged to
be substantively unconscionable, “it is not sufficient for a court to
consider only whether ‘the price exceeds cost or fair value.’”
(De La Torre v. CashCall, Inc. (2018) 5 Cal.5th 966, 983.) Rather,
the evaluation of substantive unconscionability “is highly
dependent on context. [Citation.] The doctrine often requires
inquiry into the ‘commercial setting, purpose, and effect’ of the
contract or contract provision.” (Sanchez v. Valencia Holding Co.,

                                 23
LLC (2015) 61 Cal.4th 899, 911.) “‘[A] contract can provide a
“margin of safety” that provides a party with superior bargaining
strength a type of extra protection for which it has a legitimate
commercial need without being unconscionable.’” (Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83,
117.)
       In addition, “unconscionability requires oppression or
surprise—that is, procedural unconscionability—along with the
overly harsh or one-sided results that epitomize substantive
unconscionability. . . . Even where a party complains of a single
contract clause, the court usually must still examine the
bargaining process for any procedural unfairness.” (De La Torre
v. CashCall, Inc., supra, 5 Cal.5th at p. 982.) Accordingly,
determining whether billing with chargemaster rates is
unconscionable will require not only an evaluation of specific
charges within the overall context of Dignity Health’s economic
and commercial situation but also an analysis of individual
factors relating to a particular patient—for example, was he or
she conscious or unconscious upon arrival at the hospital; was he
or she a returning patient who was familiar with Dignity
Health’s billing process; was he or she indigent or insured but
subject to policy exclusion? As to all of these questions,
individual issues necessarily predominate.
       In sum, the trial court’s decision that common issues do not
predominate with respect to Sarun’s request for certification of a
class to pursue his cause of action for declaratory relief in its
entirety is supported by substantial evidence. (Cf. Howell, supra,
52 Cal.4th at p. 561 [“[w]e do not suggest hospital bills [based on
chargemaster rates] always exceed the reasonable value of the
services provided”].) However, its implicit finding with respect to

                                24
the limited issue class that the common issue of contract
interpretation raised by Sarun is outweighed by individual
questions of fact is not. (See La Sala v. American Sav. & Loan
Assn. (1971) 5 Cal.3d 864, 877 [“[c]ontroversies involving widely
used contracts of adhesion present ideal cases for class
adjudication; the contracts are uniform; the same principles of
interpretation apply to each contract, and all members of the
class will share a common interest in the interpretation of an
agreement to which each is a party”].) As discussed, there are no
individual issues raised by this limited request for declaratory
relief.
      4. Substantial Evidence Supports the Trial Court’s Finding
         the Class Definition As Proposed in the Certification
         Motion May Not Be Manageable, but a More Limited
         Class Is Properly Certified
      The trial court predicated its finding that Sarun had not
demonstrated the manageability of the individual issues raised
by his proposed class action or that a class action was a superior
method for resolving the litigation on its misconception of Sarun’s
primary theory of liability. To determine whether the admissions
contract should be set aside, the court explained, it would be
required to determine not only whether it contains an open price
term but also, if it does, what the reasonable charges are for the
treatment received by each uninsured patient and, if it does not,
whether the chargemaster rates (or chargemaster rates less the
uninsured discount) as billed are unconscionable. As discussed,
however, certifying a rule 3.765(b) limited issue class creates
neither difficulty for the trial court.
      Moreover, although the trial court correctly observed that
answering the open-price-term question would not fully resolve
class members’ ultimate liability to Dignity Health, it erred in

                                25
suggesting there was no utility in deciding this threshold issue.
To the contrary, settling this issue could significantly expedite
final determination of any outstanding billing disputes. (See
Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 647 [“‘“[t]he
purpose of a declaratory judgment is to ‘serve some practical end
in quieting or stabilizing an uncertain or disputed jural
relation’”’”].) If Sarun’s interpretation of the admissions contract
is upheld, Dignity Health could not assert that uninsured
patients are contractually bound to pay chargemaster rates less
                                                                  17
discounts without regard to whether those rates are reasonable.
If it is rejected, as to all class members bound by the judgment
Dignity Health need only defend the rates charged against the
claim they are unconscionable, a quite different issue with a
different party bearing the burden of proof. (Cf. Sanchez v.
Valencia Holding Co., LLC, supra, 61 Cal.4th at p. 911
[“[b]ecause unconscionability is a contract defense, the party
asserting the defense bears the burden of proof”].) In addition,
requiring class members to individually pursue the contract
interpretation question, aside from its potential economic
infeasibility, would create an unacceptable risk of inconsistent
outcomes.
        Nonetheless, based on the evidence presented by Dignity
Health’s director of revenue cycle management, the trial court, in

17
       We need not decide whether an open-price-term finding
would shift to Dignity Health the burden of proving
reasonableness in a contested collection action, as Sarun argues,
or if the burden would remain with the patient to prove the
charged amounts were unreasonable, as Dignity Health contends.
In either case, resolving the open-price-term question will, as a
practical matter, significantly advance any such litigation.

                                 26
evaluating the manageability of the proposed class proceeding,
appropriately considered the difficulty and expense of identifying
absent class members and providing them with notice at an
appropriate time, if required. (See Noel, supra, 7 Cal.5th at
p. 986.) This manageability problem, the trial court indicated,
was exacerbated by a change in the proposed class definition
from that set forth in the third amended complaint: While the
motion sought to certify a class limited to patients at Northridge
Hospital Medical Center, rather than at any of Dignity Health’s
facilities in California, Sarun no longer restricted his proposed
class to uninsured emergency care patients, instead seeking to
include all patients who received any treatment or services at
Northridge Hospital Medical Center and were billed directly at
chargemaster rates or chargemaster rates less an uninsured
discount. The modified definition thus included not only
uninsured emergency care patients but also those who utilized
elective services and those treated as outpatients.
       As we explained in Hicks v. Kaufman & Broad Home Corp.,
supra, 89 Cal.App.4th at page 916, courts are not limited to the
class definition proposed in the certification motion. If necessary
to preserve the case as a class action, a court may redefine the
class to reduce or eliminate an ascertainability or manageability
           18
problem.        Here, restricting the class to uninsured emergency

18
       Although Hicks was addressing the court’s authority to
redefine a class because of issues relating to ascertainability, the
same reasoning applies to manageability concerns created by a
potentially overbroad class definition. (Cf. Noel, supra, 7 Cal.5th
at p. 986 [court must give due consideration to how
manageability concerns may be resolved before determining that

                                    27
care patients at Northridge Hospital Medical Center, that is, to
the category of patients identified in Sarun’s operative pleading
and at the single facility addressed in the certification motion,
will greatly ease any manageability concerns with the
rule 3.765(b) limited issue class that should be certified in this
case.
                           DISPOSITION
       The order denying class certification is reversed, and the
cause remanded with directions to certify a modified issue class
as described in this opinion. Sarun is to recover his costs on
appeal.

                                      PERLUSS, P. J.

      We concur:

            SEGAL, J.

            FEUER, J.

practical difficulties in providing notice to absent class members
weigh against class certification].)

                                 28