Filed 11/19/14; pub. order 12/5/14 (see end of opn.)




                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                DIVISION ONE

                                         STATE OF CALIFORNIA



DAGMAR HALE,                                            D064023

         Plaintiff and Appellant,

         v.                                             (Super. Ct. No. 37-2007-00060598-
                                                        CU-BT-CTL)
SHARP HEALTHCARE et al.,

         Defendants and Respondents.


         APPEAL from an order of the Superior Court of San Diego County, Joel M.

Pressman, Judge. Affirmed.


         Law Offices of Barry L. Kramer and Barry L. Kramer; Strange & Carpenter,

Brian R. Strange and Gretchen Carpenter for Plaintiff and Appellant.

         Higgs, Fletcher & Mack, John Morris and Alexis S. Gutierrez for Defendants and

Respondents.
                                     INTRODUCTION

       This is Dagmar Hale's second appeal in a class action against Sharp Healthcare and

Sharp Grossmont Hospital (together Sharp) contending Sharp unfairly charged her and

other uninsured patients more for emergency services than the fees it accepted from

patients covered by private insurance or governmental plans. In the first appeal, we

partially reversed a judgment of dismissal following a demurrer. The trial court thereafter

certified the class. After engaging in discovery, Sharp moved to decertify the class arguing

a class action is inappropriate based on lack of ascertainability and lack of predominantly

common issues. The trial court considered the evidence presented and found there is no

reasonable means to ascertain the members of class without individual inquiries of more

than 120,000 patient records and continued class treatment is not appropriate because

individualized issues, rather than common issues, predominate, particularly with respect to

whether or not class members are entitled to recover damages. Finding no abuse of

discretion, we affirm the order decertifying the class.

                    FACTUAL AND PROCEDURAL BACKGROUND

                                              A

       Hale was admitted to Sharp Grossmont Hospital in January 2007 and received

"medical treatment, central services, lab work, medication, emergency hospital care and

[CT] scans." She was uninsured at the time and signed an admission agreement, which

stated, "you hereby individually obligate yourself to pay the account of the hospital in

accordance with the regular rates and terms of the hospital." Sharp billed Hale $14,447.65



                                              2
for the services provided. Sharp offered Hale financial assistance for her emergency room

visit and substantially discounted her bill.

                                                B

         Hale filed this action challenging "the unreasonable, unconscionable and unlawful

charges billed to uninsured persons for medical treatment at Sharp hospitals and healthcare

facilities." She alleges Sharp does not charge uninsured patients "regular rates" but charges

"uninsured patient's significantly more for the same services than they charge other (e.g.,

insured or Medicare-covered) patients." She alleges Sharp engages "in a pattern and

practice of charging unfair, unreasonable and inflated prices for medical care to their

uninsured patients, charging them exponentially more than other patients for the very same

treatment."

         In Hale's first appeal, we reversed in part a judgment of dismissal because we

concluded Hale sufficiently stated causes of action under the unfair competition law (UCL)

(Bus. & Prof. Code, § 17200 et seq.) and the Consumers Legal Remedies Act (CLRA)

(Civ. Code, § 1750 et seq.). (Hale v Sharp Healthcare (2010) 183 Cal.App.4th 1373,

1377.)

                                                C

         After remand, the trial court granted Hale's motion for class certification and

certified the class with the following definition: "All individuals who from August 11,

2003 to [December 16, 2011] (a) received emergent-care medical treatment at a Sharp

Hospital and signed the defendant Sharp Healthcare standard form Admission Agreement;

and (b) were not covered by insurance or government healthcare programs at the time of

                                                3
treatment (the 'Class') . . . ." The court stated, "[t]he case presents a single common issue

that predominates over any single issue, i.e., whether defendant Sharp Healthcare

represented to its uninsured patients in its standard form Admission Agreement that it

would provide services at defendant Sharp Healthcare 'regular rates', but failed to do so."

       Sharp developed a protocol to search its electronic records and identified over

120,000 potential class members who may have had unfunded emergency department visits

between August 1, 2003 and December 16, 2011. However, Sharp advised the court it

could not conclusively determine whether a potential uninsured emergency department

patient signed an Admission Agreement without reviewing individual records and the

potential class members included patients who had all or part of their expenses paid by a

third party.

       The court ordered notice be disseminated to potential class members by individual

mailings and publication. A third party mailed individual notices to potential class

members in May 2012 and provided publication notice.

                                              D

       Sharp filed a motion to decertify the class in March 2013, based in part on evidence

obtained from putative class members in discovery. Sharp argued the class is not

ascertainable because Sharp does not keep records in such a way to reasonably and readily

identify those included in the class definition without individualized inquiries. Sharp also

argued the class action device is not a superior method to litigate this matter because there




                                               4
is no manageable way to prove entitlement to damages on a classwide basis without

individual inquiries.1

       Sharp presented evidence all emergency room patients, whether insured, uninsured

or covered by governmental healthcare benefits, are billed at rates listed on a publicly

available "charge description master" commonly referred to as a "Chargemaster." It also

explained, due to state law prohibiting discussion of financial issues until a patient is

stabilized, many times a determination of whether a patient is insured or not does not occur

until after a patient is admitted and receives treatment. Additionally, although a patient

may be listed as "self-pay" or "uninsured" when they present to the emergency department,

the billing department is trained to work with patients to help them determine if coverage

might be available through private insurance, government programs or other financial

assistance programs. Patients commonly do not believe they are eligible for government

benefits and indicate "self-pay" on the intake forms, but later qualify for and receive such

benefits.

       Sharp does not regularly update the initial revenue code in its electronic records to

correct payer status so patients who ultimately receive benefits may still be listed as "self-

pay." To determine what a patient paid or to determine if a patient qualified for some form

of coverage or assistance, Sharp argued it would be required to conduct individual reviews

of each of the more than 120,000 patient records initially identified during the class period.




1      Although Sharp raised other issues in its motion to decertify the class, we limit our
discussion to those issues articulated by the trial court in its decertification order.
                                               5
       Sharp presented evidence self-pay patients on average pay Sharp less than other

payors. Sharp cited 2009 statistics indicating uninsured patients on average paid 4 percent

of the Chargemaster rates whereas Medicaid paid 13 percent, Medicare paid 16 percent and

private insurance companies paid 56 percent of the Chargemaster rates. Some uninsured

patients pay nothing for their visits.

       Sharp also presented evidence from a sample of 10 absent class members. Two paid

nothing in connection with multiple emergency room visits. Two had their bills paid or

reimbursed by third parties. The other absent class members paid less than the full

Chargemaster rate for services after obtaining negotiated discounted rates from Sharp

ranging from an average of 20 to 90 percent.

       Hale opposed the motion arguing the fact all patients are charged the same

Chargemaster rates is irrelevant because the issue of differing payment obligations is a

matter for the trier of fact as is "the interpretation of Sharp's 'regular rates' or 'reasonable

rates'." She argued Sharp's policies "show that there are several different methods of fixing

Sharp's 'regular rates' or 'reasonable rates' on a class-wide basis." Hale produced a chart

from Sharp outlining self-pay price quotes and discount options, including a charity care

adjustment and tiered discounting based on the amount of the bill. She also submitted an

excerpt of a policy regarding financial assistance for uninsured or low income patients.

Hale argued she would attempt to establish a "reasonable value" for services on a class-

wide basis using an expert to testify to an across-the-board reduction of the charged fees,

such as 140 percent of Medicare, which is sometimes used by Sharp.



                                                 6
       Hale also argued the class definition is not overbroad and the class is ascertainable

and manageable. Hale conceded "there are undoubtedly some potential class members

who were sent notice but who turn out to have suffered no harm or damages (i.e., patients

who received fully charity care discounts, whose bills were covered by government or

nongovernmental third party payers, who paid little or nothing to the hospital and whose

bills have been written-off as bad debt with no adverse consequences)," but argued "this

does not present any problem, since those potential class members will not be subject to

refunds or injunctive relief."

       In reply, Sharp contended the class is not ascertainable or manageable without a

case-by-case analysis. Sharp also disputed Hale's proposal to establish liability by setting

an across-the-board "reasonable" rate by reducing charged fees by a set percentage, such as

to 140 percent of Medicare. Sharp presented evidence Hale did not accurately represent

the policies she relied upon and rates of 140 percent of Medicare would not necessarily be

reasonable for emergency department patients without insurance even though some

government-mandated financial assistance policies and prescheduled and prepaid

procedures are set at such a rate.

       After a hearing, the trial court granted the motion to decertify the class. The court

determined (1) the class is not reasonably ascertainable and (2) there is not a well-defined

community of interest in the questions of law and fact involving the affected parties. As to

lack of predominance, the court identified a significant problem in determining the right to

recover damages on a class-wide basis. The court also noted Hale herself obtained a

discount on her bill, which not only illustrated why individual inquiries are necessary but

                                              7
also raised concerns about whether her claim is typical. The court observed, "Perhaps her

claim is typical, which underscores the points raised above with ascertainability of a class

in the first instance."

                                                E

       Hale applied ex parte for an order allowing her to move to amend the class

definition before her time to appeal the decertification order expired. The court denied the

application finding no new facts or law were cited to reconsider the court's decertification

ruling. However, on the merits, the court found "the proposed class definition by plaintiff

does not cure the essential problems identified by the Court in ruling on the

decertification."

                                         DISCUSSION

                                                I

                     Standard of Review for Class Certification Decisions

       A party seeking class certification has the burden of establishing the prerequisites to

certification and " 'more than "a reasonable possibility" that class action treatment is

appropriate.' " (Miller v. Bank of America, N.A. (2013) 213 Cal.App.4th 1, 7.) " 'Because

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.' " (Sav-

on Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.)

       Even when a class is certified, the court has continuing power and discretion to

reexamine the propriety of class certification. (Cal. Rules of Court, rule 3.764(a)(3)-(4);

Weinstat v. Dentsply International, Inc. (2010) 180 Cal.App.4th 1213, 1226.) Should new

                                                8
facts be developed, "the trial court has the flexibility to . . . decertify the class altogether."

(Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1294,

fn. 5.)

          As a result, we will reverse a trial court certification ruling "only if a ' "manifest

abuse of discretion" ' is present. [Citation.] ' "A certification order generally will not be

disturbed unless (1) it is unsupported by substantial evidence, (2) it rests on improper

criteria, or (3) it rests on erroneous legal assumptions. [Citations.]" [Citations.]'

[Citation.] [¶] 'We must "[p]resum[e] in favor of the certification order . . . the existence of

every fact the trial court could reasonably deduce from the record . . . ." ' " (Thompson v.

Automobile Club of Southern California (2013) 217 Cal.App.4th 719, 725-726

(Thompson), quoting Brinker Restaurant Corp v. Superior Court (2012) 53 Cal.4th

1004, 1022.)

          "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 (Ayala).) However, "[a]ny valid, pertinent reason will be sufficient to uphold the

trial court's order." (Thompson, supra, 217 Cal.App.4th at p. 726.)

                                                  II

                                         Class Certification

          " 'The party advocating class treatment must demonstrate the existence of an

ascertainable and sufficiently numerous class, a well-defined community of interest, and

substantial benefits from certification that render proceeding as a class superior to the

                                                   9
alternatives. [Citations.] "In turn, the 'community of interest requirement embodies 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.' " ' " (Ayala, supra, 59 Cal.4th at pp. 529-530.)

       The court in this case decertified the class finding (1) the class itself is not

reasonably ascertainable without an individualized or file-by-file analysis and (2) there is

no well-defined community of interest because diverse individual issues predominate

regarding the entitlement to or the fact of damages. As we shall explain, we find no abuse

of discretion.

                                                A

                                    Lack of Ascertainability

       "Whether a class is ascertainable is determined by examining (1) the class

definition, (2) the size of the class, and (3) the means available for identifying class

members." (Reyes v. Board of Supervisors (1987) 196 Cal.App.3d 1263, 1271.) " ' " 'Class

members are "ascertainable" where they may be readily identified without unreasonable

expense or time by reference to official records.' " ' " (Thompson, supra, 217 Cal.App.4th

at p. 728.) "Class certification is properly denied for lack of ascertainability when the

proposed definition is overbroad and the plaintiff offers no means by which only those

class members who have claims can be identified from those who should not be included in

the class." (Miller v. Bank of America, N.A. (2013) 213 Cal.App.4th 1, 7.)




                                               10
       In this case, the court noted the class definition here—"those who received

'emergent-care' after August 11, 2003 and who 'were not covered by insurance or

government healthcare programs at the time of treatment' "—is clear enough on the

surface. "Either a party has insurance or does not." However, the court found the class

definition is not so clear when considering Sharp's evidence "that a determination of who is

uninsured does not necessarily occur until after the patient receives treatment and could in

fact change throughout treatment" and parties "often change their payer status during the

course of treatment." The court concluded the "class definition of 'uninsured at the time of

treatment' thus appears to be over-inclusive by including patients who may obtain

insurance at some point in time after they present but before they pay a bill. The definition

could be under-inclusive to the extent that it excludes patients who, for whatever reason,

lose insurance after they present as insured."

       Hale argues the court's ruling "makes no sense" because, according to Hale, the

"only relevant question is whether the patient has insurance at the time they present

themselves at Sharp's emergency room." (Emphasis in original.) She then contends

"whether Sharp's records at the time of admission are entirely accurate, or its determination

as to who is responsible and billed for services is made days or weeks after treatment is

rendered, makes no difference whatsoever" because "[t]he question is simply whether bills

are paid by Medicare, Medicaid, an insurer or solely by the patient."

       It is Hale's later formulation of the question that presents the problem. Hale's focus

on an oversimplified class definition fails to consider the second prong of ascertainability,

which requires class members to be readily identifiable without unreasonable time and

                                                 11
expense. The concern about the overbreadth of the class has to do not with patients who

later obtain insurance that is "not retroactive" as Hale argues, but with patients who are

later determined to qualify for coverage in some form for the emergency visit at issue. It is

the inability to reasonably discern those individuals from individuals who were actually

uninsured and then to identify any disparity in amounts paid that makes it unreasonable to

ascertain the defined class.

       Here, Sharp presented evidence showing there is no reasonable way for Sharp to

ascertain who has claims and who does not without an individualized analysis of each

patient's payment record. Sharp's director and vice president of patient financial services

declared Sharp often does not determine whether a patient is insured or not until after the

patient is admitted and receives treatment because state law prohibits discussion of

financial issues until a patient is stabilized, which may occur minutes or days after

admission. Sharp's billing department is trained to work with patients and many who

initially come into the emergency room representing themselves as "uninsured" later are

determined to be entitled to coverage through private insurance, government programs or

are otherwise eligible for financial assistance. "It is common for patients to think they are

not eligible for government health benefits at the time they present for treatment, and have

the in-take records indicate self-pay, only to later qualify for such a program and receive

benefits." Additionally, patients may qualify for partial or full charity financial assistance

based on the level of the patient's income.




                                              12
       However, Sharp does not regularly update its patient records to correct the initial

payer status code. As a result, a computer program searching for a "self-pay" code

necessarily includes patients who applied for and received benefits from another source,

resulting in an overbroad class. Sharp does not maintain patient information in a manner

that permits access to payment status on an aggregated basis. Instead, "Sharp would have

to conduct an individual inquiry into each of the 122,000+ [patient] records" to determine

what a patient paid for an encounter, if the patient qualified for government assistance, if

the patient was offered a charity discount and what payments were made, if any, Sharp

incurred considerable time and expense to write a program to attempt to initially identify

"unfunded" patients seen in Sharp emergency departments during the class period to give

notice to the defined class. However, the results were over inclusive and it would take

significant additional time and expense to make individual inquiries and construct a new

database of patient information based on the services rendered to the patients, discounts

offered and the status of collection efforts.2




2       The trial court did not consider the late-filed declaration of Hale's attorney Barry
Kramer. We similarly decline to consider the portions of Hale's reply brief based on this
declaration asserting her attorney was able to "filter" data provided by Sharp in an Excel
spreadsheet to eliminate non-class patients who made no payments and had no account
balances. Even if we were to consider the argument, it is not persuasive. The Excel
spreadsheet was created from individual inquiries of billing information from only a
sample of 900 patients out of more than 120,000 potential class members. Manipulation of
this spreadsheet does dispose of the need to conduct individual reviews of the billing data
for the remaining class members.
                                                 13
       After considering the evidence, the court stated, "Sharp persuasively argues that it

does not maintain patient information in a manner that easily permits access to data points

like whether the patient was finally determined to be self-pay on [an] aggregated basis.

. . . An individual inquiry into each of the 122,000+ patients is required. . . . As indicated

in the motion and declarations . . . Sharp was required to create a computer program to

attempt to isolate unfunded patients that fit the class definition. Sharp contends that the

computer program has been unsuccessful in that the results are over-inclusive. There is no

requirement that Sharp maintain this data at least in aggregate form and the Court does not

impose such requirement. [Citation.] Where the administrative cost in identification and

processing of past general relief recipients' claims is so substantial to render the likely

appreciable benefits to the class de minimis in comparison, the class action should not be

certified."

       The trial court exercised its discretion to decertify the class after concluding the

class is not reasonably ascertainable. We find no abuse of discretion.

                                               B

                          Lack of Predominance of Common Issues

       Hale argues the trial court applied the wrong standard to determine the class lacked

predominantly common issues and improperly focused on individual issues regarding

"damages" when it decertified the class. We are not persuaded.

       " 'A class may be certified when common questions of law and fact predominate

over individualized questions.' " (Ali v. U.S.A. Cab Ltd. (2009) 176 CalApp.4th 1333,

1347 (Ali).) The " 'ultimate question for predominance is whether 'the issues which may be

                                               14
jointly tried, when compared with those requiring separate adjudication, are so numerous

or substantial that the maintenance of a class action would be advantageous to the judicial

process and to the litigants.' [Citations.] 'The answer hinges on "whether the theory of

recovery advanced by the proponents of certification is, as an analytical matter, likely to

prove amenable to class treatment." ' " (Duran v. U.S. Bank National Assoc. (2014) 59

Cal.4th 1, 28 (Duran).)

       Hale relies on wage and hour cases in which courts have held individualized issues

regarding proof of the amount of damages class members may recover does not defeat

class action so long as there are common questions of liability amenable to class resolution.

(E.g. Bluford v. Safeway Inc. (2013) 216 Cal.App.4th 864, 870-871 [common issue

regarding liability was based on policies and procedures applied uniformly to all class

members so individual damage issues did not defeat class certification]; Falkinbury v. Boyd

& Associates, Inc. (2013) 216 Cal.App.4th 220, 232-240 [common issues of fact

predominated for subclasses related to meal, rest and overtime violations because liability

could be determined classwide based on uniform policies, or lack thereof; individual

issues, such as whether individuals took rest breaks, went to the issue of damages and did

not preclude class certification]; Jones v. Farmers Ins. Exchange (2013) 221 Cal.App.4th

986, 997 [a uniform policy denying compensation for preshift work presented

predominantly common issues of fact and law because liability depended on the existence

of the uniform policy, rather than individual damages determinations]; Benton v. Telecom

Network Specialists, Inc. (2013) 220 Cal.App.4th 701, 726 [theory that defendant violated

wage and hour requirements by failing to adopt meal and rest break policies is amenable to

                                              15
class treatment; whether employee was able to take required breaks goes to damages];

Bradley v. Networkers International, LLC (2012) 211 Cal.App.4th 1129, 1150-1153 [class

certification proper where plaintiff's theory that employer's uniform policy violated labor

laws regarding meal and rest breaks can be determined by common facts; individual proof

of damages does not bar certification].) The common theme in these cases is that plaintiff's

theory of liability could be determined based on common uniform policies applicable to the

class as a whole.

       Recently in Hall v. Rite Aid Corp. (2014) 226 Cal.App.4th 278 we determined the

trial court erred in basing its decertification order on an assessment of the merits of the

claim rather than on whether the theory of liability was amenable to class treatment. Citing

the foregoing cases, we noted Rite Aid had a uniform policy of not allowing its cashiers to

sit while they performed checkout functions at a register, which allegedly violated

California law and this theory of recovery was amenable to common proof. (Id. at pp. 292-

293.) We concluded "as long as the plaintiff's posited theory of liability is amenable to

resolution on a classwide basis, the court should certify the action for class treatment even

if the plaintiff's theory is ultimately incorrect at its substantive level, because such an

approach relieves the defendant of the jeopardy of serial class actions and, once the

defendant demonstrates the posited theory is substantively flawed, the defendant 'obtain[s]

the preclusive benefits of such victories against an entire class and not just a named

plaintiff.' " (Id. at pp. 293-294, quoting Brinker, supra, 53 Cal.4th at pp. 1033, 1034,

italics in original.)



                                               16
       The problem identified by the court regarding Hale's action here does not involve

individual issues regarding calculation of the amount of damages a class member may

recover once liability is established, but determination of the fact of damage. In other

words, whether there is any common proof to establish entitlement to or, as the trial court

put it, the "right to recover" damages.

       The trial court found the facts presented here to be similar to those in Ali, supra, 176

Cal.App.4th 1333. In that case the court determined "common questions pertaining to the

fact of damage" did not predominate. (Id. at p. 1349.) The Ali court anticipated a trial of a

class action involving whether a cab company failed to provide workers' compensation

coverage and to pay minimum wages would involve " 'a parade of drivers' presenting

individual issues" such as whether the drivers suffered on-the-job injuries and whether they

earned net income equaling or exceeding minimum wage. "Although the leases and

training manuals are uniform, the court reasonably found the testimony of putative class

members would be required on . . . the fact of damage." (Id. at pp. 1349-1350.)

       Similarly here, the declarations and deposition testimony of a sampling of putative

class members showed some patients did not pay anything for their care, some had their

bills paid or reimbursed by third parties and others obtained negotiated rates. Based on this

evidence, the court stated: "[a]ll of this means that each individual will have to litigate

numerous and substantial issues to determine the right to recover in this case: issues such

as whether a third party ultimately paid for the bill, the amount of the negotiation of the bill

by Sharp, the discounted rate and the calculation for that rate, etc." (Italics added.)

Quoting J.P. Morgan & Co., Inc. v. Superior Court (2003) 113 Cal.App.4th 195, 216, the

                                              17
court concluded, "[i]f plaintiffs have stated claims of illegality and impact which can be

proved predominantly with facts applicable to the class as a whole, rather than by a series

of facts relevant to only individual or small groups of plaintiffs, then prosecution of this

case as a class action is appropriate and desirable. If classwide proof of illegality and

impact is not possible, the class must be decertified.' In this case, the class would be

impacted differently depending on factors unique to the individual."

       Therefore, the court concluded a trier of fact could not get to the issue of whether

any of the class members are entitled to damages, without undertaking individualized

inquiries of more than 120,000 patient accounts. This finding was supported by substantial

evidence presented by Sharp. We find no abuse of discretion.

       This analysis is consistent with recent class action authorities. In Duran, supra, the

Supreme Court reversed a judgment based on a trial court's use of a random sample to

extrapolate liability to all class members alleging they were misclassified as exempt

employees and therefore were deprived of overtime payments. The court concluded the

sampling in that case prevented the defendant from showing some class members were not

entitled to recovery. (Duran, supra, 59 Cal.4th at pp. 12-13.) Discussing predominance,

the Supreme Court stated, " ' "[a]s 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 p. 28.)         However, the

court cautioned "class treatment is not appropriate 'if every member of the alleged class

would be required to litigate numerous and substantial questions determining his individual

right to recover following the "class judgment" ' on common issues." (Duran, supra, 59

                                               18
Cal.4th at p. 28, italics added.) " 'Only in an extraordinary situation would a class action be

justified where, subsequent to the class judgment, the members would be required to

individually prove not only damages, but also liability.' " (Id. at p. 30.) In rejecting the

sampling technique used by the trial court in that case to prove liability, the Duran court

reiterated " '[u]ncertainty of the fact whether any damages were sustained is fatal to

recovery, but uncertainty as to the amount is not.' " (Id. at p. 40.)

       In Thompson v. Automobile Club of Southern California, supra, 217 Cal.App.4th

719, Division Three of the Fourth Appellate District affirmed an order denying class

certification in a case alleging the defendant's auto club renewal policies resulted in late-

renewing members receiving less than a full year of services. The court determined

common issues did not predominate because individualized issues existed regarding

whether damage recovery was possible, not merely the measure of damages. These

individual issues included what benefits, if any, were received during the delinquency

period, whether the renewal practices saved class members money rather than paying a

new member fee and whether the member was aware of the renewal policy. (Id. at

pp. 731-732.) The court noted these issues were essentially the same issues identified as to

why the class was not ascertainable, but they were equally important for a predominance

analysis. (Id. at p. 731.)

       In Morgan v. Wet Seal, Inc. (2012) 210 Cal.App.4th 1341 the court denied class

certification in a case alleging the company required employees to purchase company

clothing to wear to work but failed to reimburse such purchases. Because there were no

clear company-wide policies requiring employees to purchase company clothing as a

                                               19
condition of employment or describing what an employee was required to wear, the trial

court determined there was no common method to prove the fact of liability on a class-

wide basis. Rather, individualized inquiries would need to be made regarding what

employees were told by store managers about wardrobe, how employees interpreted any

such discussion, whether attire required by the company constituted a uniform, where

employees purchased wardrobe items and the particular items purchased. (Id. at

pp. 1356-1357.) The Court of Appeal affirmed concluding the plaintiffs did not meet their

burden to present an effective plan to manage the individual issues necessary to determine

the fact of liability, i.e. the right to recover, on a class-wide basis. (Id. at pp. 1368-1369;

see Wilens v. TD Waterhouse Group, Inc. (2003) 120 Cal.App.4th 746, 756 [individual

issues went beyond calculation of damage and involved "each class member's entitlement

to damages. Each class member would be required to litigate 'substantial and numerous

factually unique questions to determine his or her individual right to recover,' thus making

a class action inappropriate"]; City of San Jose v. Superior Court (1974) 12 Cal.3d 447,

459 ["a class action cannot be maintained where each member's right to recover depends on

facts peculiar to his case"].)3



3      Courts must also consider manageability of individual issues when determining
whether or not to certify a class. (Duran, supra, 59 Cal.4th at pp. 28-29.) "Trial courts
must pay careful attention to manageability when deciding whether to certify a class action.
In considering whether a class action is a superior device for resolving a controversy, the
manageability of individual issues is just as important as the existence of common
questions uniting the proposed class. . . . [¶] Trial courts also have an obligation to
decertify a class action if individual issues prove unmanageable." (Id. at p. 29.) Similarly
in Ayala, supra, 59 Cal.4th at page 539 the Supreme Court explained, "[o]nce common and
individual factors have been identified, the predominance inquiry calls for weighing costs
                                               20
       Hale attempts to overcome the problem of establishing a right to recover on a

classwide basis by arguing liability may be determined by calculating "the reasonable value

of Sharp's services" on a classwide basis "for example, as a fixed percentage of the

Chargemaster rates." Then, based on that formula, analyze what, if any damages class

members are entitled to if they were charged more than that fixed percentage. Hale

contends these calculations "can literally be performed at the press of a computer key."

       We are not persuaded. Even though Sharp's patient billing data is contained in an

electronic system, Sharp presented evidence there is no easy way to calculate either

"reasonable rates" or what amount, if any, uninsured patients paid beyond such a rate based

on a simple "press of a computer key."

       According to Sharp, to determine the reasonableness of the Chargemaster rates, one

must analyze over 7,000 line items for individual and bundled procedures, services, and

goods derived for each individual patient. In addition, reimbursement rates from private

insurance companies are based on "a myriad of schedules that use per diem rates and/or

case rates, and at times different service reimbursement methodologies within the same

plan. . . . Reimbursement rates are patient-specific, contract-specific, and plan-specific."

There are variances in reimbursement rates based on deductibles, co-payments, caps, etc.

Finally, reimbursement rates are influenced by factors such as whether a procedure was




and benefits. . . . 'Individual issues do not render class certification inappropriate so long
as such issues may effectively be managed.' " Although not articulated as a separate reason
for decertification, the trial court's findings also imply continuation of this class action
would be unmanageable based on the numerous individual issues that would have to be
tried to establish entitlement to damage.
                                              21
performed on an inpatient or outpatient basis, physician's orders, medical necessity and

specialty services or procedures.

       Sharp estimated it would require construction of additional databases and tens of

thousands of hours to individually review the patient notes sections of each patients'

electronic file to (1) determine what, if any, reimbursements were made for more than

120,000 unfunded patients (i.e. class members), what discounts were offered to these

patients and the status of collection efforts and (2) to compare the rates paid by unfunded

patients versus those paid by privately insured, Medicare, and Medi-Cal patients. The fact

that one possibly could "filter" or manipulate data ultimately produced from such

individualized searches does not assist Hale.

       We are also not persuaded by Hale's proposal to fix a reasonable rate based on an

arbitrary percentage of the Chargemaster rates. The Supreme Court in Duran rejected a

proposal for shortcutting the determination of liability based on statistical analysis stating,

"no court has 'deemed a mere proposal for statistical sampling to be an adequate

evidentiary substitute for demonstrating the requisite commonality or suggested that

statistical sampling may be used to manufacture predominant common issues where the

factual record indicates none exist.' " (Duran, supra, 59 Cal.4th at p. 31.) Although the

Supreme Court has encouraged courts to be " 'procedurally innovative' in managing class

actions" (Id. at p. 33), the court cautioned "[p]rocedural innovation must conform to the

substantive rights of the parties," including the right for the defendant to litigate its

affirmative defenses. (Id. at p. 40.) The same concern applies here. Hale's proposal to

submit an expert to testify to an across-the-board reduction in fees based on a percentage of

                                                22
the Chargemaster rate or even some statistical sampling is not an adequate evidentiary

substitute for establishing commonality or entitlement to damages and such a method

would deny Sharp the ability to defend.

       Hale's citation in her reply brief to Children's Hospital Central California v. Blue

Cross of California (2014) 226 Cal.App.4th 1260 (Children's Hospital) does not assist her.

The dispute in that case involved the reasonable value of poststabilization emergency

medical services provided to Medi-Cal beneficiaries enrolled with Blue Cross during a

time when the Blue Cross contract with the hospital had lapsed. Blue Cross paid Medi-Cal

rates, but the hospital demanded its full billed charges. (Id. at pp. 1264-1265.) The

hospital argued the court could not consider Medi-Cal or Medicare rates accepted by the

hospital or "service specific costs" to determine reasonable rates. (Id. at p. 1265.) The

Court of Appeal held the reasonable value or market value of the services is not

ascertainable from the full billed charges alone. Although the billed charges are relevant to

the issue of reasonableness, the jury should consider the range of payments paid to and

accepted by the hospital, including amounts paid by the government. (Id. at p. 1275.) In

this case, Sharp does not argue rates it accepts from governmental programs or private

insurance are irrelevant. Instead, Sharp presented evidence the analysis required to make

this comparison in this case and then to determine any right to recover is unreasonable and

unmanageable in a class setting because of the individual analysis required.

       Therefore, we cannot conclude the trial court abused its discretion in decertifying

the class based on a lack of predominantly common issues regarding the right to recover.



                                             23
                                                III

                                  Motion to Amend Complaint

       Hale contends the trial court abused its discretion in denying her application to hear

a motion to amend her class definition. We disagree and again find no abuse of discretion.

       After the trial court decertified the class, Hale proposed amending the class

definition by inserting a clause stating: "Excluded from the Class are individual hospital

visits for which Sharp's electronic data records show (1) no patient payments and no

current account balance, and/or (2) one or more payments for the visit from other than the

patient."

       In supplemental briefing, Hale proposed redefining the class to eliminate reference

to insurance or governmental healthcare programs at the time of treatment as follows: "All

individuals who, from August 11, 2003 to December 16, 2011, had one or more 'eligible

patient hospital visits' to a Sharp Hospital Emergency Department. [¶] For purposes of this

class definition, an 'eligible patient hospital visit' is defined as a hospital visit to a Sharp

emergency department for which Sharp's billing records show (1) one or more patient

payments have been made, and/or an account balance currently exists; and (2) no payments

for the hospital visit have been made by other than the patient . . . ."

       Hale contends such amendment would eliminate any problems with ascertainability

or commonality. The trial court, after noting the motion for leave to amend appeared to be

little more than a motion to reconsider the motion to decertify the class without new facts

or law, concluded the proposed redefined class would not cure the essential problems

identified in the decertification order. We agree with the trial court.

                                                24
       It sounds simple enough to eliminate from the class those patients whose billing

records show they no longer have an account balance and those who had payments made

on their behalf by an entity or person "other than the patient." However, the proposed

redefined class does not address how Sharp is to identify those patients without conducting

the individualized inquiries of each patient's billing records, as Sharp indicated it must do.

Hale's suggestion of applying "filters" to the spreadsheet produced from Sharp's first

sampling attempt does not deal with the underlying problem of gathering the data from the

individual patient billing files at the outset. Sharp established it does not maintain patient

billing records in such a way that it is able to conduct aggregated searches of the data in the

way Hale proposes. As the trial court concluded, Sharp is not required to maintain records

in such a way and it would be unreasonable and unmanageable to conduct the necessary

individualized analysis necessary to identify the class members and litigate this matter as a

class action.

                                        DISPOSITION

       The order is affirmed. Sharp shall recover its costs on appeal.


                                                                          MCCONNELL, P. J.

WE CONCUR:


NARES, J.


IRION, J.




                                              25
Filed 12/5/14
                                CERTIFIED FOR PUBLICATION

                       COURT OF APPEAL - STATE OF CALIFORNIA

                               FOURTH APPELLATE DISTRICT

                                         DIVISION ONE



DAGMAR HALE,
Plaintiff and Appellant,
v.
SHARP HEALTHCARE,
Defendant and Respondent.
D064023
San Diego County No. 37-2007-00060598-CU-BT-CTL



THE COURT:

        The opinion in this case filed November 19, 2014 was not certified for publication. It
appearing the opinion meets the standards for publication specified in California Rules of Court,
rule 8.1105(c) the non-party's request pursuant to California Rules of Court, rule 8.1120(a) for
publication is GRANTED.

        IT IS HEREBY CERTIFIED that the opinion meets the standards for publication specified
in California Rules of Court, rule 8.1105(c); and

        ORDERED that the words "Not to Be Published in the Official Reports" appearing on page
one of said opinion be deleted and the opinion herein be published in the Official Reports.



                                             ____MCCONNELL_________________________
                                              Presiding Justice


cc: All Parties




                                                26
