A recent opinion by the Dallas Court of Appeals gives a Dallas County district court the greenlight to proceed to trial of class claims against two hospitals.
Frisco Medical Center, L.L.P. and Texas Regional Medical Center, L.L.C. v. Paula Chestnut and Wendy Bolen, On Behalf of Themselves and All Others Similarly Situated (No. 05-22-00058-CV) arose from a lawsuit filed against the hospitals for failing to disclose emergency medical care fees charged by the hospital to patients seen in the emergency room. Plaintiffs seek declaratory relief, equitable relief, and restitution under the Declaratory Judgment Act and DTPA, plus costs and attorney’s fees. Plaintiffs moved to certify a class action under Rule 42, TRCP, which the trial court granted. The hospitals appealed.
The court of appeals reversed in part and affirmed in part. Plaintiffs claimed that the hospitals violated the DTPA by deceptively failing to provide notification of the extra fees in their contracts or by other means, such as verbally or in signage posted in the emergency room, so that the patients could either agree to pay the fee or seek care elsewhere. The hospitals contended that they no duty to disclose the fee and that the Emergency Medical Treatment and Active Labor Act (42 U.S.C. § 1395dd) prohibited them from doing so. They also contested the propriety of certification based on Rule 42’s predominance requirement, asserting that each individual class member’s damages claims would require individualized review of insurance reimbursement records not available to the hospitals. Plaintiffs proposed a formula that would refund to each of them a pro rata amount based on the proportion that the fee bore to the gross amount charged for ER services. Defendants’ experts demonstrated that this formula would produce wildly disparate refund amounts that bore little relation to whether individual patients or their insurers even paid the fee at all. The court of appeals agreed with this argument and held that the trial court abused its discretion as to certification under that part of the rule [Rule 42(b)(3)].
Nevertheless, as to whether class certification was proper to address plaintiffs’ claims that the hospitals had a duty to inform patients of the fee in advance, whether they did in fact disclose it, and whether federal law prohibited them from disclosing it, the court of appeals affirmed the trial court’s certification order under Rule 42(b)(2). The court agreed with plaintiffs that these claims satisfy the commonality and typicality requirements, since resolution of them would affect all class claimants the same way, regardless of whether some claimants knew about the fee before signing the contract. The court also found that the class representatives were adequate, although one of them (Bolen) did not appear to know anything about the litigation.
Perhaps the most the questionable part of the court of appeals’ opinion involves whether the class met the cohesiveness requirement of Rule 42(b). The hospitals argued that the class was not cohesive because a single declaratory judgment would not provide relief to every class member, since some patients had prior knowledge of the fee and agreed to pay it, others’ insurers refused to pay it, and federal law might operate differently with respect to different claimants depending upon whether prior knowledge of the fee would actually discourage them from receiving treatment. The court rejected this argument, focusing on the “limited scope” of these issues and their general applicability to all class members. But the opinion does not really counter the defendants’ argument in detail or the real possibility that all class members are not created equal (i.e., if some of them clearly had advance notice of the fee and agreed to pay it anyway, doesn’t the whole basis for class certification go out the window?).
It appears to us that the court of appeals permitted certification of a class with no practical way for a jury to determine what relief to which each class member would be entitled. Defendants clearly showed that damages would have to be determined on an individual basis, requiring extensive discovery and analysis. Some claimants may not be entitled to relief at all, either because their insurers never paid the fee and the hospitals never balance billed them for it because their negotiated rate contracts didn’t authorize reimbursement in the first place. Despite these problems, a class has now been certified, which will ratchet up the pressure on defendants to settle out. It’s obviously none of our business what the defendants decide to do, but something just doesn’t seem right about this. The amounts in question are pretty small, but the attorney’s fees are likely to be pretty big. The court of appeals apparently saw no problem with that and glossed over some issues that it might have addressed more fully. It is noteworthy that the trial plan in the trial court’s order doesn’t say anything specific. Perhaps because there is no intention of trying it?
