Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—CalCtApp: Hospital Not Liable For Failing to Advise Patients on Doctors’ Insurance Participation , (May 13, 2013)

By Jody Coultas, J.D.

Emergency room patients could not state California Unfair Competition Law (UCL) or Consumers Legal Remedies Act (CLRA) claims against a hospital for allegedly failing to disclose that its emergency room doctors were not participating providers in the patients’ insurance plan, according to a California appellate court (Leon v. Watsonville Hospital Corp., May 9, 2013, Bamattre-Manoukian, J.).

The patients received treatment from physicians employed by Emergency Medical Group of Watsonville at the Watsonville Community Hospital. Although the hospital was a participating provider in their health plan, the Medical Group was not a participating provider; instead, the Medical Group was a "non-preferred," "non-participating" provider. The patients alleged that the hospital had a duty to either warn that the physicians in its emergency room did not participate in the patients’ health plan or to insure that only participating providers staff the emergency room.

A trial court sustained the hospital’s demurrer to the UCL and CLRA claims without leave to amend. The patients appealed.

The trial court did not err in finding that the patients could not rely on a premises liability theory as the basis for their unlawful business practices claim under the UCL, according to the court. The patients argued that the hospital’s business practices were unlawful because they breached a common law duty to control activities on their premises. The Medical Group’s billing practices were not related to the condition of the hospital’s premises or even occurred on the premises. There was no authority to support the patients’ proposition that a property owner may be held liable for unfair business practices of third parties or independent contractors who work on the premises. Hospitals owe a duty to insure the competency of its medical staff and to evaluate the quality of medical treatment rendered on its premises, but that duty does not extend to monitoring and evaluating an independent physician’s business or billing practices, including amounts charged for professional services.

There were insufficient allegations to support the patients’ CLRA claims, according to the court. The CLRA prohibits representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law. The patients alleged that the hospital made representations regarding price, but failed to allege that the hospital made any representations to them other than those contained in the "Conditions of Admission and Consent to Medical Treatment. Therefore, the patients were unable to show that the hospital represented that the transaction involved obligations which it did not involve, or were prohibited by law."

The case is No. H037288.

Attorneys: Ron Keith Bochner for Maria Leon. Katherine Renee Miller (Hooper Lundy & Bookman, P.C.) for Watsonville Hospital Corp.

Companies: Watsonville Hospital Corp.

Cases: StateUnfairTradePractices CaliforniaNews