Healthcare Law: Noteworthy Case Law Developments

Healthcare Law: Noteworthy Case Law Development

Estimated reading time: 9 minutes

Healthcare law is an evolving field with profound implications for providers, patients, and policymakers. Understanding case law developments is crucial for anyone involved in the healthcare industry, as they define the legal landscape surrounding medical practices, patient rights, and insurance coverage. Case law influences the obligations and responsibilities of healthcare providers, protections for patients, and legislative changes that ensure fair and equitable access to healthcare.

Conservatorship of Wendland (2001)

In Wendland, the California Supreme Court addressed the ethical and legal complexities surrounding the withdrawal of life-sustaining treatment from a conscious, non-terminally ill patient who was not in a persistent vegetative state. The case involved Robert Wendland, who became severely disabled after a car accident that left him conscious but unable to communicate consistently or make medical decisions. His wife, Rose Wendland, acting as his conservator, sought court approval to remove his feeding tube, which would allow him to die. However, Robert’s mother and sister objected, arguing that there was insufficient evidence to demonstrate Robert’s consent or best interest in withdrawing life support.

The court had to determine whether a conservator could withdraw artificial nutrition and hydration from a conscious conservatee who had not provided clear instructions regarding such treatment. The California Supreme Court held that a conservator could not make such a decision without clear and convincing evidence that the action aligns with the conservatee’s wishes or is in their best interest. The court emphasized the need for heightened protections when making life-and-death decisions for conscious, non-terminally ill patients.

The Wendland decision has significant implications for healthcare providers, patients, and public policy. For healthcare providers, the ruling clarifies the standards required when dealing with patients who cannot make decisions themselves but are not in a vegetative state. Providers must ensure that decisions to withdraw life-sustaining treatment meet the “clear and convincing evidence” standard, requiring careful documentation and possibly involving ethics committees.

For patients, this ruling reinforces the importance of making their medical preferences known through advance directives or living wills. The decision underscores the value of having documented healthcare instructions to avoid ambiguities that could lead to prolonged legal disputes or unwanted medical interventions.

This case emphasizes the importance of balancing patient autonomy with ethical considerations regarding life-sustaining treatment. It has influenced policies surrounding end-of-life care and conservatorships, encouraging legislative clarity on the rights and duties of conservators and healthcare providers in such sensitive situations. 

Durrell v. Sharp Healthcare (2010)

Daniel Durell brought a putative class action lawsuit against Sharp Healthcare, alleging that Sharp engaged in deceptive and unfair practices by charging uninsured patients significantly higher rates for medical services compared to those covered by Medicare or private insurance. Durell claimed this practice violated the Unfair Competition Law (UCL), the Consumers Legal Remedies Act (CLRA), and constituted breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. 

Durell argued that Sharp’s use of “Chargemaster” rates — standardized rates for services that are substantially discounted for insured patients but charged in full to uninsured patients — was unfair and deceptive. He sought damages and injunctive relief, claiming these practices were unreasonable and unconscionable.

The California Court of Appeal held that Durell lacked standing to pursue his claims under the UCL and CLRA because he failed to demonstrate actual reliance on any misrepresentation by Sharp and did not sufficiently allege an “injury in fact.” The court also dismissed the claims for breach of contract and unjust enrichment, ruling that Durell had not adequately performed under the contract or alleged that he paid more than the reasonable value for services. The decision emphasized the need for specific allegations of injury and causation when claiming unfair or deceptive practices under California law.

This ruling underscores the importance of transparency in billing practices and the need to justify the charges imposed on uninsured patients. Providers must ensure their billing practices comply with legal standards and are not deemed unfair or deceptive, especially when dealing with vulnerable populations such as the uninsured. However, this case also highlights the challenges patients may face when seeking to challenge hospital billing practices. The requirement to show actual reliance and injury in consumer protection claims can be a significant hurdle, potentially limiting the ability of uninsured patients to contest perceived injustices in hospital charges.

From a policy perspective, Durrell reinforces the need for clearer regulations and guidelines regarding hospital billing practices to ensure fairness and equity. It also emphasizes the importance of legislative efforts to protect uninsured patients from disproportionate healthcare costs, encouraging reforms that promote transparency and accountability in healthcare pricing. 

Children’s Hospital Central California v. Blue Cross of California (2014)

This dispute revolved around the payment for emergency and post-stabilization services provided by Children’s Hospital to Medi-Cal beneficiaries enrolled in Blue Cross’s Medi-Cal managed care plan. Between July 2007 and June 2008, during which no contract existed between the parties, the hospital demanded full billed charges totaling $10.8 million for services rendered. Blue Cross, however, paid approximately $4.2 million based on Medi-Cal rates. The hospital contended that there was an implied-in-fact contract obligating Blue Cross to pay the “reasonable and customary value” of the services, which it argued was its full billed charges.

The court held that the trial court had erred in ruling that the regulatory standard under California Code of Regulations, title 28, section 1300.71(a)(3)(B) was the exclusive measure for determining the reasonable value of medical services provided by non-contracted providers. The court determined that “reasonable value” should be based on the broader principles of quantum meruit, which allow for a range of evidence to determine market value. This includes considering both the full range of fees charged and accepted by the hospital for similar services, rather than just the hospital’s full billed charges. The case was remanded for a new trial on damages.

Attorneys should ensure that all relevant evidence reflecting the market value of services, including fees charged and accepted by a provider, is considered when determining “reasonable value” under quantum meruit. This broad range of evidence includes contractual rates, usual and customary fees in the geographic area, and the fees accepted from various payors. This case also highlights the importance of interpreting regulations in the context of existing common law principles. Legal practitioners should be cautious of relying exclusively on regulatory definitions that may not align with broader legal standards, such as those provided under quantum meruit.

Arce v. Kaiser Foundation Health Plan, Inc. (2010)

In Arce, the California Court of Appeal addressed whether Kaiser’s denial of coverage for certain therapies for autism spectrum disorder (ASD) violated the Mental Health Parity Act. Andrew Arce, a minor diagnosed with autism, filed a class action lawsuit through his guardian, challenging Kaiser’s practice of categorically denying coverage for Applied Behavior Analysis (ABA) therapy and speech therapy for ASD. Arce argued that these denials constituted unfair business practices under the Unfair Competition Law (UCL) and breached Kaiser’s health plan contract, which should provide coverage for medically necessary treatments under the same terms as other medical conditions. 

The trial court had sustained Kaiser’s demurrer, rejecting the UCL claim on the grounds that resolving it would require individualized determinations of medical necessity for each class member, which lacked commonality. However, the Court of Appeal reversed this decision, holding that the trial court erred in dismissing the UCL claim. The appellate court found that the determination of whether Kaiser’s practice violated the Mental Health Parity Act could be made based on whether the therapies were categorically excluded, without needing to assess individual medical needs.

For healthcare providers, the decision emphasizes the necessity of adhering to statutory mandates such as the Mental Health Parity Act, which requires that mental health conditions, including autism, be treated on par with other medical conditions. Providers must ensure their coverage policies do not unlawfully exclude medically necessary treatments for mental health conditions, or they may face legal challenges under consumer protection laws. This ruling underscores patients’ right to access necessary treatments under their health plans. It bolsters the protection against discriminatory practices in coverage and supports patients’ rights to receive equitable treatment for mental health issues as they would for physical health conditions.

From a policy perspective, the case highlights the importance of the Mental Health Parity Act and the role of courts in enforcing compliance with health care coverage laws. The decision encourages further scrutiny and potential regulatory reforms to ensure that health plans do not engage in practices that unfairly limit access to necessary care. Additionally, it suggests a judicial willingness to interpret consumer protection laws broadly to include unfair business practices related to health care access and coverage.

Let Continuing Education of the Bar (CEB) Guide Your Practice

CEB offers comprehensive resources and updates that allow lawyers to stay informed about recent precedents and shifts in the legal landscape. CEB ensures that attorneys can maintain a thorough understanding of current legal standards and changes with its many online resources:

CEB Practitioner: 

CEB’s Practitioner Tool offers a vast array of case law, statutes, and practical guides across various legal fields. This tool streamlines research, enhances legal practice efficiency, and provides up-to-date information, making it invaluable for lawyers seeking quick and reliable legal insights. All Practitioner resources are written by California lawyers, for California lawyers. 

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