Manatt Secures Landmark Victory in Gray v. Dignity Health

Manatt secured a landmark victory for its client Dignity Health, a California-based nonprofit hospital system, on October 13, when the California Court of Appeal ruled in favor of the hospital in Gray v. Dignity Health. The decision affirmed the dismissal of a putative systemwide class action lawsuit that claimed Dignity Health unlawfully failed to disclose emergency room fees. The decision also held that Dignity Health complies with all state and federal pricing disclosure laws, none of which imposes a duty to disclose emergency room fees.

The Court of Appeal held that the disclosure duty the plaintiff wanted to impose was directly contrary to a host of federal and state laws that prohibit hospitals from discussing cost with patients in the emergency room prior to treating them, thus “disregard[ing] the long standing regulatory environment within which emergency departments operate, which emphasizes that no one in need of emergency care should be deterred from receiving it because of cost.” 

Further, in holding that Dignity Health complied with its statutory disclosure requirements, the court also discussed at length the new federal Hospital Pricing Transparency regulation, which confirms that the legislative and regulatory interest in ensuring greater transparency in hospital pricing, including allowing patients to shop around, does not require pretreatment disclosure of emergency room fees.

The opinion in Gray v. Dignity Health not only ends litigation against Dignity Health but also should end identical litigation that is pending against multiple other hospitals in California. Further, the decision in Gray, which is the first to examine the application of the federal Hospital Pricing Transparency regulation, might help foreclose similar lawsuits in jurisdictions besides California.

Manatt’s litigation team included partners Barry Landsberg, Harvey Rochman and Joanna McCallum, who argued the appeal.

Read the court’s ruling here.

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