Terry D. Buller v. Sutter Health et al
A118541
Cite as 2008 SOS 1410

Class action against Sutter Health and Alta Bates Summit Medical Center failed

February 2. 2007, Terry D. Buller filed a class action against Sutter Health. Buller in its complaint alleged the following causes of action:

• That the latter’s billing practices violates the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.). Mainly for not informing the consumers and about the availability of the discount, and because consumers who pay in full in a timely manner without requesting a discount are not automatically given corresponding refunds.


• Violation of the Consumers Legal Remedies Act (CLRA) (Civil Code, § 1750 et seq.) and


• A common law action for unjust enrichment/ restitution and constructive trust.

Buller’s complaint purports to represent a class of consumers who have private medical insurance and who have received a bill for medical services from respondents beginning on February 1, 2003.

The complaint in essence is premised on the main that the billing invoices overstate the amount due because Sutter Health have an undisclosed policy of discounting balances for consumers who pay promptly.

March 23, 2007, Sutter Health filed a demurrer to the complaint, on the following grounds:

• That it failed to state a claim for violations of the UCL and the CLRA. With respect to the UCL claim, respondents argued that the complaint did not demonstrate unfairness as appellant was charged according to the terms of his insurance policy. They also argued that the fraud allegation was flawed, as respondents were not under an affirmative duty to disclose their discount policy.


• The third common law cause of action also was not viable.

Buller filed an opposition to the demurrer contending that a sufficient cause of action exists, and that Sutter Health’s billing statement is an affirmative misrepresentation.

On May 29, 2007, the trial court issued its order sustaining Sutter Health’s demurrer to the complaint without leave to amend.

The trial court has these to say:

• The court found the complaint had to be read as alleging a failure to disclose.


• The court determined that a claim under the “fraud” prong of the UCL does not lie where one has no duty to disclose the operative fact.


• The court concluded that respondents had no duty to disclose the existence of their discount policy.


• The claim under the “unfair” prong of the UCL also failed because the public policies cited to by Buller regarding discounts do not apply to patients who have private medical insurance.


• The court also found Buller failed to state a claim under the “unlawful” prong of the UCL because respondents’ practice does not violate the CLRA.

Buller then filed a timely appeal In the Court of Appeals of the State of California, First Appellate District Division One.

In affirming the trial court’s findings the appellate court made the following pronouncements:

• Fairly read, the complaint’s focus is on respondents’ alleged failure to disclose their prompt-pay discount policy. It appears settled that in the “absence of a duty to disclose”, the failure to do so does not support a claim under the fraudulent prong of the UCL. In other words, the failure to disclose detailed listings or breakdowns of specific escrow charges comprising transfer or document fees did not violate the UCL. This is because a consumer is not “likely to be deceived” by the omission of a fact that was not required to be disclosed in the first place.


• Plaintiff failed to state a claim under "unfair" prong of act where he could not show that allegedly unfair business practice was "tethered" to a legislatively declared policy or had some actual or threatened impact on competition.


• Finally, the appellate court noted that requiring a business to state a discount on its initial invoice runs counter to the purpose of having discretionary discounts in the first place.

Thus, the judgment of the trial court affirmed.