CO Supreme Court: Hospital Cannot Enforce $229K Surprise Bill

The surprise bill stemmed from the hospital’s chargemaster rate, but the hospital did not provide this information to the patient before her surgery.

The Colorado Supreme Court has ruled that a woman is not liable for her $229,000 surprise bill from a Centura Health hospital, as the hospital did not disclose the amount to her before the procedure.

Lisa Melody French received spinal surgery at St. Anthony North Hospital in Westminster, Colorado, in 2014. The hospital initially estimated that the surgery would cost $57,601, with French responsible for paying $1,337 out-of-pocket. But the cost increased to $229,112 following the surgery.

According to the court document, the new price tag reflected Centura’s full chargemaster rates for the surgery. Additionally, Centura determined that it had misread French’s insurance card and she was an out-of-network patient. French was left with the nearly $230,000 bill after her insurance paid $73,597 of the new charge, which was over $300,000.

French had signed a hospital services agreement (HSA) wherein she agreed to pay all charges of the hospital that were not covered by her health insurance, but the contract did not include any reference to the hospital’s chargemaster.

After unsuccessfully attempting to collect payment from French, Centura sued French for breach of contract, alleging that she had agreed to pay Centura’s chargemaster rates when she signed the HSA. Centura had concluded that her agreement to pay “all charges” included the predetermined rates in its chargemaster.

During the trial, the jury determined that French only owed Centura an additional $767, but the Colorado Court of Appeals overturned the verdict. Judge Terry Fox stated that the “all charges” referenced in the HSA unambiguously referred to its chargemaster rates and that the bill was enforceable. In addition, Judge Fox noted that hospitals cannot always accurately predict what services a patient will require.

This ruling led French to appeal to the Supreme Court.

The Colorado Supreme Court sided with French and ruled that the HSA did not include any reference to Centura’s chargemaster; therefore, French had no knowledge of the price for her surgery outside of what the hospital had initially told her.

Additionally, the court determined there was no mutual agreement between French and Centura about the meaning of “all charges” and whether or not it included the chargemaster.

“If a charge for hospital services is not included in a hospital-patient contract, then we believe that a jury is fully capable of determining the reasonable value of the services provided,” Justice Richard L. Gabriel wrote in the opinion.

Centura representatives testified during the trial that its chargemaster was not provided to patients. What’s more, Centura refused to produce the chargemaster for French, stating that it was proprietary and a trade secret.

In addition, an expert witness for French estimated that the surgery cost around $70,000 and Centura had profited from excessively billing French and her insurance plan.

“As courts and commentators have observed, hospital chargemasters have become increasingly arbitrary and, over time, have lost any direct connection to hospitals’ actual costs, reflecting, instead, inflated rates set to produce a targeted amount of profit for the hospitals after factoring in discounts negotiated with private and governmental insurers,” Gabriel wrote.

Gabriel also noted that even if French had received Centura’s chargemaster, it would have been incomprehensible as it contained 50,000 codes.

The surprise billing law under the No Surprises Act aims to protect patients from high out-of-network medical bills like the one French received. Payers and providers must go through an arbitration process to determine the payment rate for the service.

But French’s case raises the question of whether patients and payers will be able to use HSAs and contract law to resist paying arbitration amounts since the price was not established in any initial agreement.

Call Today: 614.706.5206










Popular posts from this blog

IMPORTANT UPDATE: Ohio Medicaid is upgrading its provider enrollment system

Medical Billing Companies Spill About Outsourcing Operations

How the marriage of primary care and behavioral health is driving the EHR industry