Court rules patient owes $766 on hospital's $300,000-plus billing

Horror stories about surprise billings from medical facilities for various treatments abound. It’s why in 2020 Congress adopted the No Surprises Act which took effect this year banning shock billings for emergency and a few non-emergency medical services.

Now one state has a court precedent that involves other procedures too.

It is the Colorado Supreme Court that ruled that a woman who had spinal surgery following a car accident is not liable for an additional $229,000 billing from Centura Health Corporation and Catholic Health Initiatives Colorado, doing business as St. Anthony North Health Campus, because the billing was based on a secret price list the hospital compiled, and used, and refused to disclose even during court proceedings.

The dispute arose when Lisa Melody French went to the health care center for spinal fusion surgery.

“Centura advised her that she would personally be responsible for $1,336.90 of the amounts to be billed,” the unanimous court opinion, written by Justice Richard Gabriel, said.

But then after the surgery hospital officials took another look, determined they had misread her insurance, leaving her an “out-of-network” patient.

“Century then billed French $229,112.13 and ultimately sued her to collect,” the opinion noted.

That apparently was the amount due after she already had paid $1,000 and her insurance tens of thousands of dollars, meaning the total “cost” imposed by the health center was more than $300,000.

But the ruling said French could not have consented to pay the price listed in the hospital’s “chargemaster” because the hospital refused to disclose it to her.

Further, there was no reason that could not have happened, or should not have happened, before surgery, Gabriel said.

“Moreover, 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,” he said.

In a report in the Denver Gazette, Barak Richman, a professor of law at Duke University, said it was about informed consent.

“I’m hopeful this opinion will have a widespread effect that will help patients being exploited by chargemaster prices,” Richman told the Gazette. “Perhaps more important, it will bring price transparency and price competition to the marketplace. One reason prices are going up is that chargemaster prices are hidden. And if you have a regime where prices have to be disclosed in advance, that injects a lot more information into the marketplace, and patients and consumers can respond to that.”

In the course of the case’s progress, a jury in Adams County said French should be responsible for the reasonable value of the services, “not the price the hospital set unilaterally in its chargemaster,” the report explained, even though she had promised to pay “all charges” of the hospital.

That jury decided she only owed an additional $766, after she paid $1,000 prior to the surgery, and her insurance did pay a sum of about $74,000.

A long list of health care industry players had joined the case on behalf of the hospital’s huge billing. They argued Centura was justified in charge some patients “more” because they needed to compensate for “low” reimbursements from some government programs.

The report said, “During the litigation, it came to light that Centura Health’s chargemaster was a database of 50,000 codes that the corporation declined to release because it was reportedly a ‘trade secret.’ An expert witness for French estimated that her procedure actually cost around $70,000, and Centura Health had made a profit based on what French and her insurer had paid to date.”

The opinion said, “We now conclude that because French neither had knowledge of nor assented to the chargemaster, which was not referenced in the HSA or disclosed to her, the chargemaster was not incorporated by reference into the HSA. Accordingly, the HSA left its price term open, and therefore, the jury appropriately determined that term.”

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