Ms. French Wins Hospital Lawsuit

Article Referred By Lisa Behnke, M.D.

Ms. French was sued by a hospital that had initially given her an estimate of $1,336.90 for a necessary back surgery only to later bill her $303,709.48, asserting that she had agreed to pay “all charges” billed by the hospital…………………..

Colorado Supreme Court Protects Patient, RBP Structure in Hospital Billing Case

May 18th, 2022 – Earlier this week, the Colorado Supreme Court unanimously ruled in favor of an appeals case, French v. Centura Health, supported by the Self-Insurance Institute of America, Inc. (SIIA), in which the court found that a patient could not have consented to pay the listed chargemaster price for surgical treatment. SIIA’s amicus brief can be accessed here. This is the latest litigation activity in SIIA’s ongoing legal defense campaign to protect and promote the self-insurance/captive insurance marketplace.

After successfully petitioning the Colorado Supreme Court to hear the case last year, SIIA joined the Colorado appeal of a patient, Ms. French, who was sued by a hospital that had initially given her an estimate of $1,336.90 for a necessary back surgery, only to later bill her $303,709.48, asserting that she had agreed to pay “all charges” billed by the hospital. Ms. French’s employer-provided self-insurance plan used reference-based pricing and paid $73,597.35, but the hospital sued Ms. French for the difference.

In its unanimous decision, which can be found here, the Court reversed the court of appeals and found that medical service providers are not entitled to a special rule of contract interpretation, holding that because Ms. French had not even known about the chargemaster before her surgery, let alone agreed to pay the chargemaster rates, the service agreement did not incorporate the chargemaster. As stated in the Court’s opinion, “… 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.

SIIA believes this decision is the right result for patient protection, reversing a ruling that would have made it more difficult for Colorado employers and employees to benefit from the cost savings and consumer choice created by reference-based pricing. SIIA strongly supports efforts to promote and preserve employer access to a range of innovative and effective health coverage options, and believes this decision will be a persuasive precedent as additional state courts consider related cases and issues.

For additional information and questions on this case, please contact Ryan Work, SIIA Vice President of Government Relations, at rwork@siia.org