Reference Based Pricing Lawsuit Grabs National Attention
“Few of us, when confronted with the threat, ‘Your money or your life! ’ would, like Jack Benny, pause and respond, ‘I’m thinking, I’m thinking.’ Most of us would empty our wallets. Does that act of acquiescence demonstrate acceptance of an offer and create a contract?”
Some point to Memorial Hospital of Martinsville vs Henry Dennis as the nation’s first reported RBP case to be litigated (although we suspect that is not the case as there are other similar precedent lawsuits we are aware of). In this instance the case centered on whether a hospital can “balance bill” the difference between its $111,000 price for a procedure and the plan’s upper RBP limit of around $27,000 (an approximately $84,000 difference.)
Legal Arguments Include:
“A standard-form contract prepared by one party, to be signed by another party in a weaker position” is referred to as an “adhesion contract.” Black’s Law Dictionary 390 (10th ed. 2014). While a court may take into consideration that a contract is one of adhesion in determining whether a contractual provision is unconscionable, such contracts are not unconscionable per se.”
“The Hospital’s refusal to provide Dennis with a copy of the charge description master after he received the bill for services rendered by the Hospital was not relevant to his expressions of assent at the time of contracting.”
“The hospital’s insistence that the CDM was secret and that Dennis was not entitled to have or see it is also a significant objective manifestation, by conduct of a party, that no contract was created by the written financial responsibility agreement.”
FINAL VERDICT
“I find that the reasonable value for the services Dennis received is $27,778.84, the amount the hospital would have received had Dennis prepaid his bill as an uninsured patient. The amount Medicare would pay the hospital is a federally-set rate that remains an outlier in determining reasonable value. 
The amount Anthem would pay represents a company-negotiated rate on behalf of a large volume of clients. Dennis’s situation more closely resembles that of an uninsured patient, as Dennis’s insurance was not recognized by the hospital. A similarly situated person could have negotiated for services to be performed at a cost of $27,778.84, and the hospital would have agreed to that amount. Dennis owes the Hospital $523.89, the difference between the reasonable value for the services provided and what he has already paid the hospital.”
Dennis v. PHC-Martinsville, Inc., 93 Va. Cir. 111 (2016)
The Dennis Decision: A Shot Across the Bow for Hospitals …
ATTORNEY
Supplement to your post- “Whatever happened to Centura v. French….
https://ryortho.com/breaking/jury-sides-with-patient-in-hospital-bill-lawsuit/
Colorado health system sues patient over $229K surgery bill …
HEALTH STRATEGIST – FOUNDER
Technically, health-plans are bullet proof as long as their SPD is done correctly. Members are pretty much the same as since there is no contract for over-payment – providers are required by law to accept reasonable reimbursement and further, most members are judgment proof as they have no money is they lose anyway.
The problem, as we all know, is the noise factor. About 10% to 15% of the hospitals are going to make significant noise regardless of what legal position someone takes. I’m guessing every possible position has already been taken in the last 10-12 years.
I’d like to see employers who are strapped for additional savings move to defined reimbursement plans. The plan can just declare what it will reimburse for a service and let the member work with an advocate on their options. Done well, a member may have no out of pocket if they are willing to be aggressive and potentially travel a distance for care.
