« Ind. Gov't. - Update on proposed sentencing revisions | Main | Ind. Decisions - Court of Appeals issues 4 today (and 11 NFP) »

Thursday, October 13, 2011

Ind. Courts - More on "Clarian Health sued over high charges: Patients claim bills for services insurance doesn't cover are unreasonable"

The ILB posted August 2nd on an upcoming oral argument on hospital charges for uninsured patients. The argument took place before the Court of Appeals on August 3rd; you can watch the video here.

For background see this May 8, 2010 ILB entry. Here is a quote from an IndyStar story referenced in the entry:

Allen is one of two plaintiffs in a lawsuit filed this week in Marion Superior Court claiming that Clarian Health charges uninsured patients -- or those receiving treatments not covered by their insurance -- unreasonably high prices. The Indianapolis-based hospital system, according to the suit, gives those patients no ability to negotiate different prices. * * *

The lawsuit, however, has broader implications because it targets a controversial practice used to set hospital prices across the nation. Hospitals typically start with a set price, called the "charge master." Health insurers then negotiate discounts off that rate. The discounts can be substantial depending on the volume of patients an insurer brings to a particular hospital.

Yesterday the Court of Appeals issued its opinion in the case, Abby Allen and Walter Moore v. Clarian Health Partners, Inc (ILB summary here, 5th case), concluding:
More than a century of legal precedent, including recent Indiana Supreme Court authority, provides the proper legal framework for our conclusion that Allen and Moore have stated a claim for breach of contract upon which relief can be granted. The trial court's decision is reversed and this cause is remanded for further proceedings.
Dan Carden of the NWI Times writes about the ruling today, in a story headed "Medical bills must be reasonable."
A contract between a patient and hospital that does not include or refer specifically to the price for services the patient is expected to pay is unenforceable, the Indiana Court of Appeals ruled Wednesday.

In a 3-0 decision, the court said the "charge master" or undiscounted rates of Clarian Health Partners Inc. in Carmel were not disclosed prior to two uninsured patients signing contacts agreeing to pay for medical services.

Under Indiana contract law, when there is not a specific price for services or a relevant price list included in a contract, the customer is entitled to a "reasonable charge," the court said.

The hospital's charge master rates, more than double what an insured patient would be charged, are unreasonable and therefore a breach of the contract, the court said.

Clarian claimed courts are in no position to determine what is a reasonable rate in the field of pricing medical services.

That argument fell flat.

"It has long been the judiciary's function to determine a reasonable charge when a contract lacks a definite provision for payment," wrote Judge Edward Najam Jr., for the unanimous court. "We have found no Indiana authority supporting the proposition that medical expenses or billing are or should be exempt."

Masson's Blog has a good post on the ruling.

Posted by Marcia Oddi on October 13, 2011 10:46 AM
Posted to Ind. App.Ct. Decisions