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Hospital wins on uninsured patients’ appeal of rates charged

December 19, 2012

The Indiana Supreme Court ruled in favor of a hospital’s motion to dismiss a complaint brought by uninsured patients regarding the rates charged by the hospital, finding the patients’ complaint failed to state facts on which the trial court could have granted relief.

Abby Allen and Walter Moore brought a putative class-action complaint against Clarian Health Partners Inc. in 2010 on behalf of themselves and other uninsured recipients of Clarian’s services since May 2000. They claimed that the hospital breached its contract with them by charging unreasonable fees after they received medical treatment. Before receiving treatment, Allen and Moore signed the standard form of contract agreeing to pay their accounts, but the contracts didn’t specify a fee schedule. They were charged based on Clarian’s chargemaster rates.

The trial court granted Clarian’s – now Indiana University Health – motion to dismiss, but the Court of Appeals reversed in October 2011, finding the price for services rendered to be a missing and essential term of the contract.

But Justice Robert Rucker wrote that a contract doesn’t need to state a specific dollar amount for goods or services in order to be enforceable. He pointed out that the 3rd Circuit Court of Appeals has found that omitting a specific dollar amount is “the only practical way in which the obligations of the patient to pay can be set forth, given the fact that nobody yet knows just what condition the patient has, and what treatments will be necessary to remedy what ails him or her.”

The justices disagreed with the patients’ contention that their promise to pay “the account” for treatment is indefinite and therefore can’t constitute a price term for the hospital’s services.

“Many courts have addressed contracts similar to those of Patients’ and most have held that price terms in these contracts, while imprecise, are not sufficiently indefinite to justify imposition of a ‘reasonable’ price standard,” Rucker wrote in Abby Allen and Walter Moore v. Clarian Health Partners, Inc., 49S02-1203-CT-140.

The high court declined to extend Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009), to actions for breach of contract and decided to align with courts that have recognized the uniqueness of the market for health care services delivered by hospitals.

By resolving the breach of contract claim, the justices didn’t rule on the patients’ declaratory judgment claim.

 

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