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Justices grill both sides in IU Health case

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The five justices on the Indiana Supreme Court asked feisty questions of both sides in the case in which two Indiana University Health patients have argued that hospital “chargemaster” rates are unreasonable.

Much of the nearly 45 minutes of arguments and questioning on May 10 involved the justices and the lawyers for both parties trying unsuccessfully to apply various scenarios from the retail world of commerce to health care pricing.

Car dealerships, landscape crews and other retailers were invoked hypothetically to try to reason through why IU Health could claim that uninsured patients Abby Allen and Walter Moore had contractually agreed to pay any and all charges it assessed them – even without naming a price or referring to a price guide.

“Where in the world can a patient know what standard is going to be applied?” acting Chief Justice Brent Dickson asked Jon Laramore, the attorney representing IU Health.

But Laramore said in the world of health care, those models don’t really apply because hospitals constantly use profitable lines of service to support unprofitable ones, such as neonatal intensive care units. Also, hospitals face unfunded federal mandates, such as the requirement to stabilize all patients – regardless of their ability to pay – before transferring them to any other medical facility.

“Providers have to think of their prices in a different way [than retailers],” Laramore told the justices. He added, “It’s a complicated process.”

Meanwhile, Jerry Garau, the attorney representing Allen and Moore, had the difficult case of arguing how his clients had not breached their contracts with IU Health by failing to pay any of their bills. Allen was billed more than $15,600; Moore was billed $1,138.

The justices pressed him on how IU Health could name a price in its contracts with Allen and Moore – both of whom came to the IU Health North emergency room in Carmel – when it could not know in advance what treatment they would require or even their insurance status.

“What would you suggest that the hospital do when somebody checks in and they’re uninsured,” asked the court’s newest justice, Mark Massa. “Are they to give them the manual of every possible, conceivable operation or procedure that might befall them?”

Garau’s answer? IU Health’s billing of Allen and Moore was invalid because their contracts failed to disclose a price, but even more so because IU Health failed to assess a reasonable price.

“There had to be something in the contract that would allow a reasonable consumer to ascertain the price,” Garau said, adding later, “If the price isn’t going to be disclosed, there is an obligation that the price be reasonable.”

Laramore countered that IU Health charged Allen and Moore standard prices, based on IU Health’s “chargemaster” price list. They just were not given the discounts the hospital system has negotiated with health insurance companies.

The trouble is that hospitals have aggressively hiked those chargemaster rates over the past decade more as a negotiating tactic with health insurers than to reflect the true costs of providing care.

Therefore, Garau argued, Allen and Moore should be given the chance to have a jury compare their bills against the typical payments for the services they received, to determine if they were indeed reasonable.

“What a hospital charges to 90 percent of its patients is certainly relevant,” Garau said.

IU Health won the first round in this 2-year-old fight when a Marion Superior judge dismissed the patients’ lawsuit. But after the state appeals court reversed that decision in October, remanding the case, IU Health appealed to the state’s highest court.

If Allen’s and Moore’s case is allowed to go to trial, it will be significant because their attorneys have promised to seek class-action status on behalf of all uninsured IU Health patients back to the year 2000. And they have their eyes on the patients of other Indiana hospitals, too.

IU Health now gives a standard 40 percent discount off its chargemaster prices to uninsured patients, but the discount was 20 percent until last year.

IU Health’s 20 hospitals around the state provide a significant amount of unpaid care each year, noted its spokeswoman Lauren Cislak. In 2011, it cared for 50,000 patients who could not or did not pay their entire bills, which resulted in unpaid costs of nearly $200 million. IU Health also provided nearly $122 million in free care to low-income patients.

IU Health’s revenue in 2011 totaled more than $4 billion.

It is unclear when the Indiana Supreme Court will make a ruling in the case.•
 

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  1. Being on this journey from the beginning has convinced me the justice system really doesn't care about the welfare of the child. The trial court judge knew the child belonged with the mother. The father having total disregard for the rules of the court. Not only did this cost the mother and child valuable time together but thousands in legal fees. When the child was with the father the mother paid her child support. When the child was finally with the right parent somehow the father got away without having to pay one penny of child support. He had to be in control. Since he withheld all information regarding the child's welfare he put her in harms way. Mother took the child to the doctor when she got sick and was totally embarrassed she knew nothing regarding the medical information especially the allergies, The mother texted the father (from the doctors office) and he replied call his attorney. To me this doesn't seem like a concerned father. Seeing the child upset when she had to go back to the father. What upset me the most was finding out the child sleeps with him. Sometimes in the nude. Maybe I don't understand all the rules of the law but I thought this was also morally wrong. A concerned parent would allow the child to finish the school year. Say goodbye to her friends. It saddens me to know the child will not have contact with the sisters, aunts, uncles and the 87 year old grandfather. He didn't allow it before. Only the mother is allowed to talk to the child. I don't think now will be any different. I hope the decision the courts made would've been the same one if this was a member of their family. Someday this child will end up in therapy if allowed to remain with the father.

  2. Ok attorney Straw ... if that be a good idea ... And I am not saying it is ... but if it were ... would that be ripe prior to her suffering an embarrassing remand from the Seventh? Seems more than a tad premature here soldier. One putting on the armor should not boast liked one taking it off.

  3. The judge thinks that she is so cute to deny jurisdiction, but without jurisdiction, she loses her immunity. She did not give me any due process hearing or any discovery, like the Middlesex case provided for that lawyer. Because she has refused to protect me and she has no immunity because she rejected jurisdiction, I am now suing her in her district.

  4. Sam Bradbury was never a resident of Lafayette he lived in rural Tippecanoe County, Thats an error.

  5. Sam Bradbury was never a resident of Lafayette he lived in rural Tippecanoe County, Thats an error.

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