ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, July 18, 2018

Surprise Charges for Emergency Room Services… Once Again

I blogged about the issue of emergency room and hospital “surprise charges” before, but this important issue is well worth re-addressing in the context of a new case.  Many court decisions and articles are still generated about the topic, but with no good solution yet from a patient/consumer point of view.

Here is the classic scenario: A person receives urgent medical care in an emergency room.  Upon admission, he or she is presented with a contract stating, for example, that he or she will pay for the services “in accordance with the regular rates and terms” of the hospital or emergency room.  But how does one ever know what those charges will be?  Does that make them an open price term?  If so, is the medical provider under an obligation to pay only the reasonable value of the services provided or can they charge pre-posted list rates?  Who decides what is “reasonable” and not in a market marked by, for most of us, very high prices?  If the provider charges what appears to be a very high amount, is the entire contract void for unconscionability?

A current case I came across addresses these issues (class certification was granted).  The uninsured “self-pay” patient, Mr. Cesar Solorio, signed a three-page admissions contract stating the above.  Once released, he got an un-itemized bill for $7,812.  He filed suit for breach of contract asking the court to, among other things, clarify how the contractual language “in accordance with the regular rates and terms of  [medical center] should be interpreted and applied.  Mr. Solorio alleges that the language constitutes an open price term that, under applicable law, is an agreement to pay only the reasonable value of the items received and not the posted rates by the medical center. Solorio also alleges that the medical charges were artificially inflated and more than four times higher than the actual fees and charges collected by the medical center. 

I still find these types of contracts highly problematic seen from a consumer/patient point of view. I have myself been subjected to a similar treatment (so to speak) by an emergency room that also, after the fact, sent me a much higher bill than what I was initially “promised” (orally and probably non-binding, but still).  Several items were double if not triple billed.  Patients can complain and complain, but what can we really do?  Not much, it seems, as these types of cases keep re-appearing. 

Yes, of course we want urgent medical treatment if we need it.  Yes, that is expensive.  But clearly, we also have a contractual (and moral) right notto be ripped off.  And maybe some services that might initially seem urgent could actually wait… In my own case and, I know, that of many others, medical providers are very eager to promote their treatment as highly necessary and urgent/”a good idea.”  That may, I hate to say, simply be a way for the medical providers to make more money.

As it is now, the burden seems to be on the patient seeking services to bargain for and document having received a promise that is limited in scope to … what?  Is this just an impossible issue to solve from a contractual point of view?  It seems to be.  That’s where health insurance comes into play, but reality remains that not everyone has that.  The “free market” takes over, but, in my opinion, that is far from optimum in this particular context.

The case is Cesar Solorio v. Fresno Community Hospital and Medical Center, Ca. Super. Ct. NO. 15CECG03165, 2018 WL 3373411. 

https://lawprofessors.typepad.com/contractsprof_blog/2018/07/surprise-charges-for-emergency-room-services-once-again.html

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Comments

The key here is that Mr. Solorio was "self-pay." Had he been insured or covered by Medicare, fee capitation would have come into play, requiring the provider to write off all charges in excess of the amount the third party payor agreed to pay, thus leaving patient with a much smaller "maximum amount [you] may be charged." It puts a great burden on the uninsured patient to think about bargaining for prices, especially in an emergency context.

Posted by: Judith Maute | Jul 18, 2018 8:18:59 PM

But who is in a position to bargain for prices, especially in an emergency context?

Posted by: Matthew Bruckner | Jul 20, 2018 1:35:17 PM

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