Court tosses $300,000 hospital bill for promised $1,300 charge

Colorado’s Supreme Court has ruled in favor of a woman who expected to pay about $1,300 for spinal fusion surgery but was billed more than $300,000 by a suburban Denver hospital that allegedly included charges it never disclosed she might be liable for.

This week’s ruling in favor of Lisa French, who underwent two surgeries in 2014, follows efforts by many U.S. states and the federal government to help curb health care costs by restricting or eliminating so-called “surprise billing” and requiring increased price transparency for consumers.

In a unanimous opinion, the Colorado justices ruled Monday that agreements French signed before surgery at St. Anthony North Health Campus in Westminster don’t compel her to pay the extra charges, which stemmed from a then-secret list of prices for services that hadn’t been disclosed to her.

French had expected to pay $1,337 out of pocket after her medical insurance covered the rest, believing St. Anthony’s was an in-network provider. But a hospital employee provided her an incorrect estimate after apparently misreading her insurance card; in fact, the hospital wasn’t in-network, The Denver Post reported.

Network error

French’s bill was $303,709. Her insurance paid roughly $74,000 of that amount. Centura Health, which operates the nonprofit hospital, sued for the balance.

Attorneys for Centura Health argued the agreements French signed specified she was required to pay “all charges of the Hospital” — including the prices for services the hospital maintained internally at the time.

But the court ruled that French never agreed to those charges since they weren’t specifically mentioned in the contracts.

The justices also declared that an internal database of such prices, referred to as “chargemaster” rates, doesn’t reflect actual care costs because insurance companies often negotiate a lowering of prices to “in-network” rates.

Justice Richard Gabriel, writing for the court, further asserted that internal hospital chargemaster rates “have become increasingly arbitrary and, over time, have lost any direct connection to hospitals’ actual costs, reflecting, instead, inflated rates set to produce a targeted amount of profit for the hospitals after factoring in discounts negotiated with private and governmental insurers.”

“End of the line”

The drawn-out case first went to a civil trial, which found French owed Centura Health only an extra $767. An appeals court later ruled for Centura, finding that hospitals can’t predict exact care costs in advance and that the term “all the charges” included in the contract obligated French to pay the full amount charged her.

“This should be the end of the line for her,” Ted Lavender, an attorney for French, told the Post after the Supreme Court ruling, adding French was “very happy with the result.” A spokesperson for Centura Health didn’t immediately respond to telephone and email messages Thursday seeking comment.

In recent years, Colorado, California, New York, Oregon and other states have enacted laws designed to restrict or ban surprise hospital billing. A federal law dubbed the “No Surprises Act” went into effect on Jan. 1 providing consumer protections against the practice.