Judges rule against hospital in fee suit

Citing caselaw that goes back 120 years, the Indiana Court of Appeals reversed a Marion Superior judge’s dismissal of a complaint against a central Indiana hospital pursuant to Indiana Trial Rule 12(B)(6). The appellate court held that the plaintiffs’ complaint, which challenged the reasonableness of the fees the hospital charged the uninsured patients, states a claim for breach of contract.

Abby Allen and Walter Moore filed a lawsuit against Clarian Health Partners claiming Clarian breached its contract with them and other uninsured recipients by charging them unreasonable fees after receiving medical treatment at a Clarian medical center in Carmel. Before they were treated, both signed the standard form of contract agreeing to pay their accounts, but those contracts didn’t specify a price or fee schedule for the services to be provided. Neither Allen nor Moore had health insurance. They were charged based on Clarian’s “chargemaster” rates, and Allen’s bill was later submitted to a collection agency.

The plaintiffs aren’t asking for charges to be waived; they are asking  the judge to declare the chargemaster rates billed to uninsured patients to be unreasonable and unenforceable. The trial court granted Clarian’s motion to dismiss for failure to state a claim upon which relief can be granted and dismissed the complaint with prejudice.

Addressing several issues, including whether the contract was breached and if the contracts unambiguously required payment, the COA ruled in favor of the plaintiffs, finding because no price was specified in the contracts, Allen and Moore only agreed to pay a reasonable charge for Clarian’s services. The judges cited several cases dating back to 1888 to support their holding, including the recent Indiana Supreme Court decision Stanley v. Walker, 906 N.E.2d 852, 856-57 (Ind. 2009). They declined to consider foreign rulings that Clarian cited which found hospitals aren’t held to the same reasonableness standard in the interpretation of their contracts for medical services.

“Here, the contracts provided by Clarian make no direct or indirect reference to the chargemaster or any other fee schedule, and the price for services to be rendered is, therefore, a missing and essential term,” wrote Judge Edward Najam in Abby Allen and Walter Moore v. Clarian Health Partners, Inc., No. 49A02-1011-CT-1174. “Hence, it is well settled under Indiana law that a reasonable fee is implied. Consistent with that law, Allen and Moore alleged in their complaint that Clarian charged them an unreasonable price. That allegation, if true, would constitute a breach of contract.”

The COA also declined to hold that Allen and Moore agreed to pay whatever amount Clarian charged, as that would be an unreasonable, if not absurd, interpretation of the contract, wrote the judge. The court remanded for further proceedings.