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Colorado Supreme Court Rejects Hospital's $229K Surprise Bill

Analysis  |  By Jay Asser  
   May 25, 2022

The ruling protects a woman from an unexpected medical bill resulting from the hospital's chargemaster rate.

The Colorado Supreme Court has ruled that a woman will not have to pay a $229,112.13 surprise bill for an out-of-network surgery from a Centura Health hospital.

Justice Richard L. Gabriel delivered the opinion of the court that Lisa Melody French is not liable for the exorbitant bill due to the hospital not disclosing the amount to her prior to the procedure.

French went to St. Anthony North Health for spinal fusion surgery in 2014 after suffering a car accident. The hospital estimated that her procedure, which required surgeries on two consecutive days, would cost $57,601.77 and that she would be responsible for $1,336.90 out-of-pocket after reviewing her insurance information.

Following the surgery, the hospital determined that it had misread French's insurance card and that she was instead an out-of-network patient. The hospital then billed her the new cost of nearly $230,000, reflecting its full chargemaster ratesโ€”a collection of standard list prices for hospital services.

Though French had signed a hospital services agreement (HSA) in which she accepted all financial responsibility of charges not paid by her insurance, as well as a patient's bill of rights form, the contracts did not mention the hospital's chargemaster.

When French did not pay the new bill, the hospital sued her for breach of contract, alleging that the HSAs she had signed consented to paying the full chargemaster rates.

During litigation, however, Centura representatives testified that the hospital refused to provide its chargemaster to patients, including French, because it was a "trade secret."

Additionally, an expert witness for French estimated the actual cost of the procedures French underwent to be $70,500, with Centura greatly overcharging her and her insurance.

Gabriel wrote in the ruling: "Moreover, as courts and commentators have observed, hospital chargemasters 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."

The No Surprises Act, which went into effect January 1 of this year, was created to avoid these types of scenarios by preventing surprise out-of-network bills.

However, the independent dispute resolution process has been under constant scrutiny since its implementation, with several organizations filling lawsuits against the Department of Health and Human Services over the arbitration.

Jay Asser is the contributing editor for strategy at HealthLeaders. 

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