Can people who do not have health insurance and receive treatment from a hospital sue the hospital for breach of contract when billed for amounts more than an insurance company have paid for the same services? In
, ___ N.E.2d ___ (Ind. Ct. App. 2011), Cause No. 49A02-1011-CT-1174, the Indiana Court of Appeals held that "more than 120 years of Indiana common law" allows such a claim.
less..
2 people who did not have health insurance received treatment at Clarian North Medical Center in Carmel, Indiana. They each signed form contracts prepared by Clarian that guaranteed payment of the account. Neither contract specified a price or fee schedule. Clarian then billed each of these people for significantly more than they would have billed either an insurance company or (if the patient had been an Indiana prisoner) the State. The individuals then filed a complaint against Clarian fr breach of contract and requested a judgment that the rates billed by Clarian against uninsured patients are unreasonable and unenforceable. The trial court dismissed the action for failure to state a claim and the individuals appealed.
On appeal, the Court held that the contracts signed by the individuals required Clarian to charge a reasonable rate, as they did not refer either expressly or implicitly to any rate or schedule of rates.
Indiana common law has long held that a reasonable charge will be implied in a contract that does not otherwise specify a charge.
Clarian argued that hospitals should not be held to this same reasonableness standard, but the Court rejected that argument.
Clarian imputes the chargemaster rates into its contracts with Allen and Moore and, in so doing, relies on the holding in
DiCarlo. We decline Clarian's invitation to follow
DiCarlo because the court's reasoning in that case is contrary to Indiana law. Specifically, we decline to make the same leap the
DiCarlo court made when it declared that the price term was not an indefinite, open term and that the generic term "all charges" was unambiguous and could "only refer to" the hospital's chargemaster rates. When interpreting a written contract, the court's primary objective is to discern the intent of the parties from the text of the instrument.
See Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind. 2010). But there must be a basis in the text for our interpretation. We may not simply surmise the intent of the parties, suppose that something is true, and fill in the blank. It is a basic rule of Indiana contract law that a court may not supply missing, essential terms that are not otherwise implied.
See Van Prooyen Builders, Inc. v. Lambert, 907 N.E.2d 1032, 1037 (Ind. Ct. App. 2009), aff'd on reh'g, 911 N.E.2d 619, trans. denied. 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.
Clarian also argued that it would be too difficult for a court to determine what a reasonable fee should be, so the courts should defer to state and federal executives, legislatures, and regulatory agencies. The Court did not take kindly to this argument.
Clarian's suggestion that the Indiana judiciary is not an appropriate forum for adjudicating reasonable medical expenses was squarely rejected by our supreme court's decision in
Stanley. Again, the court expressly concluded, albeit in the context of personal injury law, that Indiana's courts and jurors are quite capable of determining reasonable medical expenses. Stanley, 906 N.E.2d at 856-57. And it has long been the judiciary's function to determine a reasonable charge when a contract lacks a definite provision for payment.
See, e.g., Hubbard, 18 N.E. at 612. We recognize that medical billing is complicated,
see Stanley, 906 N.E.2d at 857, but that does not change the fact that this is a basic breach of contract case guided by well-established Indiana law. We have found no Indiana authority supporting the proposition that medical expenses and billing are or should be exempt from the common law.
The plaintiffs alleged that Clarian charged an unreasonable fee. Therefore, they alleged a breach of contract and could bring an action seeking declaratory relief.
Notably, this decision does not prevent hospitals from modifying their form contracts to reference a fee schedule. It can reasonably be anticipated that they will do so in the near future. Therefore, this holding is not likely to have much practical effect on hospitals. However, it is interesting to note an application of
Stanley v. Walker, a decision largely reviled by the plaintiffs' bar, in favor of plaintiffs.
