This blog has often covered the problem of outrageous medical bills, and explored whether patients have a responsibility to pay the balance on charges that are not covered by insurance. One common pattern is that the patient agrees to pay “all reasonable charges” when they arrive at the emergency room or other provider, and then months later receives an incomprehensible bill for seemingly outrageous amounts. The costs of the same healthcare can vary wildly from provider to provider, even in the same locale, and there seems to be little rhyme or reason. (This is a common refrain of Elizabeth Rosenthal’s 2017 book.)
According to very basic contract law, when the agreement between a buyer and seller does not specify the prices to be charged (aka an “open price contract”), the seller may not demand more than a “reasonable” amount. Years ago, I was involved in nationwide litigation against non-profit hospitals, raising this theory and alleging that their billing practices contradicted their state and federal “charitable” tax exemptions, since they were driving poor people into bankruptcy and foreclosure. That litigation had a few notable wins, when several hospital systems agreed to adopt explicit charity care policies and stop some of the more egregious practices, such as putting liens on their patients’ houses. Some of these reforms became an industry standard and then part of the Affordable Care Act.
Overall, however, this litigation was challenging, because courts tended to hold that the reasonableness of each patient’s medical bills had to be litigated individually – often with expert witnesses and comparable data from the healthcare provider and other competitors. With only a few thousand dollars at stake for each patient, the courts’ refusal to aggregate the litigation left many consumers without an effective recourse to challenge their unreasonable bills. Contingent-fee attorneys tend to look for larger stakes to make their investment of time and expenses worthwhile. Continue reading