Scott Roberts for www.theindianalawyer.com

The Indiana Court of Appeals ruled in a split decision the state’s Hospital Lien Act allows an uninsured hospital patient to renegotiate the terms of his contract with the hospital after a man was charged more than $600,000 for a nearly three-month stay.

Thomas E. Frost filed a declaratory judgment action under the Indiana Hospital Lien Act after he was treated at Parkview Hospital in Fort Wayne and its health services campus from Oct. 8, 2013, when he was injured in a motorcycle crash, to Jan. 28, when he was released from in-patient rehabilitation. Frost did not have health insurance at the time, and Parkview filed a hospital lien of $625,117.66, which was amended after an independent medical billing expert reviewed the charges and found several billing errors.

Frost said Parkview’s charges were unreasonable because they were more than what Parkview charges patients with insurance or those covered under Medicare or Medicaid. He submitted a written discovery request to the trial court requesting information about discounts patients with either government or private insurance receive, but did not get a satisfactory response from Parkview. He sought an order to compel discovery, and Parkview filed and was granted a stay of discovery. Parkview then filed a motion for partial summary judgment, saying its rates were reasonable as a matter of law. The trial court denied the motion, and Parkview filed this interlocutory appeal.

The COA majority relies heavily on Stanley v Walker, 906 N.E.2d 852 Ind. (2009), when affirming the trial court’s ruling. In that case, the court had to decide whether the discounted amount of expenses actually paid in a personal injury case was admissible and relevant to a determination of damages to an injured party. The plaintiff showed the amount originally charged by the provider in his case, but did not show what was actually paid. When the defendant wanted to show what was actually paid, the trial court did not allow it, saying it was banned by the collateral source statute.

However, the Indiana Supreme Court thought differently in that case. It said presentation of medical bills in a case where reasonableness is not an issue should be allowed. In cases where reasonableness is an issue, the defendant should be able to present contradictory evidence, in the Stanley case the discounted amount, to contradict the plaintiff’s prima facie evidence.

The COA majority said this case was very similar to the Stanley case. Parkview sought to have the court determine its rates were reasonable, but that issue was disputed and Frost sought evidence to discover discounted amounts other patients had paid to challenge it. Parkview prevented Frost from meeting its prima facie evidence with contradictory evidence, and Frost should be allowed to get his information.

Senior Judge Ezra Friedlander and Chief Judge Nancy Vaidik agreed in the decision, but Judge Edward Najam dissented. Najam said it should be Allen v. Clarian Health Partners Inc., 980 N.E. 2d306, 308 (Ind. 2012) that controls the case, not Stanley. In that case, uninsured patients disputed the hospital’s rates because the patients said their contracts did not specify a price for services and because of that, the patients could introduce evidence in court that determined a reasonable price.

In that case the Supreme Court rejected that argument, saying the patients did not state a claim upon which relief could be granted.  The court said “price terms in these contracts while imprecise, are not sufficiently indefinite to justify imposition of a reasonable prices standard.” The court then said the patients entered into an agreement to pay the account, and should pay it.

Najam said this case is similar, that Frost agreed to paid the account, no matter the reasonableness of the prices. Najam says the majority agreed Allen was not relevant because Frost is not challenging a debt is due Parkview, and he is not asking the court to impute a reasonable price, but Najam said that’s wrong. He is challenging the amount of debt he has agreed to pay and is asking the court to impute a new contract price.

Najam said if Allen is not controlling, hospitals will stop seeking payment of fees through the Hospital Lien Act, and will instead try to get it through breach of contract, where Allen does control.

However, Najam said he does not agree with the Allen decision. He said Allen places patients at “a permanent take it or leave it disadvantage,” and does not determine that the way hospitals determine health care prices is fair, especially without consent of the patient.

Najam said he believed the court’s statutory analysis would be correct if not for Allen.

The case is Parkview Hospital v Thomas E. Frost by Shirley A. Riggs, his guardian, 02A03-1507-PL-959.