She expected to pay $1,337 for surgery. A Colorado hospital billed $303,709. – The Denver Post

The Colorado Supreme Court will this week consider hospital billing practices after a woman who expected to pay $1,337 for surgery at St. Anthony North Health Campus was billed $303,709.

The case pits attorneys for patient Lisa French against Centura Health, which operates the nonprofit hospital in Westminster. The dispute centers on a contract French signed in which she agreed to pay “all charges of the hospital” for her care.

When she signed the contract ahead of a pair of back surgeries in 2014, the hospital had represented to French that the surgeries were estimated to cost her $1,337 out of pocket, with her health insurance provider covering the rest of the bill.

But the hospital’s estimate was based on French’s insurance provider being “in-network” with the hospital, which it was not. She also experienced what the hospital called “complications” after her second surgery — her attorneys say it was an extra morning in the hospital due to a slower than expected recovery — which together upped the bill to 227 times the hospital’s initial estimate.

The hospital relied on its then-secret “chargemaster” database to come to that higher price. The chargemaster, which was not referenced or disclosed in the contract French signed with the hospital, is a comprehensive list of prices the hospital charges — though, in reality, few patients pay the sticker price for care. Insurance companies can negotiate lower prices with the hospital and become “in-network.”

French’s insurance had no such agreement with the hospital, though French believed her insurance was in-network because a hospital representative told her it was after apparently misreading French’s insurance card, her attorneys said in court filings. The hospital’s attorneys said in a rebuttal filing that it is patients’ responsibility to understand their insurance coverage.

Colorado lawmakers in 2017 passed a law requiring hospitals to make some self-pay prices public, and in 2019, a federal agency required hospitals to make their chargemaster prices public. None of those protections were in place when French underwent her surgeries in 2014.

Of the $303,709 bill, French paid $1,000; her insurance paid about $74,000, and the remaining balance of $228,000 was disputed.

Judges on the civil case initially found that the hospital’s contract was ambiguous — in large part because it did not disclose the reliance on the chargemaster — and sent the case to a jury to determine whether French breached her contract with the hospital and how much she should pay; jurors decided she did breach the contract but only owed the hospital an additional $767.

Centura appealed and the Colorado Court of Appeals ruled in favor of the hospital, finding that its contract was not ambiguous and a jury shouldn’t have been allowed to determine how much money French owed the hospital.

The Colorado Supreme Court will hear oral argument on that issue — whether the hospital’s pricing and contract were ambiguous — on Tuesday.

Attorneys for French argued that the Court of Appeals decision gives too much power to hospitals and strips patients like French of the ability to make informed financial decisions around their health care.

“The Court of Appeals gave Colorado health care providers a blank check to unilaterally impose objectively unreasonable bills on uninsured and so-called ‘out-of-network’ patients,” attorney K.C. Groves wrote. “If the opinion stands, Colorado health care providers will be able to collect unconscionable amounts (that are not paid by any other class of patients) from their most powerless class of patients without ever obtaining the assent of those patients to do so.”

But the hospital’s attorneys countered that the use of a chargemaster is a normal industry practice, and said that health care costs are unpredictable, so it’s impossible for the hospital to know for sure in advance how much a patient will be charged and lock in a firm price.

“Context is essential to understanding this case’s far-reaching impact,” attorney Traci Van Pelt wrote. “(French) suggests this court radically alter the landscape of the American health care system, a suggestion warranting grave pause. (French) asks this court to find (that) only when a hospital contract contains a specific price term is it unambiguous. Such a finding must be soundly rejected; in-patient hospital care is a process, not a product.”

In court filings, several organizations wrote in support of French, including the Self-Insurance Institute of America and the Colorado Consumer Health Initiative. The American Association of Healthcare Administration and Management wrote in favor of the hospital.