INDIANAPOLIS (AP) — Indiana’s hospital boards and trial lawyers are closely
monitoring a lawsuit that accuses the state’s largest hospital group of
charging uninsured patients more for treatment than insured patients.
The case, set for May 10 arguments before the Indiana Supreme Court,
involves a 2010 lawsuit by two uninsured patients who accuse IU Health of
overbilling them. Although their breach-of-contract claims in the case
amount to just a few thousand dollars, the legal stakes are high.
Indianapolis trial lawyer Scott Weathers tells The Indianapolis Star that a
favorable ruling for his two clients could allow patients to sue over
billings as far back as 10 years.
“If we win, I’m afraid the other hospitals are going to hear from us. We
have clients in the wings,” he said, who are ready to sue.
Weathers wants to turn his clients’ lawsuit into a class action, open to
hundreds of uninsured patients who might have been overbilled by the health
system over the past decade. He also hopes to target other Indiana hospitals
with similar lawsuits seeking damage claims in the millions of dollars.
The Indiana Hospital Association, which has filed a friend-of-the-court
brief with the Supreme Court in support of IU Health’s legal position, views
the case as “a pretty concerning situation” for hospitals, considering the
trial lawyers’ intentions, said the group’s president, Doug Leonard.
It’s the first time the Indiana Supreme Court will wrestle with the
legalities of a hospital charging uninsured patients more than insured ones,
according to attorneys involved. And the court’s consideration of the issue
comes even after a new federal law requires hospitals to give discounts to
uninsured patients similar to those given to insured ones.
That law led IU Health to offer uninsured patients a 40 percent discount off
its full-price “chargemaster” rates in January of last year, said Lauren
Cislak, an IU Health spokeswoman. She said IU Health’s discount applies to
uninsured patients regardless of income and is based on the best rates it
charges its commercial insured customers or Medicare.
But the new federal guidelines don’t bar patients from suing over past
At the heart of the IU Health case are 120 years of state common law holding
that, if a contract for a service doesn’t specifically set a price or fee,
the bill must be “reasonable,” one definition of which is the price charged
most other customers.
Plaintiffs Abby Allen and Walter Moore feel that’s where they were wronged
by IU Health North Hospital in Carmel.
Allen, a college student from Avon, says she was billed $15,641.64 to treat
an infection in 2008. The lawsuit alleges that an insured patient would have
been charged $7,308.78 for the same procedure, given the discounts IU Health
had negotiated with insurance companies.
Meanwhile, Moore, a Carmel police trainee, says he was charged $1,138 in
2009 for treatment of injuries after an auto accident. He was uninsured and
claims the hospital would have accepted “significantly less” if he’d been
Both patients claim their bills were submitted to a collection agency, which
damaged their credit ratings.
Their lawsuit was filed in Marion County Superior Court, which sided with IU
Health and dismissed it. But the state Court of Appeals last fall said the
complaint has merit and should be tried in the county court. Then, IU Health
appealed to the Supreme Court.
IU Health’s attorneys have argued to the appeals court that hospital billing
disputes don’t belong in the courts, saying “the anomalies which exist in
the American system of providing health care” mean that a court “could not
possibly determine what a ‘reasonable charge’ for hospital services would
Weathers said the new federal regulations don’t negate a hospital’s
responsibility “to right what was wrong” with past billing methods.