Franklin Walter went to Mercy Regional Medical Center for a routine knee replacement in April 2019. What he came away with two months later was a surprise bill totaling $1,216.73. Without an explanation or itemized statement, Walter found himself indebted to the hospital after believing his insurance would cover all the costs.
Surprise or inflated medical bills have fueled the push to reform the health care system in the United States, particularly in rural areas where care options are limited. One method of pushback against unexpected medical bills is the court system, which is where Walter has turned to file a class-action lawsuit against Centura Health in the U.S. District Court for the District of Colorado, for what he claims are predatory billing practices for Centura’s own financial gain.
Walter, a resident of Flora Vista, New Mexico, is asking for $5 million, an amount based on the number of people lawyers estimate were affected by Centura’s billing practice. The case seeks to include all patients from Feb. 7, 2017, onward who did not receive an estimate of the amount owed before or at the time non-emergency care was provided and charged after the care was provided.
Centura Health declined to comment for this story, saying it does not comment on litigation before filing an official response. The corporation is expected to file a response in August.
Beyond compensation for what Walter and his attorneys claim to be a breach of contract, he also is using the lawsuit to push Centura to change its billing and pricing practices.
“If you schedule an appointment for any type of prescheduled surgery, the hospital should know the cost beforehand,” said Tim Blood, one of the attorneys on the case. A managing partner for Blood, Hurst & O’Reardon LLP in San Diego, Blood has specialized in class-action lawsuits for almost 30 years.
“Lay people are often surprised how commodified these procedures are,” Blood said. And while hospitals are run like a business, and should be recognized as such, Blood said they are businesses that provide lifesaving care.
Patients have to pay for the services a hospital provides, but “they should know what they have to pay for that service,” he said, especially for something “frightening and personal” like surgery.
Like most hospital patients receiving nonemergency care, Walter had to sign a “Consent for Medical Treatment” contract that requires him to agree to pay all known and unknown costs associated of the knee replacement in order to receive it.
But the contract also requires Centura, the health corporation that owns 17 hospitals and more than 100 physician practices throughout Colorado and Kansas, including Mercy, to provide Walter with an estimate of what he would have to pay out of pocket for the procedure.
The contract between Mercy and nonemergency patients says: “I acknowledge that estimated responsibility is due at the time of service and that any remaining charges are due and payable upon receipt of the bill.”
It is meant to be a protective measure against unexpected bills and overbilling for patients like Walter.
But Walter claims Centura never provided him with an estimate of out-of-pocket charges. At the time, he thought that meant he owed nothing out of pocket for the surgery.
But in June 2019, Walter received a statement with charges from the knee surgery.
Lawyers for the class-action lawsuit see the lack of transparency as preying on a particularly vulnerable group of people, such as retirees who rely on Medicaid. They also argue it is a breach of Centura’s contract to bill patients after nonemergency procedures without disclosing the known costs beforehand.
“People in that age range will probably have prescriptions they need to bring with them,” said Jordon Harlan, a lawyer with Harlan Law and one of the attorneys for Walter’s class-action lawsuit.
Centura charges patients after nonemergency procedures for prescription and over-the-counter medications they take during their time in the hospital, including those unrelated to the procedure. But the costs for those prescriptions are “wholly arbitrary and grossly inflated” over the price a patient would pay at the pharmacy, Walter’s lawyers wrote in the complaint.
During Walter’s stay at Mercy, he took 13 500-milligram Acetaminophen pills. The hospital later charged him $39 for the pills, but a 200-pill container costs about $5 at most pharmacies.
“That is an upcharge of several thousand percent per pill,” attorneys wrote in the lawsuit complaint.
Julie Lonborg, senior vice president of the Colorado Hospital Association, said people can’t bring their own prescriptions or medication into the hospital because it is a safety issue.
“We need to know what it is, otherwise it could cause problems with other medications,” Lonborg said.
And pharmaceutical companies charge hospitals more for drugs than pharmacies themselves, Lonborg said. The safety checks that hospitals conduct for medication are also strenuous, and the cost of medication and prescription drugs in hospitals accounts for that, Lonborg said.
Hospitals work hard to ensure all of their patients receive the correct medication in the correct doses at the correct time, Lonborg said. The wrong dose to the wrong patient could have a “substantial impact on their health,” she said.
The Centura contract says it has “predetermined the charges for certain procedures, supplies and treatments,” and those charges are “listed in the Centura Health Physician Group fee schedule.” But Blood said a fee schedule is not accessible to the patient.
And the “Pricing” webpage on Centura’s site does not actually provide pricing information or the “fee schedule” referenced in the contract, just links to other webpages, according to the class-action complaint.
Webpages like “Hospital Prices” and “Physician Prices” give patients an option to look up costs, but Walter’s routine knee surgery, called anthroplasty, is not among the listed procedures and costs, according to the complaint.
Blood said that is confusing and frustrating for patients, and Walter hopes his lawsuit will bring about more transparency.
But Lonborg of the Colorado Hospital Association said hospitals in Colorado have more transparency than what is required nationally. A Colorado law from 2017 requires hospitals to post the costs for the most-recent and frequent treatments.
The best thing patients can do to obtain a cost estimate before a procedure is to call their insurance company.
Colorado lawmakers were working on simplifying the health care billing and payment system for the state, but COVID-19 caused a delay in that process, Lonborg said.
Joe Hanel, spokesman for the Colorado Health Institute, said it is unusual for patients to receive a bill beforehand because medical billing is more complex than that.
“A lot of it has to do with your insurer, as well,” Hanel said.
But Walter’s case is “testing a legal theory that it should be simpler than it is,” he said.
Different insurers negotiate with hospitals on prices. Even though the procedure is the same, the cost is different depending on whether the patient has Cigna or Anthem Blue Cross Blue Shield.
“It’s not a pricing system that is intuitive to anybody,” Hanel said, but Colorado is “on the forefront in trying to address this.”
David Silverstein, founder and chairman of the nonprofit Broken Healthcare, said courts generally have not found medical providers guilty in class-action lawsuits because each individual involved in the class action is too different.
However, Silverstein said things are changing. The U.S. Supreme Court is watching these cases, he said.
“We need change,” Silverstein said.
ehayes@durangoherald,com
Centura lawsuit complaint (PDF)
