Uninsured Patient Class Action – Pricing Practices
Morrell v. Wellstar Health Sys. Inc., No. 04CV03401 (Ga. Super. Douglas County July 19, 2005)
Uninsured patients who were treated at the hospitals' emergency department sued the hospitals alleging that the hospitals charged their uninsured patients inflated rates for medical care as compared to patients with insurance coverage and/or coverage under Medicare and Medicaid. All patients had signed a consent form authorizing the hospital to bill them for its medical care services. Both Superior Courts granted the hospitals' motions to dismiss.
With regard to the plaintiffs' breach of contract action, the Athens court held that Georgia's duty of reasonableness for open price terms did not authorize an implied duty of reasonableness to express terms of service contracts. The court could therefore not determine if the hospitals' rates for services were reasonable. The court also held that the hospitals did not breach their duty of good faith because they had complied with the provisions of their contract with their patients, namely to determine the rates for provided medical services. The hospitals complied with Georgia law by providing each patient a written summary of charges. This written summary negated the patients' claim that the charges were "open" terms. Additionally, the consent form signed by each patient did not contain provisions for discounted rates. Therefore, the uninsured patients had agreed to pay the standard rate and could not later ask the court to impose a discounted rate.
Secondly, the patients argued that they had implied rights of actions against the hospitals because the hospitals used discriminatory pricing practices. Further, the patients asserted that the hospitals did not devote their income from paying patients to charitable purposes as required by its charitable status. The court disagreed, stating that the hospitals were required only to use their income for charitable purposes, but not necessarily to use that income to pay for the care of the uninsured patients. Additionally, the patients claimed that the hospital had a duty to "fix rates and charges" consistent with the Hospital Authorities Act. This argument failed because the patients were neither parties nor third-party beneficiaries of an agreement created by this Act.
Third, the patients alleged that the hospitals engaged in deceptive trade practices by charging "inflated" rates and were therefore in violation of the Uniform Deceptive Trade Practices Act. The courts disagreed, finding that the Act was designed to prohibit vendors from luring customers with dubious representation that prices had been "slashed" and had not been written to be applied to hospital rates. Since the hospitals made no claims that they had reduced their prices to the patients, this law was inapplicable.
Fourth, the patients claimed the hospital received unjust enrichment from its billing rates. However, the existence of the consent form as a contract between the patients and hospital barred any claim of unjust enrichment. Moreover, those patients who had not yet paid the hospitals could not claim unjust enrichment because the hospitals had not yet received a benefit.
Fifth, the patients alleged that the hospitals defrauded them by hiding, in their billing practices, the actual prices the patients would be required to pay for medical services. The claim failed because the patients did not allege any intent on the hospitals' behalf to defraud them, which is a key component of a fraud claim. Also, the patients did not include any specific claims of misrepresentation.
Sixth, the patients alleged that the hospitals negligently misrepresented their rates. Because they did not cite any particular fraudulent representation, this claim failed.
Seventh, the plaintiffs alleged that the hospitals breached their fiduciary duty owed to the patients because they were indigent. The court found no applicable Georgia law in which a hospital becomes a fiduciary. The hospital's duty is the duty of reasonable care to its patients.
Eighth, the patients alleged that the hospitals negligently utilized discriminatory pricing tactics. However, the court found that the patients did not allege a common-law or statutory duty which required a hospital to have an equivalent pricing plan for insured and uninsured patients.
Finally, the court held that because each of the patients' claims were dismissed, the patients were not entitled to injunctive relief which they sought to force the hospital to stop charging inflated and discriminatory rates for medical care.
The Douglas County Court similarly disposed of the plaintiffs' claims in that case, but allowed the patients to maintain a declaratory judgment action to determine if the hospital's charges were reasonable and necessary for the services received and consistent with the standard rate they agreed to pay.