Did You Enter Into A Contract When You Stayed At A Colorado Hospital?

A visit to the Hospital can be a very expensive affair.  After receiving treatment, patients can be shocked to receive unexpectedly high bills.  The facility charges of relatively common procedures such as Caesarean Birth or Knee Replacements at one hospital can be easily be double the cost as at another location.   Trying to find the costs of these treatments in advance can be challenging or even impossible; there are even stories floating around the internet of medical offices claiming it would be illegal for them to state in advance what their price is.  These charges, however, often can have little connection to a hospital's costs.  See, e.g., George A. Nation, Hospital Chargemaster Insanity: Healing the Healers, 43 Pepp. L. Rev. 745 (2016).  

So how do hospitals seek to justify these charges? Often the claim is that patients agree to them when they receive service by signing onto the hospitals pre-printed forms; in other words the for payment is a simple matter of contract law and not an unorthodox cause of action simply because the medical industry is involved.  However, where there is no contract agreement on price, hospitals can be placed in a bind as a court can require them to prove that their charges are in line with reasonable market value to enforce them.  See Portercare Adventist Health System v. Lego, 312 P. 3d 201, 206 (Colo. App. 2010), rev'd on other grounds, 286 P.3d 525.  Such can be a precarious position for a hospital as there is authority that (a) how much a hospital typically receives for its services is more probative of reasonable value than its published rates; and (b) evidence of actual cost is evidence of reasonable value.  Id. at 206-07.  As such, casting doubt that an enforceable contract on price was entered into can be a major pre-litigation or litigation goal for the savvy patient in a billing dispute.  

In Colorado, "an enforceable contract requires mutual assent to an exchange, between competent parties, with regard to a certain subject matter, for legal consideration." Indus. Prods. Int'l, Inc. v. Emo Trans, Inc. 962 P. 2d 983, 988 (Colo. App. 1997) (internal citations omitted).  Moreover, "[I]n order to establish the existence of a contract, the parties must agree upon all essential terms."  Federal Lumber Co. v. Wheeler, 643 P. 2d 31, 36 (Colo. 1981).  

There are a few areas in that definition that patients can use, depending on there circumstances, to challenge a medical bill.  First is price.  As will be discussed in a future post, the admittance agreements that hospitals use only rarely cite the price that the patient will pay.  Instead they may state that the patient agrees to pay the hospitals charges, costs, or - in the most difficult cases - pay the charges specifically listed in a hospital's chargemaster.  A patient can consider challenging the existence of a contract on the grounds that he did not enter into a specific agreement on price leading to a lack of a "meeting of the minds" and therefore a contract. 

Another ground that can be used to challenge the existence of a contract is lack of "competence".  A person is only competent to enter into a contract where they are "understanding and appreciating the extent and effect of business transactions in which he engaged".  Hanks v. McNeil Coal Corp., 168 P. 2d 256, 260 (Colo. 1946).  A person under the age of 18 is not competent.  C.R.S. § 13-22-101.  Similarly, there is authority that being in sufficiently great pain and/or being under the influence of drugs can help reach a conclusion that a person is not competent to contract.  See Murray v. Ready, 292 P. 87,88 (Colo. 1930). 

One more area that can possibly be challenged is whether the agreement was entered into for consideration.  Consideration under Colorado Law means "a benefit received or something given up as agreed upon between the parties".  CJI-civ. 30:7 (CLE ed. 2017). Depending on the circumstances, the hospital may have been obligated to admit and provide stabilizing treatment for a patient, without regard for the patient's ability to pay, under the Emergency Medical Treatment & Labor Act ("EMTALA").  If the hospital was already obligated to treat the patient under EMTALA without regard to a patient's ability to pay, there is a potential argument that the patient can raise that any form the patient signed agreeing to be bound to pay the charges as determined by the hospital determines them fails because the hospital did not give up anything in treating the patient. 

In the event you have doubts regarding a medical bill you can consider contacting The Fladen Law Center, or another lawyer, to investigate whether the arguments raised in the post may apply to you.  As every case is different do not advance these arguments without first consulting an attorney about your own specific situation.