Lisa French underwent spinal-fusion surgery in 2014 after her doctor warned her that a fall or trip might leave her paralyzed due to lingering complications from a car wreck.
Her recovery was arduous, but French says she was secure in her belief that her health insurance would make sure she suffered no financial harm from her medical bills.
Then, almost three years later, French, who works a night job as a billing clerk at a trucking company, answered a knock on the door one Sunday morning. A process server handed her papers that showed that the nonprofit St. Anthony North Health Campus in Westminster, where she had her operation, had sued her for $229,112.13.
Landing on French’s doorstep that day was a growing conflict over skyrocketing health care costs pitting employer-based, self-funded insurance plans against hospitals. A growing number of employers are refusing to pay the full amount of the hospital bills of their workers due to alleged price gouging by the hospitals. As justification, they point to data that consultants have unearthed showing wide disparities in hospital billing.
Those disputes now are moving into the courts. French’s case appears to be the first of its kind to go to trial in Colorado, her lawyers say. An Adams County jury this month sided with French and found the hospital’s bills weren’t reasonable. St. Anthony has vowed an appeal. The final outcome will determine how much of a say employers have over rising health care costs, according to consultants in the case. At stake is an important precedent that could shape the size of future co-pays and deductibles of workers throughout Colorado, they said.
“Our experience is that there is a lot of profiteering going on, and bills that have no rational relationship to the cost of the service,” said Steve Kelly, the CEO of ELAP Services, the Wayne, Pa.-based firm that advised French’s employer-based insurer not to pay her hospital bill. “That’s what we’re trying to prevent. We don’t want our clients and families subjected to predatory pricing.”
ELAP had found St. Anthony’s $303,709.49 bill grossly excessive and advised French’s insurer to pay less than a quarter of that amount. The insurer and French paid $74,597.35, an amount ELAP said allowed a reasonable profit for the hospital. The hospital disagreed and sued French — a mother of five who lives in a rental home, struggles with Type 2 diabetes and has a husband who doesn’t work because he is disabled — for the difference.
A jury said French, 56, had to pay just $766.74, nearly half of which was an unpaid portion of her co-pay.
“What bothered me is they say they are a nonprofit hospital, but how much profit did they need to make?” French said in a recent interview.
“The evidence presented at trial was that St. Anthony North’s charges are among the lowest in the community for services received by Lisa French,” said Wendy Forbes, a spokesperson for Centura Health, the health care giant that owns St. Anthony. “She had a very complicated surgery with major complications due to her personal, pre-existing health conditions. The charges were fair and reasonable and grounded in the fundamental economics of health care under our current system.”
St. Anthony’s charges are in the bottom 25 percent for the procedure that French underwent, Forbes said.
Centura will appeal and also seek attorney fees and court costs, including about $100,000 in expert-witness fees, Forbes said. If attorney fees and court costs are awarded to the hospital, “French will not be personally responsible for those fees under her arrangement with ELAP and the employer,” Forbes said. Similarly, if the hospital prevails on appeal, the unpaid balance of the hospital bill will not be French’s, Forbes said.
ELAP paid for French’s legal representation, which was provided by lead lawyer Ted Lavender, his office partner Kris Alderman of Atlanta and Frank Porada of Denver. The trial lasted six days.
Lavender said Centura might believe French won’t have to pay if the hospital chain prevails on the attorney fee and cost issue or on appeal, but that’s not necessarily the case. There is no contract between ELAP and French or her insurer that would necessarily protect her. “That’s just not a bridge we’ve ever had to cross,” he said, noting that all other billing disputes handled by ELAP have been settled before going to a jury.
French did sign a hospital contract before her surgery in which she agreed she would “be financially responsible” to the hospital for all charges “not otherwise paid by my health insurance or other payer,” according to evidence submitted during the trial.
But French said she was told by hospital officials prior to surgery that after her insurance kicked in, she would owe just $1,336, of which she immediately paid $1,000. The jury decided that under the hospital contract she signed, French should only have to pay “the reasonable value of the goods and services provided to her.” The jury affirmed in its judgment that it did not believe the hospital’s bill had been reasonable.
“Going through the whole thing was very stressful and tiring, and I always felt that the hospital was using me as a guinea pig to fight this company that was helping people from getting ripped off,” French said.
Evidence submitted during the trial showed that 13 spinal-implant materials installed in French during her spinal-fusion surgeries cost the hospital $31,665.05. The hospital had turned around and charged French $197,640 for those implants, a markup of more than 500 percent, the evidence showed.
ELAP has been hired by about 400 employers over the past decade to review hospital billing and help reduce those costs. Kelly, the company’s CEO, said ELAP reviews data hospitals must submit annually to the federal Centers for Medicare and Medicaid Services detailing the costs to provide services. Those reviews allow ELAP to determine when hospitals are profiting wildly, he said.
“It’s a very even-handed way to determine costs,” Kelly said. “We’re not trying to underpay them. We’re not trying to put them in a position where they are losing money.”
He said ELAP has found hospitals in the same city charging four to five times as much as their competitors for the same procedure.
French’s hospital bill was the first case out of more than 700,000 billing disputes handled by ELAP that went to a jury, Kelly said. All the other cases ended in settlements or with the hospital accepting ELAP’s billing analysis, he said. In the French case, the hospital appeared to be trying to set a judicial precedent, Kelly said.
“We do believe if a health system or medical provider is charging an amount completely out of line, then we have to be prepared for litigation,” Kelly said. “In this case, we thought protecting Mrs. French was critical. The amount being charged was unconscionable, which the jury believed, too.”
