Colorado Supreme Court rules in favor of woman who expected to pay $1,337 for surgery but was charged $303,709

A woman who expected to pay $1,337 for surgery at a Westminster hospital nearly a decade ago but was billed $303,709 may finally be off the hook for the massive bill after the Colorado Supreme Court ruled in her favor Monday.

The justices unanimously found that the contracts patient Lisa French signed before a pair of back surgeries in 2014 at St. Anthony North Health Campus do not obligate her to pay the hospital’s secretive “chargemaster” price rates, because the chargemaster — a list of the hospital’s sticker prices for various procedures — was never disclosed to French and she had no idea the chargemaster existed when she signed the contracts.

At the time, the hospital had represented to French that the surgeries were estimated to cost her $1,337 out of pocket, with her health insurance provider covering the rest of the bill.

But the hospital’s estimate was based on French’s insurance provider being “in-network” with the hospital, which it was not. A hospital employee gave a mistaken estimate after apparently misreading French’s insurance card.

After her surgeries, the hospital billed $303,709 for French’s care; her insurance paid about $74,000 and the remaining balance of $228,000 was disputed in a civil case.

Attorneys for Centura Health, which operates the nonprofit hospital, had argued that the contracts, which required French to pay “all charges of the hospital” for her care, implicitly included the hospital’s then-secret pricing schema.

The state Supreme Court justices rejected that argument, finding that “long-settled principles of contract law” show that French did not agree to pay the chargemaster prices when she signed the contracts, which never mention or reference the chargemaster.

“(French) assuredly could not assent to terms about which she had no knowledge and which were never disclosed to her,” Justice Richard Gabriel wrote in the court’s opinion.

The justices also noted that chargemaster prices are divorced from actual costs for care. Few patients actually pay the chargemaster’s sticker prices for care, because insurance companies negotiate lower prices with the hospital to become “in-network.”

“…Hospital chargemasters have become increasingly arbitrary and, over time, have lost any direct connection to hospitals’ actual costs, reflecting, instead, inflated rates set to produce a targeted amount of profit for the hospitals after factoring in discounts negotiated with private and governmental insurers,” Gabriel wrote.

Colorado lawmakers in 2017 passed a law requiring hospitals to make some self-pay prices public, and in 2019, a federal agency required hospitals to make their chargemaster prices public. None of those protections were in place when French underwent her surgeries in 2014.

Monday’s decision overturns the Colorado Court of Appeals, which had found in favor of the hospital. The Court of Appeals’ ruling noted that hospitals cannot always accurately predict what care a patient will need, and so they can’t lock in a firm price, and concluded that the term “all charges” in French’s contract was “sufficiently definite” because the chargemaster rates were pre-set and fixed.

The state Supreme Court justices instead upheld the trial court’s ruling, in which a judge found the contracts were ambiguous and sent the case to a jury to determine whether French breached her contract with the hospital and, if so, how much she should pay.

Jurors decided she did breach her contract but only owned the hospital an additional $767. The state Supreme Court’s ruling reinstates that verdict, said Ted Lavender, an attorney for French.

“This should be the end of the line for her,” he said of French. “This opinion reinstates the jury verdict, which was a win for her, and (the case) will now revert back to that win. I have spoken with her today and she is very happy with the result.”

A spokeswoman for Centura Health did not immediately comment Monday.