Hospital May Seek Full Payment from Third Party Insurer

August 5, 2013 in Medical and Healthcare, Ohio Courts by Brad Council

In response to the increasing influence of health insurance corporations and medical providers, the Ohio legislature attempted to set forth circumstances under which a hospital or other provider could collect on medical debt, and from whom. On July 8, 2013, in Annette Hayberg v. Robinson Memorial Hospital Foundation, the Ohio Court of Appeals interpreted one such attempt: RC 1751.60(A). That section states “every provider or health care facility” as therein defined “that contracts with a health insuring corporation to provide health care services to the health insuring corporation’s enrollees or subscribers shall seek compensation for covered services solely from the health insuring corporation and not, under any circumstances, from the enrollees or subscribers.”

The case began with a car accident in October 2003, resulting in Annette Hayberg being injured. The driver at fault was Hayberg’s husband, who was employed by General Motors Corporation, with whom he (and she) had health insurance (“GM plan”). That plan was administered by Anthem Blue Cross and Blue Shield (“Anthem”). The car was insured by Nationwide Insurance Company (“Nationwide”). Beginning with Hayberg’s stay in defendant’s hospital following the accident: Anthem paid the hospital 89% of the total invoice, per the contract between Anthem and General Motors. When it became clear that Nationwide was liable for the medical expenses, Nationwide paid the full invoice, at which point the hospital reimbursed Anthem.

The initial litigation centered on the $2,566.06 difference between what Anthem paid the hospital and what Nationwide paid. After the trial court granted summary judgment in the hospital’s favor and denied her cross motion for summary judgment, Hayberg appealed.

On appeal, Hayberg alleged two assignments of error, (1) since the hospital was under contract with Anthem, it was prohibited from seeking compensation from appellant in excess of the contracted rates plus approved co-payments and deductibles; and (2) appellee violated R.C. 1751.60 by seeking and retaining compensation in excess of the contracted rates plus approved co-payments and deductibles under the contract with Anthem. Hayberg v. Physicians Emergency Serv., Inc., 2008-Ohio-6180 (Ohio Ct. App. Nov. 28, 2008).

On appeal, the Court held that the statute did not permit the hospital to collect a greater amount than it was entitled to under its contract with General Motors, reversed the trial court’s decision and remanded it for further consideration. While the case was on remand, a new decision came out of the Supreme Court of Ohio, King v. ProMedica Health System, Inc., 129 Ohio St.3d 596, 2011-Ohio-4200. King held that per the express terms of 1751.60(A), the statute is applicable only when there is a contract between a provider and a health insuring corporation, and provider seeks compensation for services rendered and it is violated when the provider seeks compensation directly from the insured, rather than from third parties, such as auto insurers. Defendants filed a motion requesting summary judgment in light of the express holding of King, maintaining that King had the effect of nullifying the appellate court’s prior holding with regards to the claim’s viability under the statute; the trial court agreed and summary judgment was granted.

Hayberg, in her second appearance before the Court of Appeals, alleged the trial court committed prejudicial error by granting the appellee’s motion for summary judgment based on the “law-of-the case doctrine.”  The doctrine holds that a prior decision of a reviewing court (here the appellate court’s first decision) is to remain binding upon both the trial and appellate court in all ensuing proceedings. It does not allow trial courts to alter appellate mandates, except when there are intervening decisions from the Supreme Court, and therefore the Court of Appeals first interpretation of the statute should have been applied to the trial court’s decision and summary judgment should not have been granted. However, the Court ruled that King qualified as an intervening event, supplanting their earlier decision. Under King, the statute does not apply to the hospital’s separate request for payment from Nationwide, since it only applies when there is a contract between the hospital and insurer. Therefore, summary judgment in the hospital’s favor was appropriate.

The Full Text of the Opinion May Be Found Here:

http://www.sconet.state.oh.us/rod/docs/pdf/11/2013/2013-ohio-2828.pdf

Special thanks to Meredith Hughes for her contributions to this article.  Meredith is a Litigation Clerk with Slovin & Associates Co., L.P.A. and student at the University of Cincinnati College of Law.