Balance billing by non-contracted emergency room providers is clearly, and unanimously, barred.

When you become acutely ill, injured or sick, and need to be rushed the emergency room, the last thing on your mind is whether or not the emergency room that you are rushing or being rushed to is a preferred or contracted provider under your HMO.But prior to last January that was exactly what hospitals and insurance companies wanted you to do.  And, says a San Francisco Car Accident Attorney, if you happened to show up at an emergency room that wasn’t in your plan – you ended up getting a bill for the difference between what the insurance company normally paid for the medical care you received and what the hospital charged you.  This is known as balance billing.

On January 8, 2009, the Supreme Court of California put an end to the scenario that I describe above, though only as it applied to emergency rooms that are outside of a particular HMO or insurance company’s plan. The court did this in its unanimous decision of Prospect Medical Group Inc. v. Northridge Emergency Medical Group.  Specifically, the court held unanimously that balance billing by non-contracted emergency room providers was barred under California law.

The court’s decision was a big win for consumers on several fronts.The judgement also has larger and more important ramifications for the Hanif/Nishihama discussion regarding collateral source and proof of the reasonable value of medical services rendered to a patient and/or plaintiff in a personal injury action.  In order to understand these implications and the broader importance of this decision, the underlying basis or support for the court’s decision must be understood.  Fortunately, the court made this an easy task.

Paramount to the court’s decision was the fact that the emergency room providers, under the Knox-Keene Health Care Service Plan Act, have recourse against a patient’s HMO or insurance plan when there is a dispute regarding the amount owed the health care providers.  The court made it very clear that it was not commenting on what the reasonable value for the services rendered was or what the providers should be paid.But should there be a contention over the extent owed the providers, the providers have a way of pursuing their money without affecting the patient.  Of course, the health care providers can’t avail themselves of the Knox-Keene Act if the patient doesn’t incur the debt of the full charges.Put differently, why would the court be concerned with emergency room providers’ ability to pursue disputed amounts if the only debt incurred was equal to what the HMO had paid?

The implication towards Hanif/Nishihama is clear: first, had the court wanted to indicate that the reasonable value of the medical services rendered to the patient was the contract rate offered by the HMO, it had a perfect opportunity and chose not to do so.  Second, the court clearly appears to recognize that the patient actually incurs a debt for the full charges of the medical services provided.  Otherwise, there would be nothing in dispute and no need for Knox-Keene.

Nevertheless, and despite the clear reasoning from the court, I have encountered defense attorneys attempting to argue that this case (Prospect) actually limits a plaintiff’s award for past medical damages to what has been paid by the HMO.  Their reasoning is over simplistic but it works like this – since the plaintiff can’t be billed for the balance, they never owed it or did not incur more the contract amount.is it therefore the case that the plaintiff is not entitled to more than that fee or to introduce more than that fee at trial.

While this reasoning is clearly flawed for points previously made, it should also be noted the court explicitly limits its holding, which further undercuts the defense perspective.

Our holding is limited to the precise situation before us – billing the patient for emergency services when the doctors have recourse against the patient’s HMO.  We express no opinion regarding the situation when no such recourse is available; for example, if the HMO is unable to pay or disputes coverage.

Simply stated, says a leading San Francisco Wrongful Death Lawyer, the court concluded that emergency room providers may not bill a patient for services that the HMO or insurance plan is obligated to pay.  The point that the HMO is only obligated to pay a debt that a subscriber has “incurred” seems to be lost on the defense.