Patients can challenge the "reasonableness" of hospital liens - Frost vs. Parkview

On September 1, 2016, the Indiana Supreme Court affirmed the right of Indiana consumers to challenge the "reasonableness" of hospital charges that form the basis of hospital "liens."

Under Indiana law, hospitals are entitled file a "hospital lien" to recover payment for accident-related hospital charges from the proceeds of a patient's personal injury settlement or verdict. In a recent Indiana Court of Appeals case, Parkview Hospital, Inc. v. Frost, a hospital in Fort Wayne, Parkview Hospital, argued that patients had no right to challenge or contest the "reasonableness" of hospital charges forming the basis of a hospital lien. Parkview Hospital alleged that the hospital's "Chargemaster" rates are "reasonable per se."

Frost's attorney, Edward Chester, of Elkhart, pointed out that a hospital billing expert determined that the reasonable value of Parkview's charges was only about 39% of the $625,000 of the total hospital lien filed by the hospital. Attorney Chester sought to obtain information from Parkview Hospital regarding discounts provided to patients with private insurance aswell as discounts provided to patients with government-funded insurance plans such as Medicare and Medicaid to prove that Parkview's charges to uninsured patients were inflated.Parkview's counsel, Attorney Theodore Storer, argued that Mr. Frost was not entitled to information about discounts to insured patients because "a person who is not a member of the club should not get the benefits of the club."

In March of 2014, the Indiana Court of Appeals held that patients are indeed entitled to challenge the "reasonableness" of hospital charges. The Court of Appeals also determined thatpatients are are entitled to obtain discovery from hospitals regarding hospital bill discounts provided to insured patients because those discounts are pertinent to issue of whether the hospital's chargemaster rates arereasonable. Parkview Hospital appealed the Indiana Court of Appeals ruling to the Indiana Supreme Court.

In a significant victory for Indiana consumers, on October 3, 2016,the Indiana Supreme Court voted, in a 3-2 decision, that it would not take the case. As such, the Indiana Court of Appeals decision permitting patients to challenge the reasonableness of hospital liens and sanctioning discovery of hospital discounts to insured patients is now the law of the State of Indiana.

This is another case where the Indiana Trial Lawyers Association ("ITLA") went to bat for Indiana consumers by filing amicus briefs with both the Indiana Court of Appeals as well as the Indiana Supreme Court. Fort Wayne attorney and ITLA member Thomas Manges authored the amicus briefs. David L. Farnbauch, of the Sweeney Law Firm, served as local counsel for Thomas Frost at the trial court level.

The Indiana Court of Appeals decision in the Frost case can be viewed at:Parkview Hospital, Inc. vs. Thomas E. Frost et al.