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    Legal: Charging higher prices for uninsured patients: Outcome of lawsuit determined by state statutes on unfair practices

    David J. Goldberg, M.D., J.D.
    Dr. Fees has a large dermatology practice in an urban Midwestern community, Over the past two years, he has seen an increased number of people without health insurance. He has noted that uninsured patients may wait longer to come to the physician, but they eventually do show up. In fact, these patients have presented him with a unique economic advantage.

    He charges his uninsured patients double what he bills to contracted managed care insured patients. Not only does he charge these patients more, but he also aggressively pursues them with collection agencies if they fail to pay. Much to Dr. Fees' surprise, an uninsured patient sues him over this dual pricing scheme. Can Dr. Fee charge higher fees for the uninsured as compared to the insured?


    Both not-for-profit and for-profit hospitals across the United States have policies of charging uninsured patients more than insured ones, and some physicians, aware of this fact, have done the same. However, over the last several years uninsured patients have increasingly sued hospitals for such policies. The success of these claims depends on the state statutes where the litigation has been filed.

    In Morrell v. Wellstar Health System, a patient argued that the hospital violated the Georgia Uniform Deceptive Trade Practices Act because it charged unreasonable rates and charged the uninsured higher rates than insured patients. The Georgia statute at issue prohibited fraudulent misrepresentation, false advertising, or false and misleading statements. The court found nothing illegal about the hospital's policies, because the hospital made patients aware of its fees.

    Despite this, and other similar decisions, some uninsured patients have been successful in their consumer protection claims.

    In Servedio v. Our Lady of the Resurrection Medical Center, a lawsuit was brought by several uninsured patients who owed the hospital more than $60,000. None of the patients were able to pay for their medical services and the hospital vigorously tried to collect the debt, even bringing a lawsuit against one of the patients.

    The patients claimed they were charged inflated rates double and triple what an insured patient would pay, they were not considered for charity care, and excessive collection methods were used in collecting their debt.

    In fact, Resurrection Medical Center had the highest charge-to-cost ratio of any Chicago hospital. The Illinois court ruled that medical services sold by a hospital were a form of trade or commerce, and that the hospital's conduct was immoral, unethical, oppressive and clearly against public policy.

    Litigation entitled In re. Sutter Health Uninsured Pricing Cases involved a group of uninsured patients of a California hospital who alleged they were charged unreasonable rates compared to the rates charged insured patients. The California Supreme Court noted that under the California Unfair Competition Law, any "unlawful, unfair or fraudulent business act or practice" was a violation. Ultimately, Sutter agreed to a policy that provided discounts to uninsured patients.

    Whether Dr. Fees loses his lawsuit will be determined by his state statutes on unfair practices. He will likely need advice from a health law attorney.

    Dr. Goldberg is the director of SkinLaser & Surgery Specialists of New York and New Jersey; director of Mohs surgery and laser research, Mount Sinai School of Medicine; and adjunct professor of law, Fordham Law School.

    David J. Goldberg, M.D., J.D.
    Dr. Goldberg is Director of Skin Laser & Surgery Specialists of New York and New Jersey, Director of Mohs Surgery and laser research, ...

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