More specifically, Centura billed French $229,112.13, reflecting its full chargemaster rates (chargemaster is a database of over 50,000 codes that lists specific medical services and supplies, which was incorporated by reference into hospital services agreements that French had signed). Centura calculated the amount due after subtracting from the total charges the payment from French’s insurer of $73,597.35 and French’s payment of $1,000.00 (thus, the total amount that Centura charged was over $300,000.00, notwithstanding its pre-procedure estimate that the surgery would cost $57,601.77).
During discovery, French requested that Centura produce the chargemaster that applied on the dates of service for the medical care provided. Centura, however, objected to producing its chargemaster, stating that the chargemaster was “voluminous, proprietary and a trade secret.”
At trial, Centura witnesses conceded that they had provided French, at least over the phone, with an estimate indicating that her surgeries would cost $57,601.77 and that French would owe $1,336.90. They testified, however, that Centura staff had misread French’s insurance card and thus calculated the estimate based on their incorrect determination that French was in network for her surgery, when she was not. The Centura witnesses further testified that patients cannot directly access the chargemaster and that before French’s surgery, Centura did not provide to her and she could not have looked at the chargemaster. A Centura representative stated that the chargemaster rates were not incorporated into the estimate provided to French.
French had signed the two-page hospital services agreements (“HSAs”) that stated, in pertinent part, “I acknowledge full financial responsibility for, and agree to pay, all charges of the Hospital and of physicians rendering services not otherwise paid by my health insurance or other payor.” The jury found that the term “all charges of the Hospital” meant the “reasonable value of the goods and services provided to [French]” (and not the chargemaster rates) and that the chargemaster rates billed to French were not reasonable. The jury then determined that French owed Centura $766.74 in damages, apparently reflecting the balance due above the amounts already paid by French and her insurer.
In its May 16, 2022 opinion, the Colorado Supreme Court stated that “for contract terms outside the four corners of a contract to be incorporated by reference into the contract, the terms to be incorporated generally must be clearly and expressly identified … General or oblique references to a document to be incorporated, in contrast, are usually insufficient to support a finding that the document was incorporated by reference.” The Colorado Supreme Court stated: “no evidence in the record indicates that French even knew of the chargemaster’s existence. The chargemaster was not referenced in any way—even obliquely—in any of the HSAs (or in the Patient Bill of Rights forms) that French signed. Nor did French have any knowledge of the chargemaster’s terms or rates. Indeed, Centura representatives testified that the chargemaster was not provided to patients, and in this very litigation, Centura refused to produce its chargemaster to French, contending that it was proprietary and a trade secret … no evidence in the record shows that French ever assented to the chargemaster’s terms, much less clearly and knowingly assented to such terms … She assuredly could not assent to terms about which she had no knowledge and which were never disclosed to her. Accordingly, we conclude that Centura’s chargemaster was not incorporated by reference into the HSAs that French signed. As a result, and as the trial court concluded, the price term of the parties’ agreement was left open, and the trial court properly allowed the jury to determine the reasonable value of Centura’s services here.”
The Colorado Supreme Court further stated: “Centura knew the procedures that would be performed on French, French’s course of treatment did not deviate substantially from the expected course, and nothing prevented Centura from providing, at very least, the chargemaster rates for the anticipated procedures (or a correct estimate based on those rates). Moreover, as courts and commentators have observed, 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 … [furthermore,] Centura has conceded that she would not have been able to understand or interpret the chargemaster’s over 50,000 codes, and thus, access to the chargemaster would not have established mutual assent to any of the rates contained therein.”
The Colorado Supreme Court held: “we conclude that the division below erred in determining that the HSAs that French signed incorporated Centura’s chargemaster by reference. We thus agree with the trial court that the price term of the HSAs was left open and that it was for the jury to decide the reasonable value of Centura’s goods and services, as it ultimately did … Because French had no knowledge of and did not clearly and knowingly assent to the terms of Centura’s chargemaster, we conclude, under long-settled principles of contract law, that the chargemaster was not incorporated by reference into the HSAs that French signed. As a result, the price term of the HSAs was left open, and the trial court properly tasked the jury with determining the reasonable value of the goods and services that Centura provided to French.”
Source French v. Centura Health Corporation and Catholic Health Initiatives Colorado, 2022 CO 20.
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