Florida Appeals Court Finds That Non-Contracted Providers Cannot Balance Bill Patients When an HMO is Liable

A Florida Appeals Court upheld a ruling last month that a hospital-based but non-contracted provider may not balance bill patients for amounts unpaid by the patients’ HMO, when the HMO has accepted liability. The text of the ruling can be found here.

In this case, the patients, each a subscriber to one HMO, received pre-authorization from the HMO to undergo surgical procedures at a hospital under contract with the HMO. The hospital’s contract with the HMO empowered the hospital to direct hospital-based physicians to perform services for the HMO’s members.

The anesthesia provider who performed anesthesia services in conjunction with the surgical procedures had an exclusive relationship with the hospital, but was not directly contracted with the HMO. The patients had little-to-no direct contact with the anesthesia provider prior to the procedures. The anesthesia provider then billed the HMO for services provided; the HMO issued payments, which the anesthesia provider accepted, that were for lesser amounts than what had been billed. The anesthesia provider subsequently issued bills for the remaining amounts to the patients.

The patients brought a suit seeking declaratory against the provider based on Section 641.3154 of Florida Statutes (2007), which states,

A provider or any representative of a provider, regardless of whether the provider is under contract with the health maintenance organization, may not collect or attempt to collect money from, maintain any action of law against, or report to a credit agency a subscriber of an organization for payment of services for which the organization is liable, if the provider in good faith knows or should know that the organization is liable.

Because the HMO had issued pre-authorization for the procedures at issue, the HMO had accepted liability for the procedure. Because the anesthesia provider was aware of the pre-authorizations, it should reasonably have known that the HMO had accepted liability.

The court ruled that any payment dispute is between the HMO and the anesthesia provider. Because the HMO had accepted liability for the procedures and because he anesthesia provider knew about it, the patients cannot be billed for the balance.

For more information, contact Abby Pendleton, Esq. at (248) 996-8510.