Centura Health Corp. v. French

• Decision Date: 28 May 2020
• Docket Number: Court of Appeals No. 19CA0023
• Citation: 490 P.3d 780
• Court: Colorado Court of Appeals
• Parties: CENTURA HEALTH CORPORATION and Catholic Health Initiatives Colorado, d/b/a St. Anthony North Health Campus, Plaintiffs-Appellants, v. Lisa Melody FRENCH, Defendant-Appellee.

490 P.3d 780

CENTURA HEALTH CORPORATION and Catholic Health Initiatives Colorado, d/b/a St. Anthony North Health Campus, Plaintiffs-Appellants,

v.Lisa Melody FRENCH, Defendant-Appellee.

Court of Appeals No. 19CA0023

Colorado Court of Appeals, Division VII.

Announced May 28, 2020

McConnell Van Pelt, LLC, Traci L. Van Pelt, Michael T. McConnell, David A. Belsheim, Denver, Colorado, for Plaintiffs-Appellants

FISHERBROYLES LLP, Frank C. Porada, Thomas E. Lavender III, Denver, Colorado; FISHER BROYLES LLP, Kristopher R. Alderman, Atlanta, Georgia, for Defendant-Appellee

Opinion by JUDGE FOX

¶1 Plaintiffs, Centura Health Corporation and Catholic Health Initiatives Colorado, doing business as St. Anthony North Health Campus (the Hospital), appeal the judgment entered on a jury verdict finding that defendant, Lisa Melody French, was only liable to the Hospital for the "reasonable value" of its services rather than the Hospital's bill.

¶2 On appeal, the Hospital argues that the trial court erred by ruling that the hospital services agreement (HSA) French signed was ambiguous and allowing the jury to decide the parties’ contractual intent. We agree with the Hospital that the HSA's price term unambiguously referred to its chargemaster rates and was sufficiently definite to be enforceable. Therefore, we reverse the trial court's judgment that the term was ambiguous.

¶3 Because we reverse on this issue, we need not address the Hospital's remaining contentions that the trial court erred by denying the Hospital's motions for a directed verdict and judgment notwithstanding the verdict, and its motion to amend its complaint.¹

I. Background

¶4 In June 2014, French was admitted to the Hospital for elective spinal fusion

surgery. French had health care benefits from her employer, who offered a self-funded plan to its employees administered by Professional Benefit Administrators, Inc. (PBA) and ELAP Services, LLC (ELAP).² ELAP was the "designated decision maker" for the plan. The Hospital had no provider agreement or negotiated contract with French's employer, PBA, or ELAP; thus, the Hospital considered French to be an out-of-network patient.

¶5 Before the surgery, French received a cost estimate, stating that the spinal fusion

surgery would cost $57,601.77, and that after her insurance payment, she would only be responsible for $1336.90.³ French also signed, three separate times before the surgery, a two-page HSA providing that she "understood that there is no guarantee of reimbursement or payment from any insurance company." French also "acknowledge[d] full financial responsibility for, and agree[d] to pay, all charges of the Hospital ... not otherwise paid by my health insurance."

¶6 French's surgery had complications, and after a five-day hospital stay, French was billed $303,709.48. French paid the Hospital $1000, and after ELAP audited the bill, French's health insurance paid $73,597.35, leaving a balance of $229,112.13. The charges on French's bill were based on the Hospital's "chargemaster" rates, whereby the Hospital used a computer billing system to set predetermined rates for specified medical services. Specifically, when a patient receives a service, the service is recorded in the patient's medical record, which interacts with the chargemaster database by identifying the service's code, and then an automatic bill is generated for that service.

¶7 In June 2017, after failed collection attempts, the Hospital sued French for breach of contract to recover the unpaid hospital bill. Before trial, the Hospital sought to amend its complaint to add French's employer, PBA, and ELAP as defendants, but the trial court denied its request. The trial court also denied the Hospital's pretrial motion asking the court to declare that, as a matter of law, the HSA's phrase, "all charges of the Hospital," unambiguously referred to the Hospital's chargemaster rates.

¶8 Following trial, the jury found that French had breached the HSA, which it found was a binding contract requiring French to pay "all charges of the Hospital ... not otherwise paid by my health insurance or other payor." However, because the trial court had previously held that the term "all charges" was ambiguous, the jury was asked to interpret the term, and it concluded that "all charges" meant the "reasonable value of the goods and services" provided to French. Employing that definition, the jury found that French owed the Hospital $766.74 (rather than the $229,112.13 billed balance).

II. HSA

¶9 The Hospital argues that the trial court erred by ruling that the term "all charges" in the HSA was ambiguous, thereby allowing the jury to decide that the term meant the "reasonable value" of the services French received. We agree.

A. Additional Background

¶10 Three separate times before the surgery, French signed a two-page HSA and a two-page patient bill of rights. The HSA provided that French

understood that there is no guarantee of reimbursement or payment from any insurance company .... 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. ... Any remaining charges are due and payable upon receipt of the bill.

¶11 The HSA also stated that French understood that she was "financially responsible to the Hospital or my physicians for charges not covered or paid[.]" Under the acknowledgment of patient rights and responsibilities, the HSA reiterated, "I agree to accept the consequences if I disregard my rights and responsibilities."

¶12 The patient bill of rights listed ten patient responsibilities, including that the patient must "[u]nderstand and honor financial obligations related to your care, including understanding your own insurance coverage." The patient bill of rights also stated that a patient has the right to "[r]equest and receive, prior to the initiation of non-emergent care or treatment, the charges (or estimate of charges) for routine, usual, and customary services and any co-payment, deductible or non-covered charges, as well as the facility's general billing procedures including receipt and explanation of an itemized bill."

¶13 When the trial court denied the Hospital's motion for a declaratory judgment, which asked the court to hold that the HSA's price term "all charges" unambiguously referred to the Hospital's chargemaster rates, the court ruled that it

cannot find that the hospital-patient forms incorporate or refer to the chargemaster as a matter of law. At issue in all of plaintiffs’ declaratory judgment claims is the phrase "all charges" in Paragraph 5 of the Hospital Service Agreement. According to plaintiffs, the plain meaning of "all charges" unambiguously refers to rates generated from the chargemaster. The court disagrees and finds that the term is ambiguous. The document signed by defendant is devoid of any reference to the Hospital's chargemaster and does not define the meaning of "all charges." At the very least, the hospital-patient forms are reasonably susceptible to more than one meaning. Therefore, the definition of "all charges" is a question of fact appropriately decided by the jury at trial.

¶14 At trial, French testified that she did not read the HSA, she did not understand that her insurer was out of network, and she believed she would only be responsible for her deductible and coinsurance (estimated at $1336.90). When asked if she expected to see a bill following her surgery, she responded that she believed her insurance company would handle the remaining balance, testifying that she "never expected a bill because [she] assumed [she] paid what [she] was supposed to pay." French further testified that she was unaware of any limits to her insurance coverage or limitations on what her insurance would pay the hospital, testifying, "I assumed when I was told [the surgery's] covered, it's covered."

B. Preservation, Standard of Review, and Applicable Law

¶15 The parties agree that the Hospital preserved this issue for appeal.

¶16 We review de novo whether a contract is ambiguous. Am. Family Mut. Ins. Co. v. Hansen , 2016 CO 46, ¶ 23, 375 P.3d 115 ; see also Ravenstar, LLC v. One Ski Hill Place, LLC , 2017 CO 83, ¶ 9, 401 P.3d 552 (whether a contract is enforceable is a question of law that we review de novo). We also review de novo whether the trial court applied the correct legal standard. Wal-Mart Stores, Inc. v. Crossgrove , 2012 CO 31, ¶ 7, 276 P.3d 562.

¶17 A contract's term is ambiguous "if it is susceptible on its face to more than one reasonable interpretation." Hansen , ¶ 24 (quoting USAA Cas. Ins. Co. v. Anglum , 119 P.3d 1058, 1059–60 (Colo. 2005) ). If a contract is free from ambiguity, we enforce it as written. Id.

¶18 In determining whether a contractual provision is ambiguous, we examine and construe the language in harmony with the plain and generally accepted meaning of the words employed. Parrish Chiropractic Ctrs., P.C. v. Progressive Cas. Ins. Co. , 874 P.2d 1049, 1055 (Colo. 1994). We also examine the entire contract and do not view clauses or phrases in isolation in order to give effect to all provisions. Mid Century Ins. Co. v. Gates Rubber Co. , 43 P.3d 737, 739 (Colo. App. 2002) ; Town of Silverton v. Phx. Heat Source Sys., Inc. , 948 P.2d 9, 11 (Colo. App. 1997).

¶19 Mere potential for more than one interpretation does not, by itself, create an ambiguity. Branscum v. Am. Cmty. Mut. Ins. Co. , 984 P.2d 675, 678 (Colo. App. 1999). And mere disagreement between the parties about the meaning of a term does not create an ambiguity. Morley v. United Servs. Auto. Ass'n , 2019 COA 169, ¶ 16. Nor may an unambiguous contract be made ambiguous by extrinsic evidence. Hansen , ¶ 27. Rather, ambiguity must first be shown to exist on the face of the contract. Parrish Chiropractic Ctrs., P.C. , 874 P.2d at 1056.

C. Analysis

¶20 Whether a patient's written promise to pay "all charges of the hospital" unambiguously refers to...