Doe v. Hca Health Services of Tn, 98-00267

CourtSupreme Court of Tennessee
Citation46 S.W.3d 191
Docket Number98-00267
Decision Date24 May 2001


No. M1998-00267-SC-R11-CV


October 3, 2000 Session

Filed May 24, 2001

Appeal by Permission from the Court of Appeals, Middle Section Circuit Court for Davidson County: No. 92C-2041

Hamilton V. Gayden, Jr., Judge

We granted this appeal in order to determine whether a hospital's form contract in which the patient agrees to pay the "charges" not covered by insurance is sufficiently definite to constitute a valid contract. The trial court held that the word "charges" was sufficiently definite because the amount of the charges could be determined by referring to the hospital's confidential list of prices for all its goods and services; however, the court went on to hold that the hospital's charges had to be "reasonable." The Court of Appeals held that the form contract did not incorporate the hospital's secret price list because the form contract contained no "reference to any 'document, transaction or other extrinsic fact' to which reference could be made to ascertain the amount [the patient] promised to pay"; consequently, the intermediate court found that the secret price list was not an independent, objective, or verifiable method by which to determine hospital charges. The intermediate court elected not to declare the contract unenforceable. Instead, the Court of Appeals affirmed the trial court's judgment, holding that the patient is obligated to pay a "reasonable" charge for the medical goods and services she received. We affirm the judgment of the Court of Appeals.

Tenn. R. App. P. 11 Appeal by Permission; Judgment of the Court of Appeals Affirmed and Case Remanded to the Davidson County Circuit Court.

E. RILEY ANDERSON, C.J., delivered the opinion of the court, in which ADOLPHO A. BIRCH, JR., JANICE M. HOLDER, and WILLIAM M. BARKER, JJ., joined. FRANK F. DROWOTA, III, not participating.

H. Lee Barfield, II; James O. Bass, Jr.; Robert E. Cooper, Jr.; Matthew M. Curley; and Lyle Reid, Nashville, Tennessee, for the appellant, HCA Health Services of Tennessee, Inc.

G. Gordon Bonnyman, Jr.; John A. Day; and Kathryn Barnett, Nashville, Tennessee; and Ralph I. Knowles, Atlanta, Georgia, for the appellees, Jane Doe and John Doe.

William B. Hubbard, Nashville, Tennessee, for the Amici Curiae, THA - An Association of Hospitals and Health Systems - and Adventist Health System Sunbelt Healthcare Corporation.

W. Ovid Collins, Jr. and Blakeley D. Matthews, Nashville, Tennessee, for the Amicus Curiae, Tennessee Association of Business.



Jane Doe was scheduled to have a surgical procedure at HCA Donelson Hospital in July 1991.(FN1) The defendant, HCA Health Services of Tennessee, Inc., operated HCA Donelson Hospital. After the events that led to this lawsuit, the hospital moved to a new location and was renamed Summit Medical Center. For ease of reference, we will refer to the hospital as HCA Donelson Hospital. She was insured at the time through her husband's employer. As part of the hospital's pre-admission process, Jane Doe signed a hospital form titled "Assignment of Benefits" ("the contract") which read in part as follows:

I hereby authorize payment to HCA Donelson Hospital insurance benefits herein specified and otherwise payable to me but not to exceed the total charges for this hospital confinement. . . . I understand I am financially responsible to the hospital for charges not covered by this authorization. I further assume responsibility for payment of reasonable attorney/and/or collection fees in the event such costs are incurred in the collection of this debt.

(Second emphasis added.)

Jane Doe was admitted to HCA Donelson Hospital on July 2, 1991. She had her scheduled surgery and was released from the hospital on July 6, 1991. The total bill for Mrs. Doe's hospital stay was $6,731.05. This amount was determined according to the hospital's "Charge Master," a confidential list of charges made by the hospital for all its goods and services, which is used to compute charges for all private commercial patients who are treated on a fee-for-service basis. The Charge Master is compiled and maintained by the hospital's chief financial officer on the hospital's computer system. In 1991, the Charge Master contained approximately 295 pages and listed prices for approximately 7,650 items. The Charge Master is considered confidential proprietary information and is not shown to anyone other than the officers and employees of the hospital and authorized consultants. The Charge Master is adjusted on a weekly basis to reflect current cost data; the hospital's costs are marked up by a...

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