Doe v. Hca Health Services of Tn

• Decision Date: 24 May 2001
• Docket Number: 98-00267
• Citation: 46 S.W.3d 191
• Parties: JANE DOE, ET AL. v. HCA HEALTH SERVICES OF TENNESSEE, INC., d/b/a HCA DONELSON HOSPITALIN THE SUPREME COURT OF TENNESSEE AT NASHVILLE
• Court: Tennessee Supreme Court

JANE DOE, ET AL. v HCA HEALTH SERVICES OF TENNESSEE, INC., d/b/a HCA DONELSON HOSPITAL

No. M1998-00267-SC-R11-CV

IN THE SUPREME COURT OF TENNESSEE AT NASHVILLE

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.

OPINION

BACKGROUND

Jane Doe was scheduled to have a surgical procedure at HCA Donelson Hospital in July 1991.¹ 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 mathematical formula designed to produce a targeted amount of profit for the hospital. When the Charge Master is adjusted on the hospital's computer, the hospital does not preserve or archive the earlier versions of the Charge Master.

Under the terms of its policy, Jane Doe's insurance carrier paid eighty percent of the hospital bill, leaving an unpaid balance of $1,346.21. The hospital billed Jane Doe for the unpaid balance. The Does then requested additional time to pay due to their financial circumstances. However, no payments were made, and after six months, the hospital referred the account to a collection agency.

During the collection process, the Does sued HCA Donelson Hospital seeking a declaratory judgment that the hospital breached its contract by demanding unreasonable charges for its goods and services.² The hospital answered, denying the allegations of the complaint, and filed a counter-claim to collect the unpaid balance of the account.

The hospital later moved for summary judgment. The hospital argued that the plaintiffs's claims against it are based upon the premise that the contract contained an "open price term," rather than a definite price. However, the hospital argued that the term "charges" is a definite price term because it refers to the hospital's Charge Master. The trial court found that the word "charges" in the contract is sufficiently definite because it can be quantified by reference to the hospital's Charge Master; consequently, the court held that the contract is valid. Despite its holding that the contract is valid, the trial court also ruled that the charges listed in the Charge Master must be "reasonable." The court found that there are material issues of fact concerning the preparation and reasonableness of the charges in the Charge Master, as well as material issues concerning whether Mrs. Doe's bill actually comported with the Charge Master. The trial court therefore denied the hospital's motion for summary judgment.

The Court of Appeals found the contract is indefinite because the promise in the contract to pay "charges" contains 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." The intermediate court rejected the hospital's argument that the Charge Master is such a document; the court concluded that the Charge Master is not an "independent, objective, or verifiable means" of determining the "charges" for Jane Doe's hospital stay.³ While the Court of Appeals found that the price term of the contract is indefinite, the court declined to hold that the contract is unenforceable; instead, the intermediate court agreed with the trial court (albeit on different grounds) that Mrs. Doe is "obligated to pay charges that are reasonable" and that the hospital is entitled to recover for the "fair value of the goods and services furnished[.]"

We granted HCA Donelson Hospital's application for permission to appeal.

ANALYSIS

Standard of Review

The standards governing appellate review of a motion for summary judgment are well settled. Summary judgment is proper when the moving party demonstrates that there are no genuine issues of material fact and that he or she is entitled to judgment as a matter of law. Seavers v. Methodist Med. Ctr. of Oak Ridge, 9 S.W.3d 86, 90-91 (Tenn. 1999); Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993).

We review summary judgments as a question of law; therefore, we review the record in this case de novo without a presumption of correctness to determine whether the requirements for summary judgment have been met. Griffin v. Shelter Mut. Ins. Co., 18 S.W.3d 195, 197-98 (Tenn. 2000); Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.1997). We must view the evidence and all reasonable inferences in the light most favorable to the nonmoving party. Seavers, 9 S.W.3d at 90-91; Byrd, 847 S.W.2d at 210_11. Summary judgment is appropriate only when the facts and inferences permit a reasonable person to reach only one conclusion. Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995) (citing Byrd, 847 S.W.2d at 210-11).

The ascertainment of the intention of the parties to a written contract is a question of law, rather than a question of fact. Hamblen County v. City of Morristown, 656 S.W.2d 331, 335-36 (Tenn. 1983) (citations omitted).

Indefiniteness of Essential Term of Contract

A contract "'must result from a meeting of the minds of the parties in mutual assent to the terms, must be based upon a sufficient consideration, free from fraud or undue influence, not against public policy and sufficiently definite to be enforced.'" Higgins v. Oil, Chem., and Atomic Workers Int'l Union, Local #3-677, 811 S.W.2d 875, 879 (Tenn. 1991) (quoting Johnson v. Central Nat'l Ins. Co. of Omaha, 210 Tenn. 24, 34-35, 356 S.W.2d 277, 281 (Tenn. Ct. App. 1962) (citations omitted)). Indefiniteness regarding an essential element of a contract "may prevent the creation of an enforceable contract." Jamestowne On Signal, Inc. v. First Fed. Sav. & Loan Ass'n, 807 S.W.2d 559, 565 (Tenn. Ct. App. 1990) (citing Hansen v. Snell, 354 P.2d 1070 (Utah 1960)). A contract "'must be of sufficient explicitness so that a court can perceive what are the respective...