The Indiana Supreme Court has disagreed with the Court of Appeals and affirmed a trial court’s dismissal of a declaratory action in the case of Allen v. Clarian Health Partners (pdf). (See my prior blog post here.)
If a price term is sufficiently vague in a contract, courts impute an agreement to pay a “reasonable” price for the goods or service. Plaintiffs argued that since the agreement they signed for hospital services did not specify a price, their agreement was to pay the reasonable price of services. When the hospital charged them more than the reasonable price, the patients argued that the hospital had breached the contract and requested a declaratory judgment to that effect. The trial court dismissed the action for failure to state a claim. The Court of Appeals disagreed, holding that because the contracts did not specifically reference the chargemaster or other extrinsic document (and noting that the chargemaster was not, in any case, a document available to a patient), the contract was open ended and, therefore, ambiguous as to price, meaning that a reasonable fee would be imputed.
The Indiana Supreme Court disagreed, deciding that, when you sign such an agreement with a hospital, you are really agreeing to pay – not the reasonable price – but, rather, whatever the hospital’s chargemaster says. The Indiana Supreme Court did not, however, address this difficulty highlighted by the Indiana Court of Appeals:
As we have already noted, Clarian contends that the chargemaster rates are “unambiguous” and “express[,] binding obligation[s]” on Allen and Moore. Appellee’s Br. at 5. But at oral argument counsel for Clarian stated that Clarian considers its chargemaster rates confidential and proprietary. Left unanswered by Clarian is how a patient and a provider can mutually agree to an “unambiguous” and “express” chargemaster fee schedule that is not available to the patient.
The decision was 5-0. Hopefully this at least undermines hospital claims that their chargemasters are confidential, proprietary, and/or trade secrets of some sort. One of the problems with our health care system is that pricing is so opaque.