Key Points
- The Louisiana Supreme Court held that a hospital's standard assignment-of-benefits form does not obligate the hospital to bill a patient's health insurer before pursuing the patient or filing a lien.
- Relying on DePhillips (2020), the court said any contractual duty not to balance bill cannot be implied and must arise from a specific and express provision of the contract.
- The court refused to use a hospital corporate representative's deposition testimony to create an ambiguity, holding the form's terms clear on their face, and rejected quasi-contract theories for similar reasons.
- The per curiam resolved a split between the Third Circuit (Gibson I, 2023) and the Second Circuit (Bowden, 2024), overruling Gibson I insofar as it held summary judgment inappropriate.
- The court granted summary judgment and dismissed with prejudice the remaining claims of the plaintiff and the putative class; Justice Hughes dissented.
The Louisiana Supreme Court held on Oct. 30 that the standard assignment-of-benefits form a patient signs at a hospital does not obligate the hospital to bill the patient's health insurer before filing a lien against the patient. The ruling dismissed the last remaining claims in a putative class action that had been pending for a decade.
The court ruled in an unsigned per curiam opinion. It reversed a Vernon Parish district court that had twice refused to throw out contract claims brought by patient Dennis Gibson against National Healthcare of Leesville Inc., which does business as Byrd Regional Hospital. Justice Hughes dissented.
The decision resolves a conflict between two state appellate courts that had read the same uniform form language in opposite ways. The court also overruled the Third Circuit Court of Appeal's 2023 decision in Gibson's case to the extent it held that summary judgment was not appropriate. With Gibson's statutory claims already dismissed as untimely, the ruling forecloses his contract theory.
Gibson filed suit in 2016. He alleged that after he received emergency medical treatment, Byrd "improperly obtained a lien against him for the undiscounted bill rate without first seeking to collect from his health insurer." He sued for breach of contract and under the Balance Billing Act, which, the court explained, bars a contracted health care provider from collecting more from an insured patient than the contracted reimbursement rate.
The statutory claims fell away after the Supreme Court's 2020 decision in DePhillips v. Hospital Service District No. 1 of Tangipahoa Parish. That case held that Balance Billing Act claims are tort claims subject to a one-year prescriptive period. The district court then dismissed Gibson's claims under the act as prescribed.
The contract claims rested on an assignment Gibson signed when he was treated, which acknowledged that he was "responsible for any charges not covered by my insurance company." The form also said he was "obligated to pay the account of the Facility in accordance with the regular rates and terms of the Facility." Gibson argued that Byrd had thereby assumed a contractual duty to submit his bills to his insurer before trying to collect from him directly.
The Third Circuit agreed in 2023, affirming the denial of Byrd's first summary judgment motion. The appeals court wrote that it could not conclude "that Byrd is under no contractual obligation to file a claim with Mr. Gibson's medical insurer before, or instead of, filing a medical lien against the patient." It warned that Byrd's reading "could lead to unjust priority treatment of patients whose services stem from accidental injuries for whom someone other than the patient is responsible." The Supreme Court denied review of that ruling in October 2023.
About a year later, the Second Circuit Court of Appeal reached the opposite result in Bowden v. Ruston Louisiana Hospital Co. There, a patient sued Northern Louisiana Medical Center, alleging that it billed him directly for vehicle-accident treatment instead of first seeking payment from his insurer. He relied on the same uniform assignment language. The Bowden court expressly declined to follow the Third Circuit, reasoning that the language did not state that the hospital had any obligation to seek payment from the patient's insurer.
After the statutory claims were dismissed, Byrd renewed its motion. The district court denied it again, the Third Circuit refused supervisory relief, and the Supreme Court granted certiorari and scheduled the matter for oral argument.
The Supreme Court rejected the Third Circuit's reading. It said DePhillips had left open the possibility of a contractual duty not to balance bill that exists apart from the statute, but "our opinion made it very clear that such an obligation cannot be implied but must arise from a specific and express provision of the contract." The court recalled that DePhillips had refused to recognize a general good-faith duty not to balance bill because doing so "would convert many, if not all, delictual actions into contract claims."
"This language clearly establishes plaintiff's obligations as the patient to pay for the medical treatment he received at Byrd," the court wrote. "It does not impose any obligation to seek payment from plaintiff's health insurance." Clear contract words, the court said, must be enforced as written.
The court also rejected Gibson's effort to create an ambiguity with extrinsic evidence. Gibson pointed to a deposition in which Byrd's corporate representative agreed that insured patients could reasonably presume the form's "regular rates and terms" would be controlled by their insurance agreements and the discounted rates in them.
The court held that the parties' intent is ordinarily determined from the four corners of the instrument and that extrinsic evidence is inadmissible to explain or contradict its terms. The agreement "clearly and unambiguously establishes the parties' intent to place no obligation on Byrd to submit a claim to the patient's insurer prior to seeking to recover from the patient directly," the court wrote. A footnote rejected Gibson's quasi-contract theories for similar reasons.
Justice Hughes dissented in a one-paragraph opinion. "This is not a balance billing case. There is a contract between the patient and the hospital," Hughes wrote, citing the form's "responsible for any charges" clause. "If hospitals find this language inconvenient they should remove it from the assignment form. This court does it for them." Hughes would have affirmed the lower courts.
The court did not send the case back for further proceedings. Its decree reversed the district court and granted summary judgment itself, dismissing the remaining claims of Gibson, individually and on behalf of all others similarly situated, with prejudice.