California Courts Clarify Effect of Hospital Conditions of Admission Forms
Hospitals typically require patients to sign Conditions of Admission (COA) forms, which constitute a contract between the hospital and the patient. COAs typically outline the patient's obligations with respect to the hospital services they receive, which may include the duty to pay for services rendered per the hospital's chargemaster (or to assign to the hospital rights that the patient may have under the patient's health insurance plan). In addition, COAs include provisions under which patients provide informed consent for treatment and may also require patients to confirm their understanding of various arrangements related to their treatments (e.g., that physicians staffing the hospital are independent contractors and not employees, representatives, or agents of the hospital). Though challenges have been made to the enforceability of various provisions of hospital COAs, California courts have recently clarified the effect of at least two common COA features.
1. Can a signed COA provide sufficient notice of unspecified future hospital charges?
Yes. In Nolte v. Cedars-Sinai Medical Center, 236 Cal. App. 4th 1401 (Cal. App. 2d Dist. 2015), the California Court of Appeal upheld the dismissal of a patient's lawsuit claiming that certain hospital charges were unfairly assessed because the charges were purportedly not specifically described to the patient in advance. In its holding, the Court of Appeal noted that the signed COA required the patient to pay charges and did not require the hospital to specifically disclose charges in advance and that the hospital met its notice duties under California law by publishing its chargemaster.
After receiving services at an outpatient hospital facility, the patient was assessed a "facility fee" that the hospital charged to enroll new patients into the hospital billing system. The patient argued that because he was not specifically advised or otherwise given prior notice of the facility fee beforehand, the assessment of the fee was unfair and fraudulent under California's Unfair Competition Law, Business & Professions Code §17200. In dismissing the suit, the court noted that the patient signed the hospital's COA, stating that he understood that he was being admitted to a hospital facility for outpatient services, that the hospital and its independent physician contractors would bill him for their services separately, and that the patient agreed to pay for such services.
The Court of Appeal ruled that the patient's allegation that the hospital did not separately and specifically disclose and explain the facility fee to him was not unfair or fraudulent under the Unfair Competition Law because (1) the terms of the COA did not require the hospital to obtain the patient's consent to specific charges, (2) California law only requires hospitals to post their chargemasters online and to post notices of their online chargemasters in their facilities (see Health & Safety Code §1339.51), and (3) the chargemaster notices under California law were reasonable.
Overall, Nolte stands for the proposition that hospitals may enforce signed COAs in which (1) patients acknowledge that they are being admitted to a hospital facility and agree to pay separate charges for services rendered by the hospital and its independent contractor physicians and (2) hospitals do not agree to identify specific charges. When such a COA has been properly executed, hospitals need not disclose each specific charge that may be assessed as a result of the hospital visit where hospitals meet all legal requirements regarding disclosure of charges.
2. Can signage and COAs stating that physicians are independent contractors relieve a hospital of liability for physician malpractice?
No, but signage and COAs can be part of the factual analysis of whether a physician was an agent of a hospital. In Whitlow v. Rideout Memorial Hospital, 237 Cal. App. 4th 631 (Cal. App. 3d Dist. 2015), the Court of Appeal examined a grant of summary judgment striking down a patient's claims of malpractice against a hospital based on the purported malpractice of its emergency physicians. In reversing, the Court of Appeal noted that signed COAs and other indicia of the independent contractor nature of emergency physicians were not sufficient as a matter of law to defeat claims that a hospital is liable for the purported malpractice of its emergency physicians under an ostensible agency theory.
The trial court ruled that the emergency room physician who failed to diagnose and treat a decedent's brain hemorrhage was not an ostensible agent of the hospital as a matter of law. The Court of Appeal sided with the patient's estate, which argued that despite the signed COA and signage stating the emergency room physicians are independent contractors, and despite the presence of insignia on the physician's clothing identifying the physician's medical group employer, triable issues of material fact existed as to whether the patient entrusted herself to the hospital; whether the hospital selected the physician; whether the patient reasonably believed the physician was an agent of the hospital; and whether the form, signage, and insignia could give meaningful notice of the employment status of the emergency room physician to a patient suffering an acute medical condition.
Whitlow stands for the proposition that COAs and other notices explaining that physicians are independent contractors rather than employees of hospitals are not sufficient, as a matter of law, to conclusively dispose of claims against the hospital for the physician's malpractice. Though this opinion's clearest implications relate to how hospitals formulate their physician credentialing and privileging standards and risk assessment processes, the decision also reminds hospitals that COAs do not exist in a vacuum, but are in some cases only one part of a larger factual analysis.
Conclusion
Although the courts have not consistently enforced COA provisions, hospitals should continue to use COAs to clearly describe patient responsibilities, obligations, and understandings with respect to the hospital services they receive. The importance of properly drafted and appropriately implemented COAs will continue to increase due to the increased scrutiny being applied to many of the items covered in COAs. As consumers continue to question hospital pricing policies, legislators continue to conduct inquiries regarding hospital billing practices, and as various government agencies continue to implement complicated new regulatory regimes delineating specific requirements relating to hospital billing and collections rules (e.g., Internal Revenue Code Section 501(r), California Hospital Fair Pricing Act), hospitals must take special care to properly draft and implement COAs to ensure that they will be effective.