Lieff Cabraser Heimann & Bernstein, LLP

Spate of lawsuits forces change in not-for-profit hospital billing

Since federal judges have been unreceptive to uninsured patient' lawsuits for unfair higher prices, many plaintiffs have found their way to state court. There, with friendlier state consumer-fraud statutes, lawyers reached settlements with leading nonprofit hospital systems in more than half a dozen states. Among them are California, Missouri and, most recently, Illinois -- where suits against two major Chicago-area hospital systems settled earlier this year.

The settlements across the country vary, but one common provision says not-for-profit hospitals will offer uninsured patients discounted rates. Before, uninsured patients might be billed at two, three or more times what the hospital would bill an insured patient, their lawyers say. Many settlements also provide for partial rebates and debt relief on old medical bills.

A case's success depended largely on how the judge emotionally framed it, says San Francisco lawyer Kelly Dermody, the lead attorney in suits against four nonprofit hospital systems in California, including Sutter Health and Catholic Healthcare West. "Judges were either very sympathetic to the notion that people who didn't have insurance shouldn't be price-gouged relative to people who did, or they were hostile to the notion that uninsured patients -- who, as a population, tend not to pay all their bills -- would have the chutzpah to sue caregivers who often provide pro bono care," says Dermody, a partner at Lieff Cabraser Heimann & Bernstein.