Billing dispute fails to show hospital 'unbundled' treatment charges

An employer that is seeking to avoid payment has the burden of proving the hospital has unbundled its charges so as to itemize additional charges outside the established prevailing rate of reimbursement.

Case name: Steward Machine Co. Inc. v. Board of Trustees of the University of Alabama, No. 2080215 (Ala. Civ. App. 10/16/09).

Ruling: The Alabama Court of Civil Appeals determined that an employer did not show that a treating hospital "unbundled" its fees in order to charge more than the prevailing rate for reimbursement.

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What it means: In Alabama, hospitals that participate in the state workers' compensation program are required to set discounted rates based on the "prevailing rates" for reimbursement through an agreement with the Alabama Department of Industrial Relations. An employer that is seeking to avoid payment has the burden of proving the hospital has unbundled its charges so as to itemize additional charges outside the established prevailing rate of reimbursement.

Summary: An employer contested the amount the hospital charged for the inpatient services provided to an injured employee. The employer alleged the hospital engaged in "unbundling," or billing for the separate components of a procedure when the workers' compensation rate has been established. The employer argued the trial court incorrectly determined that the hospital's billing method was in compliance with Department of Industrial Relations' standards. The employer's experts said the hospital bill itemized charges that should have already been included in one "global charge." The Court of Civil Appeals concluded the employer's bill screening was inappropriately conducted in light of the hospital's reimbursement method. The court agreed that the trial court correctly determined that the hospital could not have unbundled because it had not agreed to any previous global charge. It had merely itemized the fees in accordance with its internal list of fees.

The court agreed with the employer that Alabama's Workers' Compensation Act authorizes screening of hospital bills to determine the allowed charges. However, it determined that the bill screening was not appropriately conducted because the hospital's method of relaying the charges was properly presented.

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November 19, 2009

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