Hospital Litigation Trend Causes Concern Among Providers

A recently approved $2.2 million settlement by an Arkansas hospital accused of improper billing practices in violation of the Arkansas Deceptive Trade Practices Act (ADTPA) could prompt similar lawsuits against other hospitals. Though the practice in question has been accepted in the medical industry, it is now the subject of a new litigation trend and a concern of hospital administrations. 

The practice at the heart of this litigation is when a hospital seeks payment from a patient’s third-party tort claim rather than the patient’s insurer when the injury is a result of an automobile accident in which the patient was not at fault.

In the recent case, the Western District of Arkansas federal court certified a class-action against a hospital for utilizing this billing practice. The plaintiffs alleged that the hospital’s admission form implied that their insurance provider would be billed first, and only after that would payment be sought from other sources. They claimed that the hospital’s billing policy for tort victims was deceptive. The court found that these facts were sufficient to allow plaintiffs’ claim for a violation of the ADTPA, as well as for claims of tortious interference and unjust enrichment, to survive summary judgment. The court relied on an earlier U.S. Supreme Court case holding that the Federal Rule of Civil Procedure 23 trumps any conflicting procedural state law.

Despite a 2017 amendment to the ADTPA that precludes plaintiffs from bringing a class-action claim under this statute unless the claim is being asserted for a violation of the Arkansas Constitution, the federal court held that a plaintiff may bring his claim in a class-action when litigating in federal court. The case was ultimately settled for $2.2 million, the specific circumstances of which are unknown. That settlement has now prompted a class action suit making similar claims in the same court against a different hospital.

In light of this emerging litigation, hospitals should be aware that claims are surfacing, and that these claims have some support for class-action certification in the federal district courts. This tactic has recently been used to bring class-action cases in other states as well, and it is likely that this trend will continue. Hospitals should take necessary precautions and reevaluate their billing and lien practices and disclosure forms.

Friday, Eldredge & Clark has been the largest Arkansas-based law firm for more than 50 years and has lawyers well-trained in the areas of class-actions, hospital litigation, healthcare law, and all types of federal litigation.  

The information provided above is created by the attorneys in the Class Actions and Business Litigation Practice Group at Friday, Eldredge & Clark, LLP.  The group consists of Attorneys Angela Artherton, Kevin A. Crass, Robert W. George, Jamie Huffman Jones and Marshall S. Ney. 

This is not a substitute for legal advice and should be considered for general guidance only. For more information or if you have further questions, please contact one of our attorneys listed above.