March 28, 2012
Which Company Pays the Bill?

by Justice Paul E. Pfeifer

When Virginia King was injured in an automobile accident in December 2007, she was treated at the Toledo Hospital. At the hospital, Virginia informed the admitting staff that she was covered by Aetna Health, Inc., and she provided her insurance information. What happened after that became the basis for a lawsuit. Instead of billing Aetna, the hospital billed Virginia’s automobile insurer – Safeco Insurance Company of Illinois.

In filing her complaint in court, Virginia alleged personal damages and sought a class-action suit on behalf of all enrollees treated within the ProMedica Health System – which included the Toledo Hospital – who were covered by a health-insuring corporation.

Her allegations were based on the claim that ProMedica violated Ohio law by billing the automobile insurer instead of the health-insuring corporation. The law in question – we’ll call it the insurance billing statute – states that every health care facility that contracts with a health insuring corporation shall seek compensation “solely from the health insuring corporation and not, under any circumstances, from the enrollees ... except for approved copayments and deductibles.”

But Virginia’s claims didn’t get far; the trial court granted ProMedica’s motion to dismiss. The court noted that Virginia had not alleged that ProMedica sought compensation directly from her.

Virginia appealed, and the court of appeals reversed the trial court. The court of appeals held that health-care providers that execute preferred-provider agreements with health-insuring corporations can bill only the health-insuring corporation subject to the agreement for covered services furnished to their insured and cannot bill any other potential payors. After that, Virginia’s case came before us – the Ohio Supreme Court – for a final review.

Virginia argued that the only purpose of the insurance billing statute is to protect an insured patient from being billed for medical services when the health-care provider has contracted with the patient’s health-insuring corporation to provide services to the corporation’s insured.

ProMedica, on the other hand, maintained that the court of appeals misapplied the statute when it concluded that the statute prohibited ProMedica from seeking compensation from Safeco, which provided medical benefits as Virginia’s automobile insurer. By a six-to-one vote, our court agreed with ProMedica’s argument.

According to the majority, the Ohio legislature – in passing the insurance billing statute – expressed its intent that the health-care provider must seek compensation solely from the health-insuring corporation and not from the insured.

Virginia argued that her Safeco medical-benefit payments are an asset that belongs to her, and that by seeking medical-benefit payments available under the automobile policy, ProMedica essentially sought compensation from her. But the majority was not persuaded by her argument.

The majority said that compensation by Safeco did not equate to compensation by Virginia: by making the payment, Safeco fulfilled its contractual obligation to Virginia to cover her medical costs in the event of an accident. When ProMedica and the hospital received payment, they received it from Safeco. Because Virginia was not asked to make any payment for the services she received, the majority concluded that they did not violate the insurance billing statute.

Virginia also argued that ProMedica and the hospital violated the statute because they sought compensation from Safeco and not Aetna. She contended that the language of the statute – “shall seek compensation for covered services solely from the health insuring corporation and not, under any circumstances, from the enrollees” – means that all providers that contract with a health-insuring corporation relinquish their ability to seek compensation from anyone else and can collect payment from only the health-insuring corporation, in this case, Aetna.

The court of appeals had agreed with her argument. Its reasoning relied on how it construed the word “solely.” The court of appeals defined it to mean “to the exclusion of others.” The majority of our court, however, did not think that interpretation could be reconciled with the statute.

I cast the dissenting vote in this case. The law in question – the insurance billing statute – states that every “health care facility that contracts with a health insuring corporation to provide health care services to the health insuring corporation’s enrollees ... shall seek compensation for covered services solely from the health insuring corporation and not, under any circumstances, from the enrollees ... except for approved copayments and deductibles.”

According to the majority, applying the usual meaning to the word “solely” renders the phrase “and not, under any circumstances, from the enrollees” superfluous. The majority claimed that “solely” was just part of a larger phrase, and that in context of the language of the statute, it simply means that the health care provider could not seek compensation from the insuring corporation’s enrollee – the patient.

But in fact, “solely” in this statute means just that – solely. It does not mean “unless you can get paid closer to your top rate through an injured patient’s automobile insurance policy.” And applying the usual meaning of the word does not render the phrase “and not, under any circumstances, from the enrollees” superfluous. This is because of still another phrase that is contained in the statute – “except for copayments and deductibles.”

Read as a whole, the statute requires providers that have contracted with a health-insurance corporation to seek payment from only the health-insurance corporation. When a patient’s other insurance is not dissipated through direct billing by health-care providers, the patient can use that other insurance to pay copayments, deductibles, or for treatment options excluded from the health-insurance corporation’s coverage.

An automobile-insurance policy that includes medical coverage is an asset of the patient – when a provider seeks compensation from that policy, it seeks compensation from the patient. And that’s a violation of the insurance billing statute.

Nevertheless, the majority – by a six-to-one vote – concluded that Virginia had failed to show that ProMedica and the Toledo Hospital sought compensation from her, and so, in the majority’s opinion, she failed to establish a violation of the insurance billing statute. Accordingly, the majority reversed the court of appeals and reinstated the trial court’s order dismissing Virginia’s complaint.

EDITOR'S NOTE: The case referred to is King v. ProMedica Health Sys., Inc., 129 Ohio St.3d 596, 2011-Ohio-4200. Case No. 2010-1236. Decided August 30, 2011. Majority opinion written by Justice Yvette McGee Brown.