Lisa French lives in Thornton, Colorado. In 2014, she underwent surgery to address her back pain. She received treatment at St. Anthony North Health Campus, a non-profit hospital also located in Colorado. The hospital estimated French’s bill would be around $1,300 out of pocket. French’s insurance would cover any additional expenses – or so she was told. 

The hospital billed her over $300,000. Her insurance covered, at most, $74,000, leaving French to cough up the remaining $226,000. $74,000 is a sizeable chunk of change, but in this context, about as helpful as spitting into a bonfire.   

French disputed the charges, and the event turned into a civil case. Initially, the Colorado Court of Appeals ruled French was on the hook for the out-of-pocket expenses. That ruling has since been overturned – but we’ll get to that in a bit.  

$300,000 isn’t just in a different zip code, it’s on an alien planet. What’s with the obscene discrepancy? The answer: A clerical error. Or bad eyes. Perhaps both.   

The hospital employee who supplied the initial estimate allegedly “misread” French’s insurance card and believed her insurance provider was “in-network” with the hospital. It wasn’t until after French signed the contracts and underwent surgery that the hospital realized her insurance provider was, in fact, not in-network.  

Thus, the bill. But why $300,000? 

The hospital pulled that number from its own (formerly) secret list of sticker prices for various procedures, commonly referred to as a “chargemaster.” 

Those of us working in hospitals (and healthcare in general) are likely familiar with chargemasters. Most laypeople are not. 

Attorneys hired by the hospital insisted that French’s refusal to pay what she “owed” violated the contracts she signed before receiving care. Her ignorance of the secret chargemaster was of no importance – apparently. 

But the state’s Supreme Court disagreed, finding “that ‘long-settled principles of contract law’ show that French did not agree to pay the chargemaster prices when she signed the contracts, which never mention or reference the chargemaster.” Justice Richard Gabriel wrote the following:  

“(French) assuredly could not assent to terms about which she had no knowledge, and which were never disclosed to her.” 

Gabriel and his colleagues zeroed in on the opaque nature of the chargemasters, adding that chargemaster prices are often not a part of the actual costs of care. Very few patients pay the chargemaster sticker prices because insurance companies run interference and negotiate lower rates – assuming, of course, the insurance provider is in-network. Because of the hospital’s clerical error, French received assurance her insurance provider was in-network when it wasn’t.   

“…Hospital chargemasters have become increasingly arbitrary and, over time, have lost any direct connection to hospitals’ actual costs, reflecting, instead, inflated rates set to produce a targeted amount of profit for the hospitals after factoring in discounts negotiated with private and governmental insurers,” Gabriel wrote.  

Colorado passed a law in 2017 that required hospitals to disclose some self-pay prices. And in 2019, it was ruled hospitals must make their chargemaster prices public.   

Unfortunately for French, she underwent surgery in 2014, so she missed out. If French was clairvoyant, one wonders if she would have delayed the back surgeries altogether and traded her healthcare odyssey for a few more years of discomfort.  

The justices ultimately ruled the contracts she signed did not oblige her to pay the hospital’s chargemaster prices for the following reasons: 

• The hospital did not disclose those prices when she signed the contracts. 
• She did not know the chargemaster even existed when she signed the contracts.  

A positive outcome for French, considering the Colorado Court of Appeals initially ruled in favor of the hospital. 

But French isn’t entirely off the hook. While she does not have to pay the chargemaster’s prices, she was found guilty of breaching her contract with the hospital. She must pay them something. How much she must pay was left to the jury to decide.  

And what was the magic number? $760 – a close neighbor to the initial $1,300 estimate, and less than 1% of the $226,000 out-of-pocket behemoth. 

The ultimate take-home point: Always carry an emergency $226,000 on you, just in case you wake up saddled with a life-altering amount of medical debt. Stash it in your shoes for safekeeping. Fortunately, the patient was dogged in fighting the good fight. And the Colorado Supreme Court rewarded her for her tenacity. 

What do you think? Let us know your thoughts below.

Jeffrey Segal, MD, JD

Chief Executive Officer and Founder

Dr. Jeffrey Segal, Chief Executive Officer and Founder of Medical Justice, is a board-certified neurosurgeon. Dr. Segal is a Fellow of the American College of Surgeons; the American College of Legal Medicine; and the American Association of Neurological Surgeons. He is also a member of the North American Spine Society. In the process of conceiving, funding, developing, and growing Medical Justice, Dr. Segal has established himself as one of the country’s leading authorities on medical malpractice issues, counterclaims, and internet-based assaults on reputation.

Dr. Segal was a practicing neurosurgeon for approximately ten years, during which time he also played an active role as a participant on various state-sanctioned medical review panels designed to decrease the incidence of meritless medical malpractice cases.

Dr. Segal holds a M.D. from Baylor College of Medicine, where he also completed a neurosurgical residency. Dr. Segal served as a Spinal Surgery Fellow at The University of South Florida Medical School. He is a member of Phi Beta Kappa as well as the AOA Medical Honor Society. Dr. Segal received his B.A. from the University of Texas and graduated with a J.D. from Concord Law School with highest honors.

In 2000, he co-founded and served as CEO of DarPharma, Inc, a biotechnology company in Chapel Hill, NC, focused on the discovery and development of first-of-class pharmaceuticals for neuropsychiatric disorders.

Dr. Segal is also a partner at Byrd Adatto, a national business and health care law firm. Byrd Adatto was selected as a Best Law Firm in the 2021 edition of the “Best Law Firms” list by U.S. News – Best Lawyers. With over 50 combined years of experience in serving doctors, dentists, and other providers, Byrd Adatto has a national pedigree to address most legal issues that arise in the business and practice of medicine.