Health Care Providers Must Provide Good Faith Estimate to Uninsured Plaintiffs

Lien-based treatment has become an ever-expanding practice amongst personal injury plaintiffs in California. The typical scenario usually involves a plaintiff hiring an attorney; that attorney referring the plaintiff out to their preferred lien-doctors; who then may in turn, refer the plaintiff out to further lien doctors. Based on our experiences in taking depositions of plaintiffs who treated on lien, they are often not informed how much the recommended services will cost in advance, nor are they provided billing records after such services are rendered. It has been interesting to see the facial reactions exhibited by some plaintiffs when we show them documentation that they were billed tens-of-thousands of dollars for a steroid injection. In some instances, the plaintiff was entirely unsure if they would be responsible to pay the lien-based costs in the event they did not prevail in their underlying lawsuit. In other words, we are seeing a pattern of plaintiffs either being kept in the dark, or inadequately informed, about how their lien-based treatment would be billed and ultimately paid.

A new federal rule enacted under the “No Surprises Act” took effect in January of this year that addresses the inadequacies we have seen in the past, and could have important consequences for defendants hoping to demonstrate that the lien-based bills are inflated and unreasonable.

Specifically, the new rule requires, among other things, that healthcare providers give uninsured and self-pay patients a good faith estimate of costs for services that they offer before scheduling those services or upon request from the patient or his or her authorized representative. See 45 C.F.R. 149.610. Certain California appellate courts have issued rulings based on the central premise that plaintiffs who receive medical services on lien should be treated as uninsured, even if they have insurance coverage and elect not to use it. See Pebley v. Santa Clara Organics, LLC (2018) 22 Cal.App.5th 1266. Moreover, the regulations define such a person as “uninsured” under its terms. See 45 C.F.R. 149.610(a)(2)(xiii)(B).

The good faith estimate itself must include, among other things, the following information:

• Patient name and date of birth
• Description of the primary item or service in clear and understandable language;
• Itemized list of items or services, grouped by each provider or facility, reasonably expected to be furnished for the primary item or service;
• Applicable diagnosis codes, expected service codes, and expected charges associated with each listed item or service;
• Name, National Provider Identifier, and Tax Identification Number of each provider or facility represented in the good faith estimate, and the State(s) and office or facility location(s) where the items or services are expected to be furnished; and
• A disclaimer that informs the patient of their right to initiate a dispute resolution process if the actual billed charges are substantially in excess of the expected changes identified in the good faith estimate.

See 45 C.F.R. 149.610(c).

The good faith estimate must be provided in writing, using clear and understandable language in a manner calculated to be understood by the average uninsured individual. See 45 C.F.R. 149.610(e). Moreover, the written good faith estimate is considered part of the patient’s medical record and must be maintained in the same manner as the other medical records in that patient’s chart. See 45 C.F.R. 149.610(f)(1). This provision is important to keep in mind when subpoenaing records and deposing lien-based physicians.

Failure to provide a good faith estimate does not appear, in and of itself, to preclude recovery of costs associated with services rendered by a lien-based doctors, however, it does entitle the patient to initial dispute resolution which could reduce the amount due. See 45 C.F.R. 149.620.

The potential benefits to defendants in a litigated personal injury action become apparent when considering the fact that a lien-based doctor can no longer keep a plaintiff-patient in the dark as to the estimated costs associated with the treatment he or she is recommending. For example, a plaintiff who receives advanced notice that their doctor intends to bill a lumbar fusion surgery in an amount totaling multiple hundreds-of-thousands of dollars may ultimately decline to treat with that doctor, especially if they are informed that they will be responsible to pay that doctor in the event that they lose their litigated case. Moreover, it will also provide the plaintiff an opportunity to consider alternative options, such as getting a secondary quote from their in-network providers (if insured), or other doctors who may offer the services at a lower cost. While this rule is not likely to entirely eliminate the abuses seen by hyperinflated lien-based billing, it may yet prove to have a tangible effect on tempering those practices.