Introduction
The complexities of healthcare billing in the United States have created an environment where errors, overcharges, and questionable practices are unfortunately common. From mysterious facility fees to incorrect coding and surprise out-of-network charges, patients often find themselves facing medical bills that are confusing, excessive, or potentially fraudulent.
While individual patients may feel powerless when challenging large healthcare providers or insurance companies, class action lawsuits have emerged as a powerful tool for addressing systemic billing issues. These lawsuits allow patients to join forces to challenge widespread improper practices, seek compensation for overcharges, and push for more transparent and fair billing systems.
This article explores the landscape of healthcare billing class actions, highlighting common issues that lead to litigation, notable settlements, and how patients can protect themselves from billing errors and participate in relevant class actions.
Common Healthcare Billing Issues
Healthcare billing class actions typically target several common types of alleged improprieties:
- Overcharging for services: Charging excessive amounts for simple procedures, supplies, or medications (like $100 for an aspirin).
- Upcoding: Billing for more complex and expensive services than were actually provided.
- Unbundling: Separately billing for procedures that should be billed together at a lower rate.
- Balance billing: Improperly billing patients for the difference between the provider's charge and what insurance pays when this practice is prohibited.
- Duplicate billing: Charging multiple times for the same service.
- Facility fees: Adding substantial facility fees without proper disclosure or justification.
- Out-of-network charges: Unexpected charges for out-of-network providers at in-network facilities.
- Phantom services: Billing for services never performed.
These issues often affect thousands or even millions of patients, making them appropriate for class action treatment when individual claims might be too small to pursue individually.
Hospital Price Transparency Litigation
One significant area of healthcare billing litigation involves hospital price transparency:
- Chargemaster rates: Hospitals have faced class actions alleging that their "chargemaster" rates (list prices) are artificially inflated and bear no reasonable relationship to actual costs or market rates.
- Hidden facility fees: Cases challenging hospitals' practice of adding substantial facility fees for outpatient services without proper disclosure.
- Price transparency rule violations: Since the 2021 implementation of federal hospital price transparency rules, some hospitals have faced litigation for non-compliance with requirements to publish their prices online.
For example, in Doe v. Sutter Health, patients alleged that Sutter Health failed to disclose quality improvement fees that were added to patients' bills. The case resulted in a settlement requiring better fee disclosures and reimbursements to affected patients.
Surprise Medical Billing Cases
Surprise medical billing—when patients unexpectedly receive bills from out-of-network providers despite receiving care at in-network facilities—has sparked numerous class actions:
- Emergency room surprise billing: Cases against hospitals and emergency physician groups for failing to disclose out-of-network status before providing emergency care.
- Out-of-network ancillary providers: Litigation over bills from out-of-network anesthesiologists, radiologists, pathologists, and other specialists at in-network hospitals.
- Ambulance billing: Class actions challenging excessive charges by ambulance companies, which are often not covered by network agreements.
Although the No Surprises Act of 2022 now provides federal protections against many types of surprise billing, litigation continues over violations of the law and billing practices that preceded its implementation.
Upcoding and Fraudulent Billing
Upcoding—the practice of billing for more expensive services than were actually provided—has led to both government enforcement actions and private class action lawsuits:
- Emergency room level coding: Cases alleging that emergency departments systematically assign higher-level (and more expensive) billing codes than appropriate for the care provided.
- Diagnosis Related Group (DRG) upcoding: Litigation against hospitals for manipulating diagnosis codes to classify patients into more lucrative DRG categories for insurance billing.
- Electronic health record manipulation: Cases where providers allegedly used copy-paste features or templates in electronic health records to justify higher billing levels.
These cases often involve whistleblowers who file qui tam actions under the False Claims Act for Medicare/Medicaid fraud, which can later spawn related consumer class actions for privately insured patients.
Emergency Room Overcharging
Emergency department billing has been a particular focus of class action litigation:
- Trauma activation fees: Cases challenging excessive trauma team activation fees (often $10,000+) for minor injuries that didn't require trauma team intervention.
- Facility fees: Litigation over substantial facility fees added to emergency department bills regardless of the level of care provided.
- Screening fees: Cases alleging improper charges for federally mandated emergency medical screening examinations that hospitals are required to provide under EMTALA (Emergency Medical Treatment and Labor Act).
For instance, in one notable case, patients challenged a hospital system's practice of charging trauma activation fees exceeding $30,000 for patients with minor injuries. The settlement included both monetary compensation and agreements to reform billing practices.
Insurance Coverage Disputes
Many class actions target insurance companies' handling of medical claims:
- Improper claim denials: Cases challenging systematic denial of claims that should be covered under policy terms.
- Out-of-network reimbursement: Litigation over insurers' methods for calculating "usual, customary, and reasonable" rates for out-of-network care.
- Prior authorization issues: Cases where insurers allegedly improperly denied coverage by abusing prior authorization requirements.
- Coverage misrepresentations: Litigation alleging that insurers misrepresented what would be covered under health plans.
For example, in Wit v. United Behavioral Health, a landmark class action, a federal court ruled that a major insurer had improperly denied coverage for mental health treatment by using overly restrictive guidelines that violated legal requirements for mental health parity.
Notable Healthcare Billing Settlements
Several major healthcare billing class actions have resulted in significant settlements:
- Sutter Health pricing case: $575 million settlement in 2021 over allegations of anticompetitive practices that led to higher healthcare prices in Northern California.
- UnitedHealth out-of-network case: $350 million settlement in 2009 related to manipulation of the database used to calculate out-of-network reimbursement rates.
- Dignity Health overbilling: $37 million settlement in 2014 for allegedly overcharging uninsured patients compared to insured patients.
- Kaiser emergency services: $9 million settlement in 2018 for allegedly wrongfully denying coverage for ambulance trips to emergency rooms.
- Multiple hospital systems facility fee cases: Various settlements requiring better disclosure of facility fees and partial refunds to patients.
These settlements typically provide both monetary compensation to affected patients and important systemic reforms in billing practices.
How to Participate in Healthcare Billing Class Actions
If you believe you've been subjected to improper healthcare billing practices, here's how you can participate in relevant class actions:
- Review settlement notices: If you receive a notice about a healthcare billing class action settlement, follow the instructions to submit a claim by the deadline.
- Check settlement websites: Major healthcare billing settlements have dedicated websites where you can check eligibility and file claims.
- Maintain documentation: Keep copies of all medical bills, explanation of benefits, and communications with providers and insurers.
- Research ongoing cases: Use class action tracking websites to find active cases related to healthcare providers or insurers you've used.
- Consult with attorneys: If you spot a potentially widespread billing issue, consult with attorneys experienced in healthcare class actions.
Remember that most class members are automatically included in settlements unless they specifically opt out, but you typically need to submit a claim form to receive compensation.
Protecting Yourself from Billing Errors
While class actions can provide remedies for past billing issues, you can take steps to protect yourself from future problems:
- Request cost estimates: Under the No Surprises Act, you have the right to receive good faith estimates for planned procedures.
- Verify network status: Before receiving care, confirm that both the facility and all providers who will treat you are in-network with your insurance.
- Review bills carefully: Request itemized bills and compare them to your explanation of benefits from your insurer.
- Question unusual charges: Don't hesitate to ask for explanations of unfamiliar charges or fees.
- Appeal denials: Insurance companies often reverse improper claim denials upon appeal.
- Use patient advocates: Consider working with medical billing advocates for complex billing disputes.
Being proactive about understanding your healthcare costs and insurance coverage is your first line of defense against billing errors and overcharges.
Conclusion
Healthcare billing class actions have become an important mechanism for addressing systemic problems in our complex healthcare billing system. These lawsuits not only provide compensation to patients who have been overcharged but also drive important reforms in how healthcare services are priced and billed.
As healthcare costs continue to rise and billing practices grow more complex, class action litigation will likely remain a crucial accountability tool for patients. By staying informed about your rights, carefully reviewing medical bills, and participating in relevant class actions, you can help protect yourself and contribute to broader efforts to make healthcare billing more transparent, accurate, and fair.