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Allen v. Clarian Health Partners, Inc.

Indiana Supreme Court
980 N.E.2d 306 (2012)


Facts

Abby Allen (plaintiff) was uninsured and needed medical treatment. Allen went to Clarian North Hospital, which was owned by Clarian Health Partners, Inc. (Clarian) (defendant). Allen signed Clarian’s standard contract agreeing to pay for the costs of her treatment out of her own pocket. The contract did not contain any terms explaining how the treatment costs would be determined. After Clarian treated Allen, it billed her according to its chargemaster rates, a chargemaster being a hospital’s unique, comprehensive price list for its goods and services. Although insurance companies and Medicare/Medicaid programs often negotiated lower rates than a hospital’s baseline chargemaster rates, Clarian used the full chargemaster rates to bill Allen approximately $15,600 for her treatment. Allen sued, claiming that Clarian would have charged most insurance companies only around $7,300 for her treatment. Because the contract did not include a price term, Allen contended that the implied contractual term was a reasonable price and that a reasonable price was the amount an insurance company would have been charged. Allen believed it was unreasonable to charge uninsured people more than twice that amount. The district court dismissed the case, finding that Allen had not stated a valid legal claim. The court of appeals reversed the dismissal, finding that the contract did imply a reasonable price term and that the case should go to a jury or other fact-finder to decide what was reasonable in this situation. Clarian appealed to the Indiana Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Rucker, J.)

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