Providers may potentially compel patients without health insurance to assign their auto insurance medical payment benefits (but not underinsured motorist benefits).
Five patients who were treated at Dameron Hospital Association (Dameron) for vehicle accident injuries had automobile insurance policies issued by California State Automobile Association Inter-Insurance Bureau (CSAA) that included both medical payment (MP) and uninsured and underinsured motorist (UM) benefits. Dameron required each patient to sign a Conditions of Admissions (COA) form that assigned to Dameron “all insurance benefits of any kind . . . due for hospital and/or health care services.” CSAA paid UM and MP benefits to the five patients and did not respond to Dameron’s demands for direct payment based on the assignments. Dameron then sued CSAA alleging breach of contract for failing to pay the assigned UM and MP benefits. The trial court granted summary judgment for CSAA, and Dameron appealed.
The Court of Appeal affirmed as to all but one patient. First, the court held that the assignments by two patients with health insurance were void for lack of lawful consideration. (Civ. Code, §§ 1607, 1667.) The court reasoned that, because patients with health insurance are protected from healthcare care provider collection attempts (see Health & Saf. Code § 1379; Prospect Medical Group, Inc. v. Northridge Emergency Group (2009) 45 Cal.4th 497), Dameron’s attempt to extract payments in excess of the amounts negotiated with the patients’ health insurers violated public policy.
The court next held that Dameron could not enforce an assignment of policy benefits under a COA executed by the mother of a child patient because the patient’s grandmother held the CSAA policy and had not authorized the assignment.
Finally, the court held that Dameron could potentially rely on COAs executed by patients without health insurance to collect MP benefits, but not UM benefits, under their automobile insurance policies. The court concluded the COAs were adhesion contracts enforceable only to the extent they reflected an ordinary person’s reasonable expectations. Insureds reasonably expect to recover UM benefits directly to compensate for their bodily injuries. In contrast, a factfinder could determine that insured patients reasonably expected their MP benefits to be assigned to a health care provider.
The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, who are partners at the appellate firm Horvitz & Levy LLP, and is republished with permission.