Standard hospital admissions contracts (“HACs”) often contain provisions that are shockingly unfair, but are easily overlooked or misunderstood by patients. Hospitals rely on the common law of contracts, especially the doctrine of freedom of contract, to claim that these provisions should be enforced. Many courts have accepted the freedom of contract argument and enforced some or all of these provisions.
This Article suggests that courts are in error to enforce these harsh provisions against patients. This Article focuses on four harsh provisions commonly found in HACs. First is the payment provision which is opaque, misleading, and designed to allow hospitals to price gouge self-pay patients by charging an exorbitant price. Second is the pernicious pre-dispute binding arbitration clause, which provides that patients waive their constitutional right to sue in court when they have been the victim of medical negligence. Third is the independent contractor provision that requires patients to acknowledge that the doctors treating the patient are independent contractors and thus prevents the patient from suing the hospital in the event of medical professional negligence. The fourth is the overly broad assignment of benefits provision that requires patients to assign not just health insurance benefits, but all other insurance benefits that may cover the patient’s losses related to an accident, including medical expenses and the proceeds of any claim the patient may have against any person that caused the patient’s injuries. This provision allows hospitals to exploit patients who have been the victim of an accident by charging, even for insured patients, the hospital’s exorbitant list price for the care provided. Moreover, because the hospital uses this provision to take a grossly excessive fee, there is less money available to reimburse the patient for other losses resulting from the accident.
The gross unfairness of these provisions, the latent dangers they create for patients, and standardized nature of HACs provide more than enough justification for courts to use existing common law doctrines to refuse enforcement of these harsh provisions. In particular, common law contract requirements of mutual assent and capacity to contract, as well as doctrines concerning contracts of adhesion and unconscionable contracts can and should be used to limit or eliminate the enforceability of these provisions.
George A. Nation III,
Using the Common Law of Contracts to Police Abusive Terms in Hospital Admissions Agreements: Balancing Freedom of Contract with Fairness,
Dick. L. Rev.
Available at: https://ideas.dickinsonlaw.psu.edu/dlr/vol128/iss1/4