William Withrow (from left), Paul Ivey and Frank Lowrey. (Photos: John Disney/ALM)

Lawyers battling over claims that a Columbus hospital routinely violates the law by filing inflated liens against uninsured accident victims were peppered with questions by Georgia's Supreme Court justices pondering whether the use of the standardized billing rates is unreasonable and, if so, whether a class action is the proper remedy.

The plaintiffs—four former patients of The Medical Center—argue that the hospital's use "chargemaster" rates for billing uninsured patients at rates that are higher than what other patients are charged is a violation of Georgia's hospital lien statute, which allows providers to bill for "reasonable" charges.

But the chargemaster rates bear no relation to the actual costs billed to insurers or government payers, and are particularly damaging to uninsured patients whose ability to recover is affected by the limits of a tortfeasors' coverage, and whose access to often badly needed funds is blocked by the liens, the plaintiffs' lawyers said.

Lawyers for The Medical Center argue that its liens comport with the law, and that hospitals around the country routinely base their bills on their own chargemasters.

The hospital also argues that an opinion allowing the class to be certified should be reversed because of the varying circumstances surrounding each patient's treatment.

Medical Center attorney William Withrow Jr. of Troutman Sanders had scarcely begun his argument when Chief Justice Harold Melton stopped him Tuesday.

"Is the chargemaster reasonable?" asked Melton, positing a "two-step procedure" whereby that issue is resolved before class certification is addressed.

Withrow said the relevance of the chargemaster has dissipated as the litigation progressed, and that the plaintiffs "want some sort of declaration of what reasonableness would be."

Melton expressed confusion, noting the hospital's defense has been that it relied on the chargemaster.

Most patients don't pay chargemaster rates, said Withrow, but the hospital believes those rates are reasonable.

But "that's not what the case turns on now," Withrow said.

"That's still very much in the air," Melton countered.

Justice Charlie Bethel asked whether a class could be certified that included everyone who underwent the same treatment, using a hernia operation as an example.

No, Withrow said, because the patients and their circumstances are all different.

Justice David Nahmias asked why the reasonableness question couldn't be answered.

"As I recall, the hospital's position was that its chargemaster rate is reasonable," he said. Is that still true "in every single case?"

The question must be asked on a case-by-case basis, said Withrow, whose team includes firm partner Lindsey Mann and Paul Ivey Jr., Robert "Cal" Martin and Lauren Dimitri of Hall Booth Smith in Columbus.

"Our costs will vary," he said, noting that there is no evidence in the record indicating how many people pay chargemaster rates.

Ivey then rose to address the fraud claims, arguing that the lien statute allows a hospital to file a "placeholder" lien to make sure it gets paid, and works in conjunction with another portion of the law that requires a hospital to perfect the lien by providing notice to the patient and any insurer as to how much it will charge.

If the court allows uninsured plaintiffs to collect damages for medical bills paid by others' insurance, it will "legislate a windfall" in violation of the law's intent, he said.

Melton asked whether a hospital could be accused of fraud for charging rates it knows will not actually be paid, no matter how "wild." Ivey responded the rates are set by third-party vendors.

The plaintiffs are represented by Frank Lowrey IV, Michael Terry and Michael Baumrind of Bondurant Mixson & Elmore and Charles and Austin Gower of Columbus' Charles A. Gower P.C.

Lowery disputed that the reasonableness of the chargemaster rates are no longer central to the case.

"There no question that the lien has to be for a reasonable amount," he said, otherwise it defeats the whole purpose of the law.

Plaintiffs hit with exorbitant liens suffer an "immediate impact," and can't unlock a settlement until the lien is satisfied, he said.

Nahmias questioned whether a hospital making a claim for more than most patients pay amounted to racketeering, and compared the practice to a car dealership that posts suggested retail prices "that nobody ever pays."

In this case, Lowrey said, the hospital is charging its uninsured patients more simply because they're uninsured.

Bethel noted that allowing those who have insurance and can afford health care to help carry the weight of those who cannot is a commonplace practice to help "smooth out the curve" of cost.

"They can't smooth it out on the backs of uninsured" patients, Lowrey said.

Nahmias again returned to how a reasonable rate schedule would be crafted.

"Your complaint is that the chargemaster is a blunderbuss," he said. "You want to exchange it for another blunderbuss."