Court Opinion

ID: 4556640
Source: CourtListenerOpinion
Date Created: 2020-08-18 21:11:08.843802+00
Date Added: 2024-06-11T09:37:50.058330
License: Public Domain

08/18/2020
                   IN THE COURT OF APPEALS OF TENNESSEE
                              AT KNOXVILLE
                                Assigned on Briefs April 15, 2020

              BLOUNT MEMORIAL HOSPITAL V. ERIC GLASGOW

                     Appeal from the Chancery Court for Sevier County
                     No. 16-5-159    Telford E. Forgety, Jr., Chancellor

                                   No. E2019-00776-COA-R3-CV

This appeal arises from a hospital’s action against a patient to recover payment for medical
services. After a bench trial, the court determined there was not an enforceable contract
between the parties, but the hospital was entitled to recover the value of its services under
a quantum meruit theory and ruled that the charges billed to the patient represented the
actual value of the hospital’s services. The court based its determination on the testimony
of the hospital’s witness that, because the rates that a hospital could charge were set by
Medicare, the amount charged to the patient was comparable to what other hospitals would
charge for the same or similar services. The patient appeals and asks this court to consider
whether the hospital proved by a preponderance of the evidence that the amount it charged
for medical services represented the actual value of those services. We affirm the trial
court’s decision.

  Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

FRANK G. CLEMENT JR., P.J., M.S., delivered the opinion of the Court, in which JOHN W.
MCCLARTY and ARNOLD B. GOLDIN, JJ., joined.

Bryan L. Capps, Knoxville, Tennessee, for the appellant, Eric Glasgow.

Joel A. Vallejo, Nashville, Tennessee, for the appellee, Blount Memorial Hospital.

                                   MEMORANDUM OPINION1

       1
           Tenn. Ct. App. R. 10 states:

       This Court, with the concurrence of all judges participating in the case, may affirm, reverse
       or modify the actions of the trial court by memorandum opinion when a formal opinion
       would have no precedential value. When a case is decided by memorandum opinion it shall
       be designated “MEMORANDUM OPINION,” shall not be published, and shall not be
       cited or relied on for any reason in any unrelated case.
       On May 9, 2016, Blount Memorial Hospital (“Blount Memorial”) filed a Complaint
on Sworn Account against Eric Glasgow (“Mr. Glasgow”), seeking payment for medical
services that Mr. Glasgow received on December 29, 2013, and on January 3, 2014, in the
amount of $31,595.55. Mr. Glasgow filed an answer on April 24, 2017, and the case
proceeded to trial on October 31, 2017, in Sevier County Chancery Court.

        At trial, Stacy Hawkins testified that she had been employed as a financial counselor
for Blount Memorial for 14 years and was primarily responsible for patient billing. She
identified two itemized bills for medical services that Blount Memorial provided to Mr.
Glasgow on December 29, 2013, and January 3, 2014, for $20,587.90 and $11,007.65
respectively, and the itemized bills were entered into evidence. Additionally, Ms. Hawkins
identified two Consent/Release forms signed by Mr. Glasgow, upon admission to Blount
Memorial, one in December 2013 and the other in January 2014, agreeing that he was
“liable for the payment of the . . . account in accordance with [Blount Memorial’s] rates
and terms,” and those forms were also admitted into evidence.

        Ms. Hawkins explained that, initially, Blount Memorial submitted the claims to
United Healthcare (“UHC”) because Mr. Glasgow listed UHC as his health insurance
provider. Ms. Hawkins testified that UHC refused to pay any portion of the claims because
Mr. Glasgow failed to update his “coordination of benefits” information. She further
testified that, when Blount Memorial informed Mr. Glasgow of the issue with UHC, he
was asked to update his information with UHC. Instead of doing as requested, Mr. Glasgow
asked Blount Memorial to submit the claims to the Department of Veterans’ Affairs (“the
VA”). Ms. Hawkins testified that Blount Memorial complied with his request and
submitted the claims to the VA; however, the VA did not pay the claims because the claims
were not military-related, and it was designated as Mr. Glasgow’s secondary insurance.
Because UHC and the VA refused to pay the claims, Ms. Hawkins submitted the bills to
Mr. Glasgow for payment without the benefit of contractual discounts that would have
applied pursuant to Blount Memorial’s agreements with the health insurance company and
the VA.

        When questioned about the reasonableness of Blount Memorial’s charges as billed
to Mr. Glasgow and whether those charges were customary in the industry, Ms. Hawkins
testified that any area hospital who accepted Medicare patients would have similar charges
to Blount Memorial because Medicare determined the prices that those hospitals could
charge for their services. Mr. Glasgow presented no evidence to challenge the
reasonableness of the charges he was asked to pay.

        At the conclusion of the hearing, the trial court delivered its ruling from the bench,
which was also incorporated into a written order entered on April 5, 2019. Relying on the
decision in Doe v. HCA Health Services of Tennessee, Inc., 46 S.W.3d 191 (Tenn. 2001),
the trial court determined that the Consent/Release forms Blount Memorial produced as

                                            -2-
evidence of a contract between the parties were too indefinite to constitute an enforceable
contract for medical services.2 However, the court found that Blount Memorial was entitled
to recover the reasonable value of its services under a theory of quantum meruit. In
determining the reasonable value of Blount Memorial’s services, the court relied on the
testimony of Ms. Hawkins that that rates for the services rendered to Mr. Glasgow were set
by Medicare. The court reasoned that $31,595.55 was a customary charge for the services
because “the amount that was billed in this case was the amount that was and is set by
Medicare and . . . [it] is the same amount as any hospital that accepts Medicare patients
and gets paid by Medicare[.]”

        Mr. Glasgow appealed.

                                               ANALYSIS

       The sole issue on appeal is whether Blount Memorial proved by a preponderance of
the evidence that the amount it charged for medical services represented the actual and
reasonable value of those services under a quantum meruit theory.

        Mr. Glasgow argues that Ms. Hawkins’ testimony was incompetent and insufficient
to prove that the charges billed to him were actual and reasonable because (1) she was not
responsible for setting the prices that Blount Memorial charged, and therefore, she had no
direct knowledge of the actual value of the services provided, (2) she did not know if Blount
Memorial’s rates were customary because she did not speak directly with other area
hospitals to determine what they charged for similar services, and (3) she did not know the
contractual rates that UHC or any other health insurance company paid for the services
rendered to Mr. Glasgow, which the hospital regularly accepted as sufficient payment for
its services. For its part, Blount Memorial argues that Ms. Hawkins’ 14 years of experience
in Blount Memorial’s financial services department, her familiarity with Blount
Memorial’s billing practices, and her uncontroverted testimony that Blount Memorial’s
charges were reasonable and customary among the hospitals in the community was
sufficient to prove that the charges billed to Mr. Glasgow reflected the actual and
reasonable value of the medical services provided.

        “In all actions tried upon the facts without a jury, the court shall find the facts
specially and shall state separately its conclusions of law and direct the entry of the
appropriate judgment.” Tenn. R. Civ. P. 52.01. If the trial court makes the required findings
of fact, appellate courts review the trial court’s factual findings de novo upon the record,
accompanied by a presumption of the correctness of the findings, unless the preponderance
of the evidence is otherwise. Kelly v. Kelly, 445 S.W.3d 685, 692 (Tenn. 2014) (citing

        2
          In Doe, the Court determined that the contract for payment of medical services was too indefinite
to enforce because it “did not provide any reference to a document, transaction or other extrinsic facts by
which the price could be determined and the meaning of the term ‘charge’ made clear.” Id. at 197.
                                                  -3-
Tenn. R. App. P. 13(d)). “For the evidence to preponderate against a trial court’s finding
of fact, it must support another finding of fact with greater convincing effect.” State ex rel.
Flowers v. Tennessee Trucking Ass’n Self Ins. Grp. Trust, 209 S.W.3d 595, 599 (Tenn.
Ct. App. 2006). Our review of a trial court’s determinations on issues of law is de novo,
without any presumption of correctness. Lind v. Beaman Dodge, Inc., 356 S.W.3d 889, 895
(Tenn. 2011).

        “Courts will not award quantum meruit recoveries without some proof of the
reasonable value of the goods or services.” Doe, 46 S.W.3d at 198. Such a determination
is not necessarily based on the contract price. Castelli v. Lien, 910 S.W.2d 420, 427 (Tenn.
Ct. App. 1995). It may be based “on the customs and practices prevailing in the same sort
of business in which the services would normally be provided.” In re Estate of Marks, 187
S.W.3d 21, 32 (Tenn. Ct. App. 2005) (citations omitted); see also Doe, 46 S.W.3d at 198.

       As our Supreme Court held in Doe, the reasonable value of medical services should
be determined “by considering the hospital’s internal factors as well as the similar charges
of other hospitals in the community.” Doe, 46 S.W.3d at 198. Relying on a Missouri Court
of Appeals decision, wherein that court determined that the testimony of the hospital’s
financial representative that she was familiar with the customary charges in the medical
industry and that the hospital’s charges for the services were reasonable and customary,
the Court determined that such evidence was “sufficient to make [a] prima facie case for
the reasonable value of the services rendered.”3 Doe, 46 S.W.3d at 198 (quoting Heartland
Health System, Inc. v. Chamberlin, 871 S.W.2d 8, 11 (Mo. Ct. App. 1993)).

       Here, Ms. Hawkins testified that Mr. Glasgow was billed for the full amount of
Blount Memorial’s services, an amount Blount Memorial considered to be the reasonable
value of those services. That said, we recognize that “the full billed charges reflect what
the provider unilaterally says its services are worth,” which is not necessarily determinative
of the actual value of the services. Children’s Hosp. Cent. California v. Blue Cross of
California, 226 Cal. App. 4th 1260, 1275 (2014). However, in addition to testifying that
the amount charged to Mr. Glasgow was the reasonable and actual value of the services he
received, Ms. Hawkins testified that the amount Blount Memorial charged for its services
to Mr. Glasgow was comparable to what other area hospitals charged for similar services.
More specifically, she testified:

        A. . . . I do know that [the rates] are set by Medicare, that Medicare governs
        all of our rates, and that our rates are compatible to the other area hospitals.

        3
           “We find that the foregoing standards are appropriate for use in Tennessee in cases in which there
is no valid, enforceable contract between a hospital and its patient. We adopt these standards for determining
the ‘reasonable value’ of the medical goods and services provided by the hospital to the patient in such
cases.” Doe, 46 S.W.3d at 199.

                                                    -4-
      Q. How do you know the rates are compatible to other area hospitals? That
      was going to be my next question.

      A. Because that’s part of what I've learned in--in fourteen years. I mean, it’s
      just -- you know, our charges are compatible. If they weren’t, then Medicare
      would not allow us to charge what we charge for every item that we charge
      for.

      Q. So it’s your testimony that the gross billed amount that you send to Mr.
      Glasgow or any patient for a billable procedure, that gross billed amount is
      based on what Medicare tells you to charge?

      A. They -- allows us to charge, yes.

      Q. Maximum allowed to charge?

      A. Yes.

      Q. Okay. Do you know where these bills fall on the continuum with Medicare
      for maximum allowable? Is it the maximum or is it ten percent less?

      A. I would not know, sir.

      Q. Okay. Now -- but you say that you know they are comparable in the
      community with other hospitals?

      A. Yes.

        Pursuant to the reasoning set forth in Doe, it was not necessary that Ms. Hawkins
have experience in setting the prices for Blount Memorial’s services in order to provide
competent testimony regarding what was reasonable and customary. See Doe, 46 S.W.3d
at 198. We find that Ms. Hawkins’ 14 years of experience working as a financial counselor
in Blount Memorial’s billing department enabled her to testify competently about Blount
Memorial’s contract with Medicare and its effect on Blount Memorial’s billing practices,
as well as its general effect on the billing practices of other hospitals in the area.

       Ms. Hawkins’ testimony, which was not contradicted, established that Blount
Memorial’s charges for its medical services were comparable to all hospitals in the area
that accepted Medicare patients. Moreover, Ms. Hawkins’s testimony—that being the
testimony of a hospital representative who is familiar with what is reasonable and
customary—is “sufficient to make [a] prima facie case for the reasonable value of the
services rendered.” See id. (quoting Heartland Health System, Inc., 871 S.W.2d at 11).

                                             -5-
Because Blount Memorial established a prima facie case that the charges for which Mr.
Glasgow was billed were reasonable for the services rendered, it was incumbent upon Mr.
Glasgow to present rebuttal evidence to challenge the reasonableness of the charges. See
Frame v. Davidson Transit Org., 194 S.W.3d 429, 435 (Tenn. Ct. App. 2005) (“Once the
plaintiff presents a prima facie case, the burden then shifts. . . .”) Mr. Glasgow presented
no such evidence.

       For these reasons, we find that the evidence preponderates in favor of the trial
court’s determination that Blount Memorial’s charges for the services rendered to Mr.
Glasgow reflected the actual value of the goods and services it provided. Accordingly, we
affirm the trial court’s decision.

                                     IN CONCLUSION

       The judgment of the trial court is affirmed, and this matter is remanded with costs
of appeal assessed against Eric Glasgow.

                                                  ________________________________
                                                  FRANK G. CLEMENT JR., P.J., M.S.

                                           -6-