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Dispute Over Bill Is Lesson in Contracts

August 22, 1985|JEFFREY S. KLEIN

A recent letter from a Los Angeles woman, describing a dispute with her doctor over the bill, helps illustrate a few principles of the law of contracts. The woman hurt her back while moving some furniture and went to the doctor for treatment.

She decribed what happened next:

"I was there for about 1 1/2 hours, had some back X-rays taken and various manipulations of my spine along with some physical therapy. He said I should come back for more therapy, but I felt a little better and decided not to because I just couldn't get the time off. Eventually I got better."

"I asked him to bill my insurance company, which he agreed to do. Now I find that he charged me $120 for the exam and treatments and $125 for the X-rays and $45 for the supplies. I think that is high, and he didn't tell me at the time that it was so much money. Anyway, my deductible wasn't completely met, and my insurance company only paid the doctor $2.17.

"Now he says the rest is my responsibility. I don't think it is because he actually didn't help me at all, and might even have made it worse. (I spoke with another doctor, and he said that the treatment was all wrong for me.)

"Also, he didn't tell me how much money it was going to cost and just assumed that my insurance would cover it. I thought that it would, too, but hadn't counted on the deductible being so high."

He Expects Payment

"Can this doctor turn my account over to a collection agency or take me to small claims court? He expects me to pay for it myself. Since I already pay for my insurance premiums, I don't think this is at all fair."

Fair or not, the doctor certainly can turn the account over to a collection agency or sue the reader for breach of contract in small claims court. The case can be brought to small claims court because the amount in dispute is less than $1,500. Although the reader may have legal defenses, the doctor would probably win, and the patient would have to pay the bill--at least the reasonable value of the doctor's services.

The doctor and patient appear to have entered into a legally binding contract. As defined by state law: "A contract is an agreement to do or not to do a certain thing."

We all enter into many contracts every day, often without realizing it.

When you hire a plumber to fix the pipes or you charge purchases on a credit card, you have entered into a contract.

A contract has three basic legal elements: an offer to do or sell something, an acceptance and what is legally called "consideration" and the transfer of something of value in exchange for the services or the goods.

A contract does not have to be in writing nor does it have to be expressed. It can be implied.

In this case, was there an implied promise to pay the doctor's bill? Probably, Bryon Sher, a Stanford law professor who teaches contracts and also is a state assemblyman, explains.

"What undertaking or obligation does a patient incur when a doctor provides treatment without tying down in advance what the costs will be?" he asks. "People (patients) in those circumstances understand that you will pay the going rate, the reasonable value for the doctor's services."

It's the same kind of contract that you enter when you get your hair cut. If you go into a barbershop and ask for a trim, even if there are no signs posted and nobody tells you in advance how much the haircut will cost, by your conduct, you accept the obligation to pay.

"You imply a promise to pay the reasonable charge for the barber's services," Sher explains.

In return, the barber--or in this case, the doctor--makes an implied promise to render competent services. That does not mean the doctor is promising that you will be cured, only that he will use his education and training properly to render professional services.

If the doctor does not render competent services, the doctor has breached the contract, and the patient does not have to pay the bill.

"If he did not perform his side of the bargain, she would not have to perform her side of the bargain," Sher adds. But that's a question of fact for the judge to decide. However, our reader says she did get better, which may indicate that the services were at least competent, if not entirely satisfactory.

If the doctor does explicitly promise that you will be cured, you may be able to enforce that promise in the courtroom.

All first-year law students learn about a famous case in which a doctor promised a patient that he would fix his "hairy hand" and make it "100%" again. After the hand came out of surgery as hairy as ever, the patient sued for breach of contract and won. But that was because the doctor promised a specific result, and the court decided the promise was part of the contract.

What about the doctor's "promise" to bill the insurance company? A court would probably rule that this was just the way payment was expected, not a separate agreement to let the patient off the hook, unless the doctor specifically agreed to accept whatever the insurance company paid as full payment.

Another Legal Theory

Even if a judge rules that there was no contract here, which is unlikely, the doctor has another legal theory--originally known in the English common law as quantum meruit , now known as unjust enrichment--to enforce the payment obligation.

This rule of law states that where a person renders a benefit to you, and it is unfair for you to keep the benefit without paying for it, you must pay the reasonable value of the benefit received.

In response, the patient may argue that there was no benefit received. That again is a question of proof for the judge to decide, but unless another doctor will testify that the treatment was worthless, it's not a strong case.

The reader put her final question this way: "Do I have to pay for medical treatment if it really wasn't all that good and I got well on my own anyhow."

I'd pay the bill.

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