Steward Machine Company, Inc. v. Board of Trustees of the University of Alabama, for it division University of Alabama Hospital
On October 16, 2009, the Alabama Court of Civil Appeals released this opinion concerning charges disallowed from a UAB Hospital bill in a workers’ compensation matter. UAB Hospital submitted a bill to the employer for $130,284.09 for medical services provided to an employee. After screening the bill, the employer disputed some of the charges as "unbundled or included in another service" and tendered payment of only $93,766.54. UAB Hospital filed a civil action to recover the disputed charges.
"Unbundling" occurs when a medical provider bills for each separate component of a procedure rather than for the agreed rate set for an overall procedure. The trial court’s judgment in favor of UAB Hospital was based on the trial court’s finding that none of the disputed charges were "unbundled" because UAB Hospital had never agreed to any specific global rate for any procedure in question. The trial court further found that UAB Hospital itemized its fees for each service provided in accordance with the hospital’s official fee list and in compliance with UAB Hospital’s negotiated participation agreement with the Alabama Department of Industrial Relations and the terms of the Alabama Workers’ Compensation Act. On October 22, 2008, the trial court entered judgment in favor of UAB Hospital in the amount of $37,845.69. The employer then appealed.
In affirming the trial court’s ruling, the Court of Civil Appeals noted that hospitals may charge the "prevailing rate" of reimbursement as negotiated between each hospital and the Department of Industrial Relations in accordance with Alabama Code § 25-5-77. The Court further noted that the participation agreement between UAB Hospital and the Department of Industrial Relations does allow bill screening for "unbundling" of charges and "unbundled" charges can be properly disallowed in certain cases. However, the Court affirmed the trial court by finding that the employer in this case failed to meet its burden of proof to show that UAB Hospital actually "unbundled" any fees so as to charge more than the prevailing rate of reimbursement. The Court concluded that the bill screening in this case was not appropriately conducted, and, as a result, the employer improperly reduced its payment to UAB Hospital.