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Court Finds Terms in Hospital Invoices to be Unenforceable

By on May 5, 2016 in Medical Records with 0 Comments

On April 22, 2016, the New Jersey Appellate Division found that a hospital’s medical records processor could not enforce an arbitration clause, which was included in an invoice for fees charged in response to a request for medical records.[1]

A law firm, on behalf of and authorized by its client, requested Medical Records Online Inc. (MRO) to furnish the client’s medical records. In response to the request, MRO forwarded a $204.19 invoice, conditioning delivery of the records on payment of the fee. The invoice included the following arbitration clause:

By paying this invoice, you are representing that you have reviewed and approved the charges and have agreed to pay them. Any dispute relating to this invoice must be presented before paying this invoice. Any dispute not so presented is waived. All disputes must be resolved by arbitration under the Federal Arbitration Act through one or more neutral arbitrators before the American Arbitration Association. Class arbitrations are not permitted. Disputes must be brought only in the claimant’s individual capacity and not as a representative of a member or class. An arbitrator may not consolidate more than one person’s claims nor preside over any form of class proceeding.

The law firm paid the fee and received a CD-ROM containing the 271 pages of medical records, but thereafter filed a complaint in part alleging that MRO violated the New Jersey Consumer Fraud Act by overcharging for medical records that patients and their authorized representatives are legally entitled to. In response, MRO filed a motion to compel arbitration or, in the alternative, to dismiss the complaint.

The Appellate Division upheld the trial Court’s decision to deny MRO’s motion, reasoning that arbitration clauses are unenforceable without consideration. MRO had a statutory pre-existing duty to provide the client’s medical records. Fees charged in response to a request for medical records are only meant to cover the cost incurred in producing a copy of the records. In some instances, hospitals must accept less than a cost-based fee since New Jersey regulations set a $200 maximum charge for an entire record.[2] The Court further held that the waiver of disputes was likewise unenforceable due to the lack of consideration.

There are a number of regulations pertaining to fees which may and may not be charged for certain types of medical record requests. State and federal regulations set forth standards for fees that providers can charge for medical records and time frames within which records must be supplied. Be sure that your practice has an experienced regulatory attorney to navigate the web of restrictions and requirements pertaining to medical records.

[1] Bernetich, Hatzell & Pascu, LLC v. Medical Records Online, Inc., 2016 N.J. Super. LEXIS 56 (App.Div. Apr. 22, 2016).

[2] N.J.A.C. 8:43G-15.3(d).



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