Liberty Nat’l Life Ins. Co. v. Univ. of Ala. Health Svcs. Found., P.C. (Summary)

Liberty Nat’l Life Ins. Co. v. Univ. of Ala. Health Svcs. Found., P.C., No. 1012346 (Ala. Sept. 19, 2003)

A life insurance company that provided supplemental cancer insurance to individuals brought suit against a hospital, a health services foundation, and a health system, seeking damages for what the insurer deemed to be improper billing practices. The hospital issued a bill to each patient upon his or her discharge that listed the “actual charges” from its charge master, regardless of whether the hospital had accepted a lesser amount from Medicare or the patient’s private health insurer. Insured patients would submit those bills to the insurer for reimbursement. Pursuant to its insurance policies, the insurer would pay the patients the amount listed on the statement, which was frequently more than the amount received by the hospital.

The insurer sued, claiming that the Hospital’s billing practices were interfering with its contractual relations, causing the insurer tort damage, and violating the state statute governing hospital billing. The trial court dismissed the suit, finding that the insurer lacked standing to sue the hospital over its billing practices. The Alabama Supreme Court reversed in part and remanded the case to the trial court for further proceedings. The court did find the hospital was entitled to sovereign immunity, however, since it was affiliated with a State University.