Constitutional claims debated in hospital rate dispute lawsuit [Independent Record, Helena, Mont.]

Jan. 26--In a case that could upend the negotiated rates insurers pay hospitals for medical services, a lawyer for St. Peter's Hospital defended the practice in court Wednesday, arguing that a lawsuit against the hospital reaches too broadly and misconstrues constitutional guarantees of equal protection.

"What's before the court is a case of social engineering," Randy Cox, a lawyer for the hospital, said at the 90-minute hearing before District Judge James Reynolds in Helena. "St. Peter's is the named defendant, but it appears that the real targets are Blue Cross Blue Shield (of Montana) and New West (Health Services), and their ability ... to under state law enter into preferred-provider agreements with health care providers such as St. Peter's."

The lawsuit, filed by Helena attorney John Morrison on behalf of Jessica Gazelka, who received care at St. Peter's and did not have insurance, claims that the state law allowing hospitals and insurers to develop agreements for discount rates violates the Montana Constitution's prohibition against discrimination against people with certain social conditions.

Cox argued that the being uninsured is not a "social condition" as envisioned by the Constitution, and that Gazelka suffered no discrimination by St. Peter's. She received, and paid for, medical care, he noted.

Cox also said that banning the preferred-provider agreements was akin to protesting the discounts provided by supermarkets to customers who participate in various promotions, or the discount restaurants offer to senior citizens.

"The plaintiff's claim that a discount violates a constitutional provision for equal protection is, I think, remarkably broad and certainly, I think, unprecedented," Cox said.

Morrison said that all kinds of people -- residents versus nonresidents, people of different ages, even limited liability corporations versus regular corporations -- had been considered having "social conditions" subject to constitutional protections.

Judge Reynolds asked about the discounts that some stores offer certain customers.

"There is a difference between somebody who is going to the hospital after a car accident to seek medical care and somebody who's going to Costco to buy food or even prescription drugs," Morrison said.

Morrison is seeking class-action status for the case, and ultimately a refund to uninsured patients who paid more than insurers' discounted rates.

The hearing addressed a motion by St. Peter's to dismiss the constitutional claim. It did not address a second charge of unlawful restraint of trade.

Reynolds did not immediately rule on the motion.

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