Settlement is reached in lawsuit over UW billing

Patients who undergo minor surgery at the University of Washington Medical Center will receive a discount — and will be able to get an estimate of their out-of-pocket costs ahead of time — under a class-action lawsuit settlement announced Friday.

About 20,000 patients a year have such procedures, said John Phillips, a Seattle attorney who brought the lawsuit on behalf of Heidi Rothmeyer of Seattle. Rothmeyer challenged the medical center when it tacked onto her bill a hospital "facility" fee for a dermatology procedure done at an outpatient clinic.

Rothmeyer visited the UW's Roosevelt Way clinic last year to have cysts removed from her scalp and chest. She had had the "simple outpatient procedure" before, her lawsuit said, at a cost of several hundred dollars for each cyst.

But her bill from the UW totaled $8,189, including a $6,839 hospital "facility" fee, even though the procedure was performed in a doctor's office. Rothmeyer was shocked to discover these charges, the lawsuit says, because the clinic never told her ahead of time they would be added to her bill.

The UW argued that such billing practices are legal, "consistent with industry practice," accepted by Medicare and Medicaid and negotiated with insurers.

Phillips, Rothmeyer's attorney, argued that patients should be able to know before they undergo a procedure at a particular clinic that the cost of having a procedure performed at a hospital-based outpatient clinic could be much higher than at another doctor's office or at a non-UW clinic.

Although the settlement involves no refunds, the UW will set up a system over the next year allowing patients to estimate their personal out-of-pocket costs ahead of time.

"Helping patients calculate out-of-pocket expenses will allow us to work more closely with the insurance industry to provide better service," said Lisa Brandenburg, interim executive director of the UW Medical Center.

Phillips said Rothmeyer's lawsuit initiated a move toward "greater transparency in billing and fairer pricing" not only at UW's medical center but at other hospitals throughout the area.

The UW lawsuit is the second filed by Phillips against a medical center for charging extra hospital fees for outpatient procedures without informing patients ahead of time.

The first, against Virginia Mason Medical Center, is under way in King County Superior Court. Phillips said it is the first such lawsuit in the country, and is being carefully watched by hospital officials and insurers nationwide. It also has been certified as a class-action lawsuit.

In the Virginia Mason case, patients must submit a form to the court before being included in the class action. Virginia Mason has argued that no laws prevent businesses from charging different prices at different locations so long as they don't misrepresent those prices. In addition, the medical center argued in court filings, businesses have no duty to tell consumers they might get a better price at another location.

Carol M. Ostrom: 206-464-2249 or costrom@seattletimes.com