Claims not Within Physician-Patient Relationship, Court says, but also are “Entwined with” and “Directly Tied” to Care
Charles McNew was injured in a fall at his home in June 2021, and subsequently treated at the Fletcher Hospital emergency room in Hendersonville, North Carolina. Three months later he claims to have suffered an injury of a different sort when he was billed amounts for that care at rates he alleged were far in excess of the hospital’s published rates and those of similar providers.
In McNew v. Fletcher Hosp., Inc., 2022 NCBC 53, a purported class action found the Business Court considering the nature of the patient-biller relationship and whether billing for medical care is part of the “professional services rendered by members of a learned profession.” See N.C.G.S. § 75-1.1(b).
Judge Bledsoe rejected the contention that a breach of fiduciary duty claim could lie between a patient and a hospital that arises from its charging and billing practices. The Court acknowledged the well-settled rule that a physician-patient relationship is among the small list of settings where “there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith.” McNew, ¶ 14 (quoting Dallaire v. Bank of Am., N.A., 367 N.C. 363, 367 (2014). In North Carolina, that limited roster also includes relationships between attorneys and clients, spouses, business partners, and guardians and wards. Id. ¶ 15 (citing Hager v. Smithfield E. Health Holdings, LLC, 264 N.C. App. 350, 355 (2019).
However, neither by operation of law nor on a de facto basis, did the Court conclude that the physician-patient relationship encompassed that of biller to patient. The Court noted that the physician-patient duty exists because of the “special knowledge and skill in diagnosing and treating disease or injuries” that is absent where the tie is simply “one of debtor and creditor.” Id. ¶ 17.
The Court reasoned that the biller-patient relationship sounds in contract, as opposed to one where the hospital “occupied a position of power and influence” over patients. Id. ¶ 23. Thus, it found the traditional rule that “general contractual relationships do not typically rise to the level of fiduciary relationships” should govern. Id. ¶ 21 (quoting Sykes v. Health Network Sols., Inc., 372 N.C. 326, 340 (2019). Judge Bledsoe noted that neither plaintiff nor the Court could locate any authority in North Carolina or elsewhere to support a fiduciary construct in the biller-patient fact pattern. See e.g., Burton v. William Beaumont Hosp., 373 F. Supp. 2d 707, 723–24 (E.D. Mich. 2005) (“While Michigan courts have recognized fiduciary relationships such as . . . doctors and patients, there is no authority for the proposition that a fiduciary relationship exists between a hospital and a patient for what plaintiffs complain of here, namely billing practices.”).
The Court also rejected plaintiff’s claim that a de facto fiduciary relationship exists in the patient-biller context. The Court noted the high standard for a de facto claim in North Carolina as one where “one party figuratively holds all the cards – all the financial power or technical information.” McNew, ¶ 20 (quoting Lockerman v. S. River Elec. Membership Corp., 250 N.C. App. 631, 636 (2016)). Judge Bledsoe highlighted the absence of claims about the medical care McNew received or the “medical knowledge of the Hospital’s staff.” Id. ¶ 23. Instead, the Court observed (Id.):
“[Plaintiff] challenges only the amount he was billed after the services were rendered, and he provides insufficient facts to plead the substantial difference in bargaining power our courts require to establish that he had a de facto fiduciary relationship with the Hospital.”
Unfair Trade Practices
The Court also rejected plaintiff’s Chapter 75 claim against the hospital as not meeting the “in or affecting commerce” prong of the unfair trade practices analysis. The Court’s rationale was the statutory exception that “‘commerce . . . does not include professional services rendered by a member of a learned profession.” Id. ¶ 28 (quoting N.C.G.S. § 75.1.1). The Court relied substantially on Sykes, and its admonition that “this exception for medical professionals has been broadly interpreted.” Id. ¶ 30.
The Court noted that a two-step analysis applies to whether the “learned profession” exception applies: (i) is the performer of the act a member of the profession, and (ii) is the conduct an actual rendering of professional services. Id. ¶ 29 (citing Sykes, 372 N.C. at 334). The Court considered the same fact pattern it deemed as merely “one of debtor and creditor” for purposes of a fiduciary duty analysis and concluded that it nonetheless demonstrated conduct that was “sufficiently related to the provision of patient care to fall with the [learned profession] exemption. Id. ¶¶ 17, 33.
In its Chapter 75 analysis, the Court concluded the hospital’s charges for medical care “directly relate to the provision of Plaintiff’s medical care” and that plaintiff’s claims challenged “the Hospital’s conduct in not disclosing those charges in the course of rendering its emergency and imaging services.” Thus, the Court concluded that the hospital’s alleged conduct was so closely tied to its provision of medical care to plaintiff that it “is entwined with, and directly tied to, the provision of Plaintiff’s medical care at the Hospital’s emergency room.” Id. ¶ 33.
- Billing litigation between patients and health care providers continues to provide opportunities for complex analysis and narrow legal distinctions. Here, the Business Court concludes conduct can be so ordinary as to be that “of debtor and creditor” not contained with a physician-patient relationship, but also so closely “entwined with” the “provision of patient care to fall within the [learned profession] exemption’s reach.”
Brad Risinger is a partner in the Raleigh office of Fox Rothschild LLP.