In a cautionary tale for rural Alaskans, the Alaska Supreme Court overturned Friday a lower court decision that would have left a couple with tens of thousands of dollars in pregnancy care and attorney’s fees. But they are not yet in the clear.
In October of 2008, Rachel and Steven Thomas were admitted to Ketchikan General Hospital with pregnancy-related complications.
Their provider, Dr. Sarah Archer, recommended that the Thomases medivac to Seattle because of potential weather issues in Anchorage.
A weather history for Ted Stevens Anchorage International Airport shows two days in October of 2008 where wind gusts exceeded 30 miles per hour, though fog or snow reduced visibility to less than one mile for a period of time on five days.
The Thomases told Archer that Ketchikan Indian Corporation Tribal Health Clinic and Contract Health Services (CHS) would not pay for health care outside of Alaska Native Medical Center (ANMC) in Anchorage unless they had preauthorization.
CHS, now called Purchased/Referred Care, is how the Indian Health Service (IHS) pays for health care away from an IHS or tribal health care facility.
Archer responded that she would contact the insurer on the Thomases’ behalf, and if they would not cover the medivac and health care, then the hospital would.
“At this point, I would have gone anywhere to save my son’s life,” Rachel Thomas later testified. “I mean, had [Dr. Archer] said you need to go to Anchorage, I would have gone to Anchorage. She said, you need to go to Seattle, so I am going to Seattle.”
“[M]y concern was not billing at that time; it was immediate health,” she added.
Archer did indeed contact the insurer and ANMC, but not until six months later.
The Thomases received a bill from Guardian Flight for $69,000 and another for $23,000 from Swedish Medical Center in Seattle.
While an unspecified insurance policy eventually covered the medivac — Guardian offers medivac insurance for $125 per year — ANMC denied coverage of the services provided by Swedish because: “(1) [the Thomases] failed to request preauthorization within 72 hours of beginning treatment or of admission to the healthcare facility; (2) ANMC was ‘available and accessible to provide the necessary medical services to the patient’; and (3) the Thomases lacked a referral or authorization for the transfer from an ANMC physician.”
The Thomases sued Archer and Peacehealth Medical Group, the operator of the hospital in Ketchikan, arguing that in not upholding her promise to cover the Thomases’ costs, Archer breached both her fiduciary duty and a verbal contract.
Superior Court Judge William Carey ruled against the Thomases, more than doubling their financial woes by awarding Peacehealth $31,000 in attorney’s fees and court costs without allowing the Thomases to review Peacehealth’s records.
The Supreme Court upheld Carey’s decision regarding breach of fiduciary duty and breach of contract.
However, the Court found that Archer’s promise to the Thomases may have triggered promissory estoppel, which the Court explained in Kiernan v Creech “allows the enforcement of contract-like promises despite a technical defect or defense that would otherwise make the promise unenforceable.”
The Court remanded the case on the question of promissory estoppel, at least temporarily relieving the Thomases of their $31,000 burden in fees related to the suit.
Their bill from Swedish Medical Center is once again in the hands of the superior court.
Provider’s Fiduciary Duty Limited to Health Care
Numerous cases support the superior court’s ruling that Archer’s promise to contact insurers or pay for the Thomases’ health care fell outside her expertise and therefore did not result in a fiduciary duty.
In 1991, the Supreme Court held in Pedersen v Zielski that
The physician-patient relationship is one of trust. Because the patient lacks the physician’s expertise, the patient must rely on the physician for virtually all information about the patient’s treatment and health. A physician therefore undertakes, not only to treat a patient physically, but also to respond fully to a patient’s inquiry about his treatment, i.e., to tell the patient everything that a reasonable person would want to know about the treatment.
Partly relying on Pedersen for his ruling, Carey said that “the duties imposed by the physician-patient fiduciary relationship should be kept to matters involving medical treatment and advice, which are not at issue here.”
Carey also looked to an Ohio Court of Appeals decision, Northern Ohio Medical Specialists, LLC v Huston, in which that court wrote, “A physician undisputedly owes a fiduciary duty to his or her patient with respect to diagnosing and treating diseases and injuries. Appellants, however, direct us to no authority that such a duty extends beyond the medical relationship. Consequently, appellants’ claim premised on a fiduciary duty fails as a matter of law.”
“This reasoning is consistent with our description of the physician’s fiduciary duty in Pedersen,” Justice Peter Maassen wrote in Friday’s opinion. “A physician’s expertise in the practice of medicine is unique, respected, and highly valued. The patient, lacking that expertise, relies on the physician’s judgment and care and is especially vulnerable to the physician’s mistakes; the law protects the patient’s vulnerability by imposing on the physician a heightened duty of care when the physician is acting within the scope of that expertise.” (emphasis in original)
The Superior Court said that Archer’s recommendation for the medivac clearly fell within the scope of her medical expertise.
“The alleged promise regarding insurance and payment, on the other hand, did not stem from Dr. Archer’s special expertise as a physician,” the Court said, adding, “The Thomases did not need Dr. Archer’s special expertise in order to understand the requirements of their insurance coverage and to obtain the required preauthorization.”
On a separate question, Carey said Archer’s promise to the Thomases did not constitute a contract because the Thomases “made no return promise, and [the hospital] sought none.”
The Supreme Court agreed that the hospital did not seek a detriment to the Thomases as consideration for Archer’s promise, a critical element in establishing a legal contract.
For the Thomases, Archer’s promise, had it been fulfilled, was all benefit with none for the hospital. Therefore, there could be no breach of contract, as the Thomases argued.
Court: “Reasonable Person” Could Find Thomases’ Acts Based on Promise
Despite their failure to prove breach of fiduciary duty or breach of contract, the Supreme Court ruled that the Thomases could yet have a case under promissory estoppel.
“Promissory estoppel has these elements: ‘1) [t]he action induced amounts to a substantial change of position; 2) it was either actually foreseen or reasonably foreseeable by the promisor; 3) an actual promise was made and itself induced the action or forbearance in reliance thereon; and 4) enforcement is necessary in the interest of justice,'” the Court explained.
Carey ruled that the Thomases did not show a substantial change in position because Rachel Thomas’s testimony made it clear she would have taken the medivac under any billing scenario to save her unborn child.
However, the Supreme Court said the Thomases decision not to seek preauthorization from their insurer, a step of which they were aware and would have done, was predicated on Archer’s promise.
“A reasonable person could conclude that the Thomases substantially changed their position in reliance upon Dr. Archer’s alleged promise by failing to do what they otherwise would have done,” the Court ruled Friday.
The Court also ruled that a person could reasonably foresee that the Thomases would not seek preauthorization based on Archer’s promise. Further, the promise could be seen as an “actual promise.”
The fourth consideration — whether enforcement of the promise is necessary in the interest of justice — is not something that should be decided on summary judgment because it raises questions of fact, as opposed to questions of law, the Court noted.
Carey acknowledged that although the Thomases did not prove a breach of fiduciary duty, the fiduciary relationship between Archer, the hospital, and the Thomases “could nonetheless be relevant to the Thomases’ promissory estoppel claim as evidence of the reasonableness of their reliance on what the doctor told them.”
Accordingly, the Supreme Court returned the case to the lower court to reconsider the promissory estoppel claim.
In a footnote, the Court softly chastised Carey, expressing “concern” that Carey awarded $31,000 in fees to Peacehealth without allowing the Thomases to review the hospital’s billing and records.
Yet another issue for the lower court to reconsider.