In a recent ruling that could change how hospitals bill for services, California’s Third District Court of Appeal has decided against Dameron Hospital Association. The hospital had sought to collect payment directly from a patient’s uninsured motorist (UM) insurance policy held with Progressive Casualty Insurance Company.
The court’s decision, announced on May 27, 2025, confirmed that hospitals cannot sidestep California’s Medi-Cal reimbursement system by enforcing an assignment of benefits (AOB) to claim UM benefits owed to a patient. This case arose after a patient, known as M.G., who was covered by Medi-Cal, received emergency care from Dameron following a car accident. During her admission, M.G. or her representative signed a form that included an AOB clause for UM benefits. However, instead of billing Medi-Cal, Dameron sought payment directly from Progressive for $2,686.75.
After Progressive settled a claim with M.G., Dameron found itself without payment and decided to sue Progressive. The hospital argued that it was entitled to the payment based on the AOB and claimed unfair business practices and breach of contract. Dameron sought damages and a court order requiring Progressive to honor AOBs in the future.
The trial court dismissed Dameron’s complaint, a decision that the appellate court upheld. The court referenced a similar case involving Dameron Hospital that ruled such AOBs were unenforceable. The judges stated that a Medi-Cal patient like M.G. would not expect to assign her UM benefits to a hospital for full payment of services, especially when the hospital did not bill Medi-Cal first.
The court emphasized that it is unreasonable for patients to think that a standard hospital admission form would allow hospitals to collect payments above Medi-Cal rates without notifying Medi-Cal or determining the extent of the UM insurer’s obligations. The ruling reinforced the idea that UM coverage is meant to compensate insured individuals for losses due to accidents with uninsured drivers, not for hospitals to receive payments outside the established reimbursement system.
This ruling is now final, and Dameron has been ordered to pay Progressive’s appellate costs. The decision highlights the ongoing challenges in balancing hospital billing practices with patient coverage and insurance policies.