Gazelka v. St. Peter’s Hospital

Gazelka v. St. Peter’s Hospital, 2015 MT 127 (May 12, 2015) (Baker, J.) (4-1, aff’d & rev’d)

Issue: (1) Whether the district court properly held that Gazelka had standing; and (2) whether the district court properly awarded the hospital summary judgment.

Short Answer: (1) Yes, and (2) no.

Affirmed (1) and reversed (2) and remanded

Facts: Gazelka was involved in a car accident in early 2010, and had no health insurance. She received treatment at the hospital. The driver of the car that hit her had a Safeco policy with $100,000 policy limits. Safeco paid for some of Gazelka’s medical bills. When it settled for the policy limits, the Ridley payments were deducted from the settlement funds Gazelka received.

In early 2011, Gazelka was treated at the hospital, and uninsured. She did not pay, and the hospital referred her account to a debt collector, which sued and obtained a judgment against her.

In September 2011, Gazelka filed suit against the hospital, alleging it violated Montana anti-trust laws and Article II, section 4 of the Montana Constitution by discriminating against her on the basis of her uninsured status. Her complaint centers on preferred provider agreements (PPAs), which are agreements between insurers and healthcare providers regarding the amount and manner of payment that providers will accept as satisfaction for services rendered to insured persons. Gazleka alleges the Montana Preferred Provider Agreements Act, which authorizes PPAs, is unconstitutional, as are the hospital’s billing practices. She seeks to certify a class of persons who have been discriminated against on the basis of their insurance status.

The hospital moved to dismiss, and the district court denied the motion.

Procedural Posture & Holding: Gazelka moved for partial summary judgment on her claim that the billing practices and statute are unconstitutional. The hospital argued the motion was premature and sought discovery under Rule 56(f), or in the alternative, moved for summary judgment on the ground that Gazelka lacked standing. The district court held that Gazelka had standing, determined that uninsured persons are not a protected class, and awarded summary judgment to the hospital on the merits. Each party appeals, and the Supreme Court affirms standing but reverses summary judgment on the merits. 

Reasoning: (1) The district court held Gazelka had standing on the basis of a financial injury. The Court does not address that, as Gazelka does not need to show financial injury to have standing to bring her claims. The alleged unequal treatment and unequal opportunity to obtain a benefit are sufficient injury for standing. Moreover, her injury is redressable regardless of whether she benefits from PPAs.

(2) Gazelka alleges that the hospital discriminated against her in the exercise of a civil right on the basis of a social condition, and further alleges that the statute discriminates against her on the basis of a social condition, thus triggering strict scrutiny. Alternatively, she alleges MPAA deprives her of equal protection, triggering rational basis review. Finally, she alleges the hospital’s billing practices unlawfully restrain trade.

The district court held Gazelka’s uninsured status is not a social condition, and this Court does not analyze that further. The district court did not address her remaining arguments, however. A statute that treats similarly situated individuals differently is subject to rational basis review. The district court did not determine whether Gazelka is treated differently from similarly situated individuals, nor did it address her claim that the billing practices unlawfully restrain trade. The district court erred by entering judgment without first resolving all of Gazelka’s claims.

Justice McKinnon’s Dissent: Justice McKinnon dissents on the standing issue. The Court decides the issue on arguments neither raised nor briefed by Gazelka, on facts not alleged by her. To demonstrate that the PPA statutes violate equal protection, Gazelka must demonstrate that she has been deprived of this benefit. But her arguments to this Court and the district court were premised on her having suffered a financial injury by having to may more for health care services. The Court would be wise to apply standing principles and leave this issue to the legislature.