Can medical providers collect payment without written contracts? Outsource Receivables Management, Inc. v. Bishop Explained

In healthcare settings, patients often receive services from multiple providers without signing separate contracts with each one. The Utah Court of Appeals recently addressed whether anesthesiologists can collect payment from patients based solely on contracts implied in fact, even without written agreements.

Background and Facts

Kellene Bishop underwent surgery at Orem Community Hospital and received anesthesia services from Lone Peak Anesthesia (LPA), an affiliated but separate medical practice. Although Bishop believed the anesthesiologist was employed by the hospital, she was separately billed for the anesthesia services. After making partial payments, the Bishops requested relief based on hardship, which LPA denied before assigning the debt to Outsource Receivables Management for collection.

Key Legal Issues

The court examined whether a contract implied in fact existed between Bishop and LPA, requiring proof that: (1) Bishop requested LPA’s services, (2) LPA expected compensation, and (3) Bishop knew or should have known LPA expected payment. The court also considered whether attorney fees were appropriate under Utah’s bad faith statute.

Court’s Analysis and Holding

The court of appeals affirmed the trial court’s finding of a contract implied in fact, noting that Bishop’s consent to treatment and acknowledgment that she “certainly wouldn’t have gone in for a surgical procedure of that nature without anesthesia” established her request for services. The court rejected Bishop’s argument that LPA could not expect payment without a signed consent form, explaining that contracts implied in fact allow recovery “in circumstances in which that plaintiff, for some reason, would not be able to sue on an express contract.”

Regarding attorney fees, the court upheld the award under the bad faith statute because the Bishops had previously been billed separately by LPA in 2008 and paid that debt through Outsource. This history rendered Bishop’s defense that she could not be billed separately “frivolous” and demonstrated bad faith.

Practice Implications

This decision confirms that healthcare providers can establish enforceable payment obligations through patient conduct, even without written contracts. For practitioners defending medical debt collection cases, thoroughly investigate clients’ prior billing history with the same providers, as such history can severely undermine defenses and expose clients to attorney fee liability under Utah’s bad faith statute.