Hospital applying excess payment to other account but has never billed me for that account

Hi,

Last fall my son was admitted to the pediatric unit for about a day at the recommendation of ER doctors. Later, the health insurance company denied the claim as not medically necessary. I contacted the hospital and was told that they would submit additional documentation to insurance to work out getting the claim paid.

Months went by, and we have never received a bill from the hospital for this visit that insurance refused to pay. On the insurance claims portal, it shows that the claim still was not paid, however it also says that we don’t owe anything (the original claim was for over $13,000).

Our son was later at the ER on a different visit and we set up a payment plan for a balance of several hundred dollars that was a legitimate charge under the insurance. This was paid off over several months, but due to the hospital’s system being run poorly, every time my wife tried to make a payment it set up a new payment plan, etc. and by the end of it she was charged one extra payment (about $35) without authorization.

We called the hospital and they acknowledged the error and said a refund would be made to the card on file. After some time, when we did not receive the refund, I called back to ask what happened. They said they would not be returning the $35 because it was applied to the other account that the insurance had refused to pay for and for which we never received a bill.

This was not even an overpayment but an unauthorized charge by them in violation of the payment plan agreement.

How can this be legal? What is the best recourse? Dispute with bank? Something else?