In the 1981 case United States v. Erika, Inc., the U.S. Supreme Court ruled on a dispute involving Medicare payments to providers of medical services and equipment. The central issue was whether or not Erika, Inc., a provider of home respiratory therapy equipment, could charge patients for costs exceeding what Medicare would reimburse them for their services under its "reasonable charge" limitation policy. The court held that providers may not bill patients for amounts exceeding those determined as reasonable by Medicare's carrier unless they had informed the patient in advance about this possibility and obtained their agreement to be liable for these additional charges. This ruling clarified that while providers have no legal obligation to accept Medicare's determination of reasonable charges as payment in full, they must disclose any potential extra costs to patients beforehand if they intend to collect more than what is covered by Medicare.

The dissenting opinion in the case of United States v. Erika, Inc., 1981 argued that the majority's decision was a misinterpretation of the Medicare Act and its legislative history. The dissenters believed that Congress intended for providers to bear some risk when they agreed to provide services under Medicare Part B, which is why it included a reasonable charge limitation in the statute. They also disagreed with the majority's interpretation of "reasonable charge" as being synonymous with "customary charge." Instead, they asserted that Congress meant for "reasonable charges" to be determined by considering various factors such as prevailing charges in other areas or during different time periods. Furthermore, they contended that allowing providers to pass on all their costs directly to patients would undermine efforts at cost containment within healthcare system and lead to higher medical expenses overall.