By Jay Hancock and Elizabeth Lucas
Many hospitals, including for-profit and nonprofits, have turned their collections offices into lawsuit machines that harm their patients and don’t do much for the hospitals, either.
While hospitals have stepped up their collection efforts, patient incomes have flatlined or fallen. Deductibles have soared, which means even the many patients who have health insurance can’t afford hospital care.
Nonprofit hospitals are required to provide “community benefits,” which might logically include ample assistance for patients unable to pay for their costly services.
Yet many hospitals skimp on financial assistance and hound families over charges that are often inflated far beyond the cost of the care. They garnish wages and attach property liens that wipe out savings when homes are sold. High interest rates drive the debt even higher.
By themselves, patients are helpless to fight these practices. Therefore, if reporters don’t expose this trend, the public may not learn about it, and the practices will continue.
Here are tips for journalists seeking to cover this story, including how to find the hospitals involved and how to reach patients who have been harmed as a result of these tactics.
Check the courthouse. Hospital lawsuits against patients usually are filed in local courts. To begin your search, ask clerks for the hospital system’s legal name. Often the legal name is different from the brand name. Check the docket or ask the clerk which judge handles hospital-debt suits and on which day. Many courts devote a day to hospital-debt cases.
Leverage court data. If you can get your hands on data from the courts, you’ll have a better shot at figuring out the total amount that any given hospital has pursued with lawsuits over the years. Court data usually are available at the state level. Sometimes, such data are searchable or downloadable from a website; other times, you have to request it. It’s not always available, however. Court data are notoriously dirty; we found hospital (plaintiff) names spelled multiple different ways. All of our patient lawsuits were labeled “contract action,” “complaint – catch-all,” or “warrant in debt.” Talk to court clerks about how filing and categorization works.
In Virginia, the circuit court handles cases of more than $25,000 and the district court handles anything less than $25,000. Most of the money is in the former, and most of the cases are in the latter. Pursue both.
Garnishment often involves a second legal filing. First, the hospital obtains a judgment that the debt is owed. Then it seeks permission to seize patient wages and bank accounts.
Go to the hearings. Attending hearings may be the most effective way to meet patients and hear their stories because doing so is likely to be easier than obtaining defendants’ names from lawsuits and then trying to track them down.
Pro tip: Print out HIPAA-waiver release forms for the hospitals involved and maybe the major insurance companies too. HIPAA is the Health Insurance Privacy and Accountability Act of 1986, which hospitals, insurers, and other parties involved in such lawsuits will use as a privacy shield to protect them from having to comment for any articles you write. If you bring HIPAA-waiver releases with you to the courthouse, you can ask those patients being sued to sign them on the spot. The forms give the patient’s permission for providers and others to talk about these cases.
Ask patients for copies of their paperwork. That includes bills, explanations of insurance benefits and any dunning letters. Often these patients will bring their bill files to the courtroom. Take pictures of the documents and the patients. As with the HIPAA waiver forms, it’s much easier to get this done when you can than trying to track your sources down later.
Screen the lawsuit paperwork for judgment amounts. This is what the hospital sued for. Some judgments can be eye-popping and worth the trouble to try to locate patients through Lexis or whatever if you haven’t met them in the courtroom.
Check bankruptcy records. Searching bankruptcy court filings is another way to identify people who owe money to hospitals. Sometimes, it’s difficult to isolate the hospital debt as the main cause of a bankruptcy, because filings also list car loans, credit card bills, and other debts along with medical bills. But hospital bills often are the trigger for all the other unpaid bills, consumer credit experts say. If you get sick and can’t pay a hospital bill, your credit can be downgraded and you may have to take time off from work. Those events can trip a default cascade that lands you in Chapter 7.
Examine a facility’s charity care records. Hospitals will say they provided a certain amount of charity care each year, sometimes in the millions of dollars. Do not take this declaration at face value. Hospitals inflate charity care amounts by assuming they would have collected revenue at chargemaster rates for the unpaid treatment. Chargemaster prices are often four or five times more than the actual cost of care, so nobody pays chargemaster rates. Hospitals set these rates as basically a starting point for negotiating insurance discounts.
Determine whether the debt may be inflated. By the same token, one of the lesser-known outrages of hospital debt collection is that hospitals often sue uninsured patients at chargemaster prices or close to those amounts. In one case, we found that a health system sued a patient for more than eight times what it would have gotten from a health insurer for that treatment. We then found a benefits consulting company, working for self-insured employers, that knows how to expose this by calculating the actual cost of care plus reasonable reimbursement for a particular patient’s treatment.
Check property liens. These liens, which are filed in the local courthouse, can be more complicated than we thought, at least in Virginia where we did our work. In Virginia, liens do not attach to a specific property. Rather, creditors file a copy of their lawsuit judgment in the courthouse land records, which gives the creditor a claim on any property the debtor happens to own in that city or county. Some Virginia hospitals went wild with liens, filing them just in case patients owned property, even when they had no such evidence. One health system filed 40,000 liens over the years in the city of Richmond alone.
As far as we can tell, there were not many cases of hospitals foreclosing on a family’s home to recoup the debt. Rather, they let the lien sit there for years and accumulate interest at high rates. Then when the house is sold, a title search turns up the lien. The title company pays off the hospital with the proceeds of the sale, if any are left after the mortgage is paid off.
Find out what other funds a hospital may be able to take. In addition to courthouse litigation, hospitals sometimes seize patients’ state tax refunds if they can. If the health system is a state agency, such as a public hospital or a state university teaching hospital, it can take tax refunds without even filing a lawsuit. Tax-refund “offset” programs coordinated among state agencies allow hospitals to do so.
Compare health systems’ financial assistance policies. They are often shockingly different from one another. Some systems help families with incomes of up to 500% of federal poverty guidelines. Others stop at 100% or 200%. We found that the University of Virginia Health System flunked families that applied for financial assistance if they had as little as $5,000 in a 401(k) account at work, no matter how low their income.
Check a hospital’s financial records. Hospitals often plead scarce resources and financial challenges. Still, a look at their Form-990 filings to the Internal Revenue Service and the financial reports they make to bondholders often show substantial profits and investments. The 990 forms can be found at www.guidestar.org. You can find municipal bond documents at the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) website. Click on the hospital system’s financial disclosures tab and look for audited financial statements or comprehensive annual financial report (CAFR).
Jay Hancock (@JayHancock1) is a senior correspondent for Kaiser Health News, and Elizabeth Lucas (@eklucas) is a data editor who specializes in data analysis and reporting for the Kaiser Health News enterprise team. In May, Hancock and Lucas were named finalists for the 2020 Pulitzer Prize in the investigative category for their work. The prize committee said, “exposing predatory bill collection by the University of Virginia Health System that relentlessly squeezed low-income patients—many into bankruptcy—forcing the nonprofit, state-run hospital to change its tactics.
