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Reporting on why a huge nonprofit with a healthy endowment would sue an uninsured patient Date: 01/21/15

Houston journalist Dianna Wray found that one of the largest nonprofit hospitals in Texas was not functioning as  nonprofit. Instead, it was suing the people it was established to help: the poor and uninsured.

By Dianna Wray

I first heard about Memorial Hermann Hospital's practice of suing uninsured patients when a local lawyer who specializes in health care lawsuits contacted me about a case he was undertaking on behalf of Ignacio Alaniz.

In January 2012, Alaniz was rushed to Memorial Hermann in the Texas Medical Center after he was run over by his own car. He had emergency surgery and was in the hospital for weeks. He also didn’t have health insurance. He'd been vaguely assured by hospital personnel that the hospital would work something out under its charity arm, but his medical bills were more than $400,000 by the time he was released. Then Memorial Hermann, the largest nonprofit medical system in Houston, sued him for failing to pay the bill.

That was what I started with, a story about one man being sued even though it was clear he would never be able to pay. I've been reporting for a while but I hadn't done much health reporting before. I dealt with this by reading everything I could get my hands on about the history of health care, the evolution of hospitals, the rise of the nonprofit hospital and how health insurance and advances in medicine have changed the nature of medical care. Getting a handle on all that proved invaluable as I came to understand why a huge nonprofit with a healthy endowment would sue an uninsured patient.

Alaniz's story was interesting enough on its own, but I ran Memorial Hermann through district court records to see if any similar cases popped up. There were dozens. I called Memorial Hermann to ask if this was normal practice or if the staff there could offer an explanation for why they were specifically suing uninsured patients. I got no response, aside from a Memorial Hermann spokesman noting that the hospital donates more than $400 million in care per year, and declining to discuss pending litigation. The spokesman also said they didn't differentiate between the insured and the uninsured when it came to collecting debts for hospital bills.

So I had to fill in the blanks myself. The Texas Medical Center is the largest medical center in the world and the Memorial Hermann Healthcare System is the largest nonprofit hospital system in Houston. It was set up with a healthy endowment and the hospital keeps its nonprofit status by making a certain amount of donations in care per year. However, about 28 percent of Houston’s population was uninsured – at least until the Affordable Care Act became effective. As a Level 1 Trauma Center, Memorial Hermann received a large number of these uninsured patients, many of whom would never pay their bills. So I started checking on the other hospitals, searching for names of comparable hospitals through court records, but nothing similar to the Alaniz case popped up. No other hospital in the area had anything close to the number of cases that Memorial Hermann did.

While going through court documents and calling lawyers representing clients being sued by Memorial Hermann, my story started to fall into place. These patients had little in common except they arrived at the hospital, often taken there by ambulance drivers instructed to favor Memorial Hermann and a few other hospitals because they are certified top-level trauma centers, and because they needed immediate medical care and lacked insurance. After they had amassed a huge debt, the hospital lawyers sued them for payment. It didn't start making sense until I had a large number of people all telling me a similar story, which was fortunate because my deadline was looming.

When working on an article like this, I found it incredibly helpful to dig into the history behind the story. I learned about the history of hospitals, how the first ones were started, how health insurance was created and how advances in medical technology and the advent of health insurance changed the medical industry. I learned about the history of the health care industry in general and about the history of the medical care in Houston, how Memorial Hermann hospital was created, how the other Houston hospitals were set up. I did all this as I was talking to experts and reading studies on nonprofits. Taking the time to get a grasp on the history and the law behind hospitals helped me to ask the right questions.

My story, “Getting Stuck: Uninsured Patients Slammed with Lawsuits by Non-for-Profit Hospital,” ran in the Houston Press on July 24, 2013. It highlighted how some medical systems are called nonprofits even though the systems don’t function as nonprofits, to the point of suing poor and uninsured patients. At the Health Journalism 2014 conference in Denver, it was recognized as one of the best examples of health journalism in the business (small) category.

The story brought local attention to the fact that a nonprofit hospital has sued the poor and the uninsured, the very people it was set up to help. After the story was published, Alaniz and Memorial Hermann settled, and both sides dropped the case.

My advice to journalists planning similar stories is to look through court documents for patterns of lawsuits against the poor and uninsured. I reviewed the civil court records filed with the Harris County District Clerk through an online database back to the 1980s looking for patterns of behavior and similar cases. More than 90 suits had been filed since 1999. Also, nonprofit tax filings showed Memorial Hermann wrote off more than $582 million in donated care, most of it from unreimbursed Medicaid expenses.

While Alaniz's story was about one man who was pushed to the brink of financial ruin by the hospital that saved his life, I found that his case was one of many.

Dianna Wray is a staff writer for the Houston Press. Her article, Getting Stuck: Uninsured Patients Slammed with Lawsuits by Non-for-Profit Hospital,  was recognized as one of the best examples of health journalism in the business (small) category at AHCJ’s Health Journalism 2014 conference in Denver.