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Hospital Collections

Michael Agruss

Written and Reviewed by Michael Agruss

  • Managing Partner and Personal Injury Lawyer at Mike Agruss Law.
  • Over 20 years of experience in Personal Injury.
  • Over 8000+ consumer rights cases settled.
  • Graduated from the University of Illinois Chicago School of Law: Juris Doctor, 2004.

Nearly everyone has had to visit a hospital at some point in their lives, whether it be for an emergency, a surgery, or routine testing. When you, or your child, are in pain or you’re facing an uncertain health issue, the last thing you are thinking about is if you’ll be sued for your medical bills. Unfortunately, for many people in the U.S., this is a reality.

Not all hospitals sue over unpaid medical bills, but a few hospitals across the U.S. sue over these bills more often. In a study released by The Journal of the American Medical Association (JAMA) in June 2019, an estimated 20% of U.S. consumers had medical debt in collections in 2014. This debt has been increasing due to rising insurance deductibles, an increase in direct patient billing, and more out-of-network care being delivered at in-network medical facilities. 

Everyone agrees that hospitals need to be paid for the medical treatments they provide, but adopting aggressive collections strategies, which include suing patients, wage, savings, or bank account garnishments, and liens on vehicles and homes can be devastating. Normally, hospitals refer unpaid bills to debt collectors but few file lawsuits or garnish wages. However, according to the study, in 2017, patients were sued 20,000 times and wage garnishment was enacted in 9,000 cases just in hospitals in Virginia.

Virginia isn’t the only state where hospitals are following this practice. The New York Times uncovered similar circumstances in Carlsbad, New Mexico, where 3,000 patients were sued by Community Health Systems over medical debt since 2015, with more than 500 of these lawsuits occurring since August of 2019. Community Health Systems, a hospital chain in Tennessee, owned the three hospitals in New Mexico that charged the highest rates to its patients and has both been fined millions of dollars for charges of admitting patients unnecessarily in other states, as well as systematically overbilling for emergency room visits. 

Additionally, in Memphis, Methodist Le Bonheur Healthcare filed 8,300 lawsuits from 2014-2018, including lawsuits against some of their own employees according to the independent journalism group ProPublica. 

While people across the country are dealing with rising medical costs, opaque pricing, and surprise bills, one-hospital towns-where residents have less of a choice for emergency medical care-are feeling the pain even more. Hospitals with little competition can negotiate higher rates with insurers who want the hospital included in their network. Surprisingly, non-profit hospitals are more likely to garnish wages compared to for-profit hospitals, the JAMA study found. 

Of all hospitals in the U.S. that garnished wages, 43% were non-profits, 33% were for-profits, and 6% were government-owned hospitals. This is especially eye-opening when you realize that non-profit hospitals were originally created to provide care and financial aid to those in the community that would otherwise not be able to receive them, and these hospitals receive significant tax benefits for providing this care. Yet, these same low-income patients are losing their homes, vehicles, and hard-earned wages due to aggressive debt collection lawsuits.

Another problem lies in the fact that the cost of medical care can differ from institution to institution. Hospitals have broad discretion in setting their prices, and charges for the same services can vary, even across similar patient demographics and the amount billed to patients has little relationship to the quality of care that was given. What frustrates patients even more is that they have no options in finding out the prices of their care until the bill comes or the pricing given is confusing and vague. 

In July 2019, the Trump administration proposed legislation to make public the prices that hospitals negotiate with insurers, and while this is a good start, it will not paint a clear picture to patients that could still amass unanticipated, out-of-pocket debts from co-pays, deductibles, and medical complications that could result in extra treatment and payments. 

This also doesn’t take into consideration the “surprise bills” that many patients receive, which are bills for out-of-network providers who are working at in-network hospitals. Smaller hospitals often cannot afford a full-time emergency room doctor, forcing them to hire an out-of-network physician, yet they are not required to disclose this information to their patients. This has become enough of a problem that some states have outlawed this practice. 

Debt collection is common in the medical industry, but lawsuits are a traumatic way to push patients into paying, especially when these patients are typically at or below the federal poverty level and owe bills in the low thousands. And no patient, or parent, should be forced to choose between medical care and keeping their home. Many states have laws and regulations in place to protect those with medical debts from falling too far behind in debt, including Illinois. 

If you are the victim of aggressive medical debt collections, or you feel you do not owe a medical debt but you are still being threatened with legal ramifications, consider contacting an experienced lawyer to discuss your rights and review your case to determine what legal rights you may have.

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