Hospitals Suing Patients For Outstanding Medical Debt

by Contributor

(Nov. 11, 2019) — Ballad Health, which runs hospitals and healthcare facilities throughout Southwest Virginia and East Tennessee, has been  suing patients for unpaid medical bills in recent months. It’s common to hear of patients taking healthcare providers to court for cases of medical malpractice, but it’s less common for hospitals to be the plaintiffs. However, in one example in Wise County reported by  The New York Times, Ballad Health brought 102 of the 160 cases heard. Suing for unpaid bills is clearly becoming big business for some healthcare providers.

It’s often assumed that having health insurance means you’ll be able to cover your medical expenses, but with hospital bills rising, this is becoming less certain. Many of the patients who get caught in a medical debt spiral have private health insurance but are still responsible for a large share of the bill.

Worker’s compensation insurance is carried by most businesses, which pays for health expenses in the event of workplace injury or accident; Cerity Insurance, recognizing the need for legal coverage, recognizes the importance of covering legal fees in the event of an employee being sued for injuries due to workplace negligence. However, while worker’s compensation insurance helps patients who are injured on the job or need to attend court for injury-related cases, workers who amass medical bills for other reasons – including healthcare for their children – fall between the gaps of what is covered by insurance providers. For those individuals, finding legal fees to fight cases brought to court by hospitals is impossible in the light of their existing medical bills. Medical debt in Tennessee accrues 10% in annual interest, and this can quickly add up. As a result, the hospitals nearly always win, with few patients attending the court hearing to contest the claims.

When a healthcare provider wins a case against a patient, those who are unable to pay often find their wages cut. Children’s Wisconsin took 671 cases to court last year, suing for amounts ranging between $46 and $20,606, and has this year garnished wages, not only of McDonald’s and Walmart employees, but also of its own staff. In some cases, Children’s takes a quarter of the patient’s wages, forcing them into further debt as they struggle to keep up with bills and other living costs. The hospital claims that filing lawsuits against patients is a last resort, used only when other methods of chasing the debt have failed, but for those who are simply unable to pay, there is no way for them to avoid being sued.

Legislation has recently been proposed by New York lawmakers to put a 3% cap on the interest hospitals are able to recover on medical debt. The proposed changes would also reduce the statute of limitations from six years to two, which could lead to fewer judgements against patients. Some hospitals are eager to avoid the court route, and are introducing financial support policies for those with high deductibles. In Pennsylvania, for example, St. Luke’s University Health Network piloted an assistance policy for patients who have insurance but still cannot afford their medical expenses. The hospital receives 50 applications each week, which raises concerns that it may be an unsustainable policy. Ballad Health, on the other hand, has no plans to change its approach, although it has said that it plans to increase the income limit for charity care, which vice president, Mr. Keck, claims will reduce lawsuits.

As medical bills rise, more and more people struggle to pay, even with private health insurance. While some hospitals collect patient debt in court, others are seeking ways to provide financial support for those who need assistance. However, with the number of hospital-led lawsuits rising, it’s clear that more will need to be done to address the discrepancy between earnings and medical costs.