Hospitals are some of America's toughest debt collectors

By Megan Cerullo

/ MoneyWatch

Back In 2017, Heather Waldron underwent emergency intestinal surgery at a University of Virginia Health System hospital, a procedure that kept her in the in Charlottesville facility for two months. Roughly two years later, she lost her home after the nonprofit hospital system sued her to collect on the $164,000 bill, and she says she is preparing to file for bankruptcy.

"When something like that happens, it's almost like you want to give up, because you feel like, 'How am I ever going to pay off $164,000?'" said Waldron, who also happens to be a nurse.

The financial strain drove apart Waldron and her now exhusband — and the home they once shared with their five children is in foreclosure proceedings.

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Her predicament isn't an anomaly. Over six years, UVA (as the Virginia health system is often called locally) filed roughly 36,000 lawsuits against patients seeking a total of more than $106 million, Kaiser Health News and the Washington Post first reported. Some suits were to recover as little $13.90, according to the report.

UVA is hardly alone. Roughly a third of Virginia hospitals have adopted aggressive billing and collection strategies including suing patients, garnishing their wages and putting liens on their homes, according to Dr. Martin A. Makary, author of "The Price We Pay: What Broke American Health Care — and How to Fix it."

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"Taking care of a patient is taking care of an entire person, and they violated trust in the medical profession," Makary said."We have failed to manage or control health care costs as an industry, and the ugly effects are now spilling over to the general public in the form of these predatory collections and billing practices, of which suing patients and garnishing their wages represents the worst of it."

Hospitals in other states have employed the same tough tactics. Some patients at the Carlsbad Medical Center in New Mexico say they fell into financial ruin after they were treated at, then sued by, the hospital. Indeed, Carlsbad has sued more than 3,000 patients over the past 10 years, CNN reported. Carlsbad is owned by Tennessee-based Community Health Systems, one of the nation's leading for-profit providers of hospital services.

Misti Price, also a nurse, said she faced five lawsuits by Carlsbad over bills stemming from her children's ailments including pneumonia, asthma attacks and broken bones. After the first suit in 2012, the hospital garnished her wages and repossessed her vehicle, she said.

Misti Price says Carlsbad Hospital in New Mexico has sued her five times and she still owes roughly $17,000 — a sum she says she can't afford to repay. Misti Price

"I lost a vehicle, I almost lost my house and I was working three jobs just to put food on the table. It was tough," Price said, noting that she can't afford to repay the $17,000 in hospital bills.

Following public uproar, both hospitals say they've amended their billing practices. UVA last week suspended roughly a dozen patient lawsuits, KHN reported. On Friday, the hospital system said it is making changes to "reduce our reliance on the legal system for the collection of debts, enabling us to focus our efforts on workable repayment plans."

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Carlsbad said it would no longer bring collection suits against patients whose incomes are below 150% of the poverty line, regardless of whether they are insured. It will also drop current judgments against patients who can show their earnings don't exceed that amount.

Price, who works for insurer United Healthcare, said she's worked out a payment plan with the hospital. But she remains shaken by the litigation and years of ensuing financial anxiety.

"I shouldn't have to second guess whether I should take my family to the hospital to get medical care they need in fear of being sued, in fear of my wages being garnished," Price said. "It's very scary and frustrating."

First published on September 17, 2019 / 1:02 PM

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