Despite new state and federal laws aimed at reining in aggressive collection practices, North Carolina’s largest hospital system continues to file hundreds of lawsuits each year to collect on unpaid bills.
Since 2013, nonprofit Carolinas HealthCare System has filed more than 2,700 bill-collection lawsuits against patients, state records show.
An Observer review found that a number of those lawsuits were filed against low-income patients who lacked health insurance. That appears to defy the intent of new laws aimed at protecting vulnerable patients, advocates say.
Carolinas HealthCare, the Charlotte-based hospital chain that runs Carolinas Medical Center and about 40 other hospitals, says it follows the law. The hospital system has increased financial assistance to patients and has taken additional steps to help the needy, officials say.
Those who are sued represent just a tiny fraction of the more than 1 million patients Carolinas HealthCare treats each year, officials say. The system is filing such lawsuits at roughly half the rate it did in 2010.
But patient advocates say they’re troubled to learn that the hospital system continues to sue some who are poor and uninsured, despite new laws designed to protect such patients. Lawsuits and liens can prevent people from refinancing their mortgages, destroy their credit and, in some cases, make it impossible for them to sell their homes.
The Observer interviewed 15 former patients who’ve been sued by the system since the beginning of 2013 and found that most were uninsured. At least four of them appeared to have so little income that they qualified for charity care – the practice of forgiving a patient’s bill. None of those four hired lawyers, and the hospital system won a judgment in each case.
Among those sued: Karen Roberson, a 58-year-old east Charlotte resident who had no insurance and just $10,000 in annual income in 2012, the year she was diagnosed with breast cancer.
She and her son say they applied to CMC-NorthEast in Concord to get help with chemotherapy bills, which eventually mounted to more than $40,000. Instead, Carolinas HealthCare sued Roberson and won a judgment.
“You have all this stuff going on. And you feel like crap,” Roberson says. “And then to have to worry about your finances?”
CHS: Suits are a last resort
Officials with Carolinas HealthCare declined to discuss the cases of individual patients.
But they say they file lawsuits only as a last resort against patients who don’t qualify for financial help – or who don’t follow the steps needed to qualify.
They say they make multiple attempts to contact patients who don’t pay their bills and provide financial help or payment plans to those who respond.
The system files lawsuits only when patients “have not wanted to talk to us (and) we’ve determined that they have a means to pay,” says Stephen Burr, senior vice president of patient financial services.
At least three of the patients interviewed by the Observer, however, said they offered to make monthly payments to the hospital but were told their offers were unacceptable.
Hospital officials say that obtaining court judgments provides the system its greatest chance of being paid for its services. And they say it’s only fair to the many patients who do pay their bills.
Carolinas HealthCare never forces patients from their homes, officials say, but intends to collect money when patients die or sell their houses.
But system officials say they’ve worked hard to ensure most patients never face that predicament. They’ve expanded interest-free payment options, increased charity care and allowed all patients to consolidate their debt with a single medical credit card.
The system says it provided more than $320 million in financial assistance to uninsured patients in 2013. That amounted to roughly 4 percent of the system’s $8.4 billion budget.
New laws, old practices
Like most other North Carolina hospitals, those owned by Carolinas HealthCare are tax-exempt – a distinction that saves them millions each year. In exchange, these nonprofits are expected to provide financial help to those without the means to pay.
Despite the upheaval in health care policy, Carolinas HealthCare remains financially strong, with nearly $3 billion in reserves. Critics contend the system should use its resources to help patients, not sue them.
A 2012 investigation by the Observer and The News & Observer of Raleigh found that large nonprofit hospitals in North Carolina have squelched competition, inflated prices, paid executives millions and left thousands with large bills. During the five years ending in 2010, the newspapers found, North Carolina hospitals filed more than 40,000 collection lawsuits.
In response to the newspapers’ series, state legislators in 2013 passed a law mandating that hospitals curb some of their more aggressive bill-collection practices.
Among other things, that law limits the cases in which hospitals can put liens on patients’ houses. It also bans hospitals from referring unpaid bills to collection agencies while a request for charity care is pending.
The federal Affordable Care Act also seeks to protect patients. In response to the law, the Obama administration recently adopted new rules that require nonprofit hospitals to determine whether patients are eligible for financial assistance before filing lawsuits or putting liens on their homes.
The Charlotte-based system is by no means unique in its bill collection practices. A 2012 Observer study found that most of the nation’s 20 largest hospital systems allow their hospitals to file lawsuits and liens against patients.
In North Carolina, about two thirds of hospital lawsuits last year were filed by Carolinas HealthCare and two nonprofits it manages – Moses Cone Health System in Greensboro and Wilkes Regional Medical Center in North Wilkesboro.
Most North Carolina hospitals rarely sue patients. Novant Health, which owns Presbyterian Medical Center and 14 other hospitals, has a policy against doing so. And some hospitals, including Iredell Memorial in Statesville, have recently stopped such suits.
Adam Linker, co-director of the North Carolina Justice Center’s Health Access Coalition, says that some of Carolinas HealthCare’s recent bill-collection lawsuits appear to violate the spirit of the state and federal laws.
“I think it shows something is wrong with the health system, and the health system should reflect on that and change its policies rather than forging ahead and destroying people’s lives,” he said.
Staff writer Karen Garloch and (Raleigh) News & Observer database editor David Raynor contributed.
CHS charity care policy
Carolinas HealthCare System says it will offer free hospital care to patients whose income is less than twice the federal poverty level. That amounts to earnings of less than $48,500 per year for a family of four.
To qualify, patients must fill out a detailed, five-page application. Among the information requested: the cash and face values of any life insurance and burial insurance contracts; the tax values and loan amounts on any real estate, cars, motorcycles or boats owned; balances and account numbers on any savings, checking and retirement accounts; and details on all forms of income, including pensions, unemployment and child support.
How we did the story
The Observer and The (Raleigh) News & Observer analyzed data from the N.C. Administrative Office of the Courts to come up with a list of all lawsuits that North Carolina hospitals have filed against patients in recent years. Reporters used that data to determine litigation trends and to find patients who had been sued.
The data showed that hospitals owned and managed by Carolinas HealthCare System have filed more lawsuits against patients than any others. To learn the circumstances of those being sued by Carolinas HealthCare in 2013 and 2014, an Observer reporter pulled Mecklenburg County court files on cases involving the highest dollar amounts. Then the reporter tried to contact each of the defendants. While many were unreachable, the reporter was able to interview 15 of the patients who had been sued.
The five patients who shared their experiences for these stories all said they were willing to give Carolinas HealthCare System permission to provide information about their cases to a reporter. But officials for the hospital system declined to discuss individual cases.