Prognosis Profits

Lawsuits by local hospital chain drop sharply

This story was originally published in the Observer on 10/19/12.

In what some patient advocates call a move in the right direction, the nonprofit system that owns Carolinas Medical Center and more than 30 other hospitals is suing significantly fewer patients than it did last year, new data shows.

The average number of lawsuits filed per month by Carolinas HealthCare System has dropped by more than 20 percent since last year, and more than 30 percent since 2010, according to state courts data.

The change comes months after an investigation by the Observer and The News & Observer of Raleigh, which showed that N.C. hospitals are suing thousands of patients to collect on bills. An in-depth look at some of the cases suggest most of those patients were uninsured and that a significant number of them should have qualified for free hospital care.

The N.C. NAACP and other groups representing low-income families have called for an end to the controversial practice of suing patients, saying it puts additional hardship on some of the state’s most vulnerable people. When hospitals win such lawsuits, they often put liens on the homes of former patients – a practice that can make it difficult for those people to sell or refinance their houses.

Carolinas HealthCare said it hasn’t changed its bill-collection policies. But it said the decline in legal actions might be the result of “more patients actively reaching out to us to address billing obligations rather than waiting until a legal action is filed.”

Another possible factor: Changes to the hospital system’s website have made it easier for patients to get information about financial assistance.

The newspapers’ investigation found that during the five years ending in 2010, N.C. hospitals filed more than 40,000 lawsuits. Most of the suits were filed by Carolinas HealthCare and Wilkes Regional Medical Center, a hospital in North Wilkesboro that is managed by Carolinas HealthCare.

Last year, Carolinas HealthCare filed an average of more than 190 suits per month. This year, it has been about 150. The pace of litigation has also slowed at Wilkes Regional, where the number of suits filed each month is, on average, about half what it was last year.

Adam Searing, director of the N.C. Health Access Coalition, said he thinks it’s time for Carolinas HealthCare to follow the lead of other large hospital systems, including Duke University Health System and UNC Hospitals, which all but stopped suing patients years ago.

“Hopefully this gradual reduction means they will make a broad policy change,” Searing said. “The assets Carolinas wants to take are the only assets many poor families have built up over the years … This runs directly counter to their community obligation.”

Like Carolinas HealthCare, most N.C. hospitals are tax-exempt, which saves them millions each year. In exchange, they are expected to provide charity care and other benefits to the public.

Officials for Carolinas HealthCare say they never force patients from their homes. But the liens they obtain allow them to collect after former patients die or sell their houses.

System officials say they provide care to anyone who needs it and sue only when people fail to answer repeated payment requests.

“Our patient financial counselors are eager and available to assist our patients with their individual financial circumstances … ,” the system said in a prepared statement.

CHS officials point out that their hospitals provide more charity care than most in North Carolina, and say they work hard to determine whether patients can afford to pay before suing.

But critics contend the Charlotte-based hospital chain could afford to stop suing. The nation’s second-largest public hospital system, Carolinas HealthCare generates nearly $7 billion in annual revenue and has posted average annual profits of more than $300 million over the past three years.

Most N.C. hospitals rarely sue, the Observer found. Novant Health, the nonprofit chain that owns Presbyterian Hospital and 12 other hospitals, has a policy against doing so.

The last hospital in the Raleigh area to routinely sue patients was UNC Health Care. UNC stopped the practice in 2006, after The News & Observer told the story of how the hospital system won a $185,300 lien on the home of Jerry Ansley, a Clayton man who ran up medical bills of more than $1 million for treatment of life-threatening problems.

But like most hospital systems, Novant, Duke and UNC do use commission-driven collection agencies, which can seriously damage a patient’s credit.

Hospital lawsuits and liens can prove even more devastating. When Joyce Jones was hospitalized for pancreatitis, she had no job, little money and a low-cost insurance policy that covered only a fraction of her $34,000 bill.

In 2006, Carolinas HealthCare sued her and put a lien on her home in west Charlotte. The house has a tax value of $70,000, and Jones worries that the lien may one day cause her family to lose it.

“The way the economy is, nobody’s got any money,” she said. “…(The hospitals) need to work with people more.”

The hospital said it sent multiple statements to Jones before filing suit. Jones said she stayed with her brother after being hospitalized, and doesn’t remember getting the letters.

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