The number one reason families go bankrupt is medical debt, explained Senator Elizabeth Warren at the first Democratic primary debate on June 26th. That’s not just people who are uninsured, she noted; that’s families with insurance. Now, the complicity of nonprofit hospitals in creating that debt is being further illuminated and we are waiting for Congress, and specifically Senator Charles Grassley of Iowa, to take notice.
A study published June 25 in the Journal of the American Medical Association (JAMA) focused on how hospitals try to collect these debts. As Ruth McCambridge covered last week, researchers found that, in Virginia, more than a third of hospitals sued patients who didn’t pay their bills, filing 20,000 debt lawsuits in 2017 alone. To collect these debts, hospitals garnished the wages of more than 9,300 workers. Five hospitals accounted for half of these lawsuits—four of the five were nonprofits.
One of the most aggressive Virginia hospitals, according to a June 25 story from NPR, was Mary Washington in Fredericksburg. The nonprofit hospital has since announced that it will end the practice of bringing debt lawsuits, but until last week, it regularly sued so many patients that the local courthouse scheduled a “hospital docket” one morning every month.
Among the defendants on June 14th, when NPR reporter Selena Simmons-Duffin visited the court, was Daisha Smith, a 24-year-old eldercare worker who spent two weeks in the hospital in 2017. She was working at Walmart at the time, earning $11 per hour, and had no insurance. The hospital handed her a bill for $12,287.68, more than half her yearly wages.
Smith claims she didn’t know the hospital had a financial assistance program or that they were trying to collect on her bill until she discovered her wages were being garnished. After garnishment, her earnings came to $1400 per month. Her rent is $1055. She took a second job to try to make ends meet but was still having trouble paying her debt. She told NPR reporter Simmons-Duffin, “I literally have no food in my house because they’re garnishing my check.”
It is difficult to know how common the practice of suing low-income patients is among nonprofit healthcare systems, because there is no national data on collections practices, says Erin Fuse Brown, a professor at Georgia State University who studies health care costs. “I haven’t seen any good studies that tried to estimate the number of hospitals that are doing this or the percentage of patients who are subjected to this type of debt collection activity.”
Nonprofit hospitals are required by law to have financial assistance programs; the law also prohibits hospitals from taking “extraordinary collection actions,” according to Jenifer Bosco, staff attorney at the National Consumer Law Center. She told NPR that nonprofit hospitals “have to provide some sort of financial help for lower-income people, but the federal rules don’t say how much help, and they don’t say how poor you have to be to qualify [or] if you have to be insured or uninsured.”
This leaves hospitals to determine their own policies. “Hospitals sometimes can legally sue their patients for medical debts,” Bosco explained. “The question is whether that’s something they should be doing.”
That’s a question that goes to the heart of a story recently reported by ProPublica, in partnership with MLK50. Reporter Wendi Thomas reveals that Methodist Le Bonheur Healthcare, a United Methodist Church affiliated hospital system in Memphis, Tennessee, sues its own employees to recover medical debt.
Thomas spoke with a hospital housekeeper (she did not want to reveal her identity for fear of losing her job) earning $12.25/hour. The hospital was suing her for $23,000, debt from several hospital stays plus attorney’s fees that equaled her annual wages.
The housekeeper described the situation as “surreal.”
“You know how much you pay me,” she said, referring to the hospital. “And the money you’re paying, I can’t live on.”
Thomas reports that from 2014 to 2018, Methodist filed more than 8300 lawsuits against patients. An analysis of Shelby County court records shows that “after winning judgements, [the hospital system] has sought to garnish the wages of more than 160 Methodist workers and has actually done so in more than 70 instances over that time.”
A nonprofit, religiously affiliated hospital garnishing the wages of its own workers—particularly those earning near poverty wages to begin with—raises ethical concerns, says retired Methodist minister Fred Morton. “Certainly, they should not be predatory to their own employees on medical bills,” he said. “That’s very much contrary to Scripture.”
The hospital seems to have not thought very deeply about the financial challenges facing its employees. Wages at the hospital begin at $10 per hour (though o