June 28, 2019; ProPublica and NPR

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 other employers in the area have committed to $15 starting wages), and the hospital’s high-deductible health insurance policy requires employees to use Methodist’s health care services, despite more generous financial assistance available at other hospitals.

Methodist, unlike some of its competitors, offers no financial assistance to patients who have insurance. But its own insurance policy leaves employees responsible for a $750 individual deductible, and 20 percent of all charges, up to an out-of-pocket cap of $4100 per year. For the hospital’s low-wage employees—18 percent earn less than $15 per hour—a medical emergency can quickly add up to a lifetime of debt.

After being served papers, ProPublica reports, the housekeeper offered to pay the hospital collection agency $50 every two weeks, but she was told that was too little. In court, she filed an affidavit stating she had two dependents, a 27-year-old son with disabilities and a grandson. In 2017, she earned $16,000, $4,000 less than the federal poverty level for a family of three.

When the judge proposed that she turn over $200 per month to her employer to pay off her debts, the housekeeper offered $150 per month, despite the fact that she couldn’t afford it. The judge agreed. To meet her obligations, she is relying on payday loans, driving herself deeper into debt. “You have to rob from Paul to pay Peter,” she told ProPublica. “It doesn’t never seem like you can get ahead.”

As the housekeeper struggles to care for her family, the Guardian reports that Methodist’s CEO is earning $1.6 million annually. The health system has $2.1 billion in revenue, and in 2018 reported an $86 million surplus. It also gets assistance from the state of Tennessee to help offset the costs of uncompensated care. In the first three months of 2019, according to the Guardian, the legislature allocated $31 million to “qualifying hospitals,” of which $5 million went to Methodist.

Methodist reports that it spent $226 million, or about one percent of its revenues, on community benefits in 2018. That begs the question of why it engages in aggressive collection policies, particularly in relation to its own workforce, people who as employees of their city’s largest health care system should expect to at least benefit from access to affordable quality health care.

Fuse Brown told NPR that these aggressive debt collection strategies “raise bigger philosophical questions about a hospital’s role.”

“There has to be a balance between getting their bills paid but also being a reasonable community member,” she said. “[Lawsuits don’t] seem to be worth the effort, and it’s so ruinous to the patient—not just the financial obligation but the effect on your credit, on your record, the emotional effect of being sued.”

Martin Makary, one of the JAMA study’s authors and a surgeon and researcher at Johns Hopkins, was so disturbed by his research that he put together a team of doctors and lawyers to challenge Mary Washington’s debt collection suits in Fredericksburg. He said, “It’s a disgrace every place where it happens.”

“To see these aggressive, and even predatory, collection strategies affect everyday teachers, farmer, even nurses—it’s heartbreaking and it’s wrong and it needs to stop,” says Makary.

Makary’s team is now providing Daisha Smith, the eldercare worker, with an attorney to work out a payment plan. More importantly, the pressure on Mary Washington has put an end to the “hospital docket,” just as Makary had hoped.—Karen Kahn