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KFF: Hundreds of Hospitals Sue Patients or Threaten Their Credit, a KHN Investigation Finds. Does Yours?

Read the KFF article here.

Article features Tracy Douglas, Harbor-UCLA Medical Legal Partnership Registered Legal Services Attorney, Bet Tzedek

 

Despite growing evidence of the harm caused by medical debt, hundreds of U.S. hospitals maintain policies to aggressively pursue patients for unpaid bills, using tactics such as lawsuits, selling patient accounts to debt buyers, and reporting patients to credit rating agencies, a KHN investigation shows.

The collection practices are commonplace among all types of hospitals in all regions of the country, including public university systems, leading academic institutions, small community hospitals, for-profit chains, and nonprofit Catholic systems.

Individual hospital systems have come under scrutiny in recent years for suing patients. But the KHN analysis shows the practice is widespread, suggesting most of the nation’s approximately 5,100 hospitals serving the general public have policies to use legal action or other aggressive tactics against patients.

And although industry officials say they are careful about how they target patients for unpaid bills, few institutions have renounced what federal rules call “extraordinary collection actions,” even as medical debt forces millions of Americans to cut back on food and other essentials, drain retirement savings, and make other difficult sacrifices.

At the same time, a majority of hospitals scrutinized by KHN effectively shroud their collection activities, publicly posting incomplete or in many cases no information about what can happen to patients if they can’t pay.

These are among the findings of an examination of billing and financial aid at a diverse sample of 528 hospitals across the country. Over the past year, KHN investigated each of these hospitals, reviewing thousands of pages of policies and other documents. The reporting also included thousands of telephone and email inquiries and interviews to obtain and clarify how hospitals handle patients with unpaid bills.

Some hospitals did not respond to multiple requests for information. But KHN was able to gather details about most. From them, a picture emerges of a minefield for patients where a trip to the hospital can not only produce jaw-dropping bills but also expose patients to legal risks that jeopardize their livelihood. Among the findings:

  • More than two-thirds sue patients or take other legal action against them, such as garnishing wages or placing liens on property;
  • A similar share of the hospitals report patients with outstanding bills to credit rating agencies, putting patients’ credit scores and their ability to rent an apartment, buy a car, or get a job at risk;
  • A quarter sell patients’ debts to debt collectors, who in turn can pursue patients for years for unpaid bills;
  • About 1 in 5 deny nonemergency care to people with outstanding debt;
  • Nearly 40% of all hospitals researched make no information available on their websites about their collection activities, although KHN in some cases was able to obtain the information through repeated requests.

“People don’t know what’s going to happen to them. It can be terrifying,” said Tracy Douglas, a consumer attorney at Bet Tzedek Legal Services in Los Angeles. Douglas described one older woman she worked with who was afraid to seek financial assistance from a hospital because she worried the hospital would seize her home if she couldn’t pay.

(go to link at top of page for story’s interactive map)