UNC Hospitals said it will give up its claim against the home of a Clayton man who racked up more than $1 million in medical bills there during a battle with viral encephalitis and a rare, nongenetic form of hemophilia.

Jerry Ansley and his wife, Kathie, whose story appeared in The News & Observer this month, were financially devastated by the medical problems, which began in September 2004 with a mosquito bite that likely infected him with encephalitis. Health insurance covered only a small fraction of the related bills, and the couple ran through their modest retirement savings while he was sick. Ansley remains disabled and dependent on his wife for care, and no one in the house is working.

The Ansleys' medical crisis occurred as UNC Hospitals had become more aggressive in collecting bills. As a state agency obligated by law to try to collect from debtors, UNC had sought to recover at least a portion of what it was owed. Ansley's account was one of hundreds forwarded to the state Attorney General's Office, which sued the couple for the $185,300 -- the full fair-market value of their home -- plus interest and court fees. The rest of Ansley's UNC bills were written off.

The hospital's tougher collection efforts drew criticism this summer. Some patients and staff questioned the state-supported hospital's historic mission to offer care regardless of a person's ability to pay. Hospital officials vowed to alter their approach. Among the changes: UNC Health Care System, the parent of UNC Hospitals, will not pursue legal action against patients who qualify for financial assistance or make a good-faith effort to work with hospital financial counselors.

On Friday, a Raleigh attorney representing the Ansleys, Doug McClanahan, received a letter from the Attorney General's Office that said UNC has approved additional financial assistance for the Ansleys that reduces the balance owed to zero. The letter also said that the Attorney General's Office has dismissed the lawsuit, which sought to place a lien on the couple's home.

UNC Hospitals spokesman Lynn Wooten confirmed that the Ansleys' case has been resolved, but declined to provide details about the case or UNC's decision, citing medical privacy laws.

"We are happy for the family that this issue has been, at last, put to rest, and wish the Ansleys the best in the future," Wooten said in a statement.

Jerry and Kathie Ansley said they are relieved they no longer have to worry about losing ownership of their home.

"I feel like a semi-truck has just been rolled off my chest," said Jerry Ansley, a former high school science teacher who had hoped to start a business as a homebuilder before his illnesses. Now, he and his wife are living on $808 a month in disability benefits and charity from family.

$2.5 million debt

Ansley's medical crisis took him from WakeMed in Raleigh to UNC to Duke Hospital in Durham. In all, his medical bills totalled more than $2.5 million. After reviewing the Ansleys' financial situation, WakeMed and Duke both wrote off the entire amounts due to them.

But the Ansleys say their fight is not over.

The Ansleys hope to persuade state lawmakers to pass a law that would prevent health care organizations from settling medical debts by going after a patient's primary residence. Tara Niebaum, the Ansleys' daughter, said the family has been in contact with members of the state House and Senate, and with Gov. Mike Easley's office, about sponsoring such legislation. The family has established a blog and online petition urging passage of a medical protection act.