Prognosis: Profits

Charlotte hospital system sues thousands of patients

When serious abdominal pains sent Joyce Jones to the hospital, she’d hoped the bill would be the least of her problems.

She had no job and a bare-bones health insurance policy that she knew would cover only a fraction of her bill. So it helped ease her worries, she said, when a social worker at Carolinas Medical Center-Mercy told her the hospital had a fund to help patients like her.

Jones thought the hospital was taking care of the cost. But soon after her two-week stay, she received a bill for $34,000.

In 2006, the hospital sued her and put a lien on her small west Charlotte home. She’d like to leave the house to her disabled daughter some day. But she knows the hospital’s lien, which would allow the hospital to collect its money if Jones dies or sells her home, may make that impossible.

“All that money they’ve got, they should be helping people,” said Jones, 65.

Like CMC-Mercy, most North Carolina hospitals are tax-exempt – a distinction that saves them millions each year. In exchange, federal officials expect these nonprofits to provide community benefits such as charity care.

But thousands of times a year, hospitals are suing uninsured patients instead.

Some of the most litigious hospitals boast healthy profits, and critics contend they could afford to help such patients rather than take them to court.Over the past five years, North Carolina hospitals have filed more than 40,000 lawsuits to collect on bills. It’s unclear how many of the patients lacked health insurance and substantial income or assets. But in interviews with 25 of those patients, The Charlotte Observer and News & Observer found 17 of them were uninsured – and 10 said they were never told about the hospitals’ financial assistance programs.

Thousands of lawsuits

Most hospitals in the state rarely, if ever, sue patients. But the most litigious of the state’s hospitals have filed thousands of lawsuits against patients who don’t pay their bills.

Carolinas HealthCare System, the multi-billion-dollar public nonprofit enterprise that runs CMC-Mercy and about 30 other hospitals, has filed more than 12,000 suits over the past five years. So has Wilkes Regional Medical Center in North Wilkesboro, state records show.

Carolinas HealthCare wins most of the lawsuits it files, allowing it to put liens on the homes of patients. Officials for the hospital system say they file suit only when people fail to answer repeated requests for payment. The system never forces people from their homes, but does collect money after the patients die or sell their houses, officials say.

Hospital executives say it’s only fair to the many patients who do pay their bills.

“We always struggle with, ‘Should we be doing that (filing lawsuits)?’ ” says Greg Gombar, Carolinas HealthCare’s chief financial officer. “But it comes back to a message ... If you have the ability to pay, you need to pay because other people are.”

Carolinas HealthCare CEO Michael Tarwater said the high number of lawsuits reflects the fact that the hospital system treats more patients than any other system in North Carolina. And many of those patients are uninsured and underinsured, he said.

The hospital system continues to treat patients who have failed to pay past bills, Tarwater noted. “We never turn off somebody’s health (care) because they don’t pay,” he said.

But critics contend it’s inappropriate for wealthy hospitals to sue patients they could afford to help. Carolinas HealthCare, for instance, brings in annual profits of more than $150 million. It also enjoys annual tax breaks worth more than $100 million, The Observer estimated.

Patient advocates question why so many lawsuits are filed by tax-exempt hospitals that are supposed to be pursuing charitable missions.

“Pure and simple, suing people is not a charitable act, especially when you’re dealing with people of limited financial means,” said Mark Rukavina, executive director of the Access Project, a Boston-based nonprofit working to improve access to health care.

It’s unclear how many of the sued patients could afford to pay their bills. But the newspapers’ investigation found that many of them don’t appear to be well-heeled.

Under its financial assistance policy, Carolinas HealthCare says it will offer free or sharply discounted care to uninsured and underinsured patients who earn less than four times the poverty guidelines and have less than $150,000 in property equity. The government defines poverty as an individual making $11,170 or less.

In a sampling of 100 suits that Carolinas HealthCare filed against Mecklenburg County residents, the newspapers found that 71 of them either didn’t own property in the county or owned houses assessed at less than $150,000.

Interviews with 15 who were sued suggest at least a third of them probably should have qualified for charity care based on their incomes and assets.