Suing Poor Patients in Maryland

The Baltimore Sun published a series of articles reporting how some Maryland hospitals have been zealous in their pursuit of money from poor patients, in spite of a state program that is supposed to make sure hospitals are fairly reimbursed for the care of the poor. The series opened with this case:

Willie Mae White began worrying how she'd pay the $36,224 bill from Johns Hopkins Bayview Medical Center a few weeks after having emergency brain surgery. She lived off Social Security and food stamps after decades working as a housekeeper. So she was thrilled when Bayview informed her in writing that her bill would be forgiven, at least in part. The hospital had little to lose, since it can recover its costs of free and unpaid care under a unique state program. Instead, the hospital sued her 15 months later to collect the bill. Fearing she'd lose her Waverly rowhouse and too sick to defend herself in court, she agreed to pay $500 right away plus $50 a month. At that rate, it would have taken her 59 years to get out of debt.

'It wasn't fair. But what could I do? I said, 'Lord, it's in your hands,'' said White, 66, who remains too weak to work.

In the aggregate, the Sun's investigation found:

• Hospital debt collection lawsuits spiked sharply between 2003 and 2006 before falling slightly last year. In all, hospitals filed more than 132,000 of these suits in the past five years, winning at least $100 million in judgments.

• In some cases they added annual interest at twice the rate allowed for other types of debts. And despite national hospital industry guidelines that caution against routinely placing liens on houses, Maryland hospitals placed at least 8,000 liens in the past five years.

• Maryland, unlike some other states, lacks uniform standards and practices to determine who is eligible for free or reduced-price care at hospitals. Some people wind up facing lawsuits even though they have little means to pay their bills.

• State officials have never resolved critical gaps in the system. For instance, they don't monitor debt collection practices to ensure that patients are being treated fairly, and they cannot be sure hospitals aren't getting paid twice for some of the same bills. Hospitals deny they collect bills twice.

• A majority of Maryland's hospitals have received surpluses from free and unpaid care in recent years, even though the system is supposed to ensure that they merely break even over time, according to state figures.

The hospital and hospital systems vary in the their debt collection practices. Apparently the most aggressive debt collectors included the state's most prominent academic medical center:

Johns Hopkins Hospital, Maryland's largest hospital, and Johns Hopkins Bayview Medical Center have filed about 14,000 collections lawsuits between them over the past five years. In a written statement, the Hopkins system said it sues fewer than 1 percent of its patients and that it now sues less often than it did several years ago - although it acknowledged that it consistently refers about 20 percent of its patients to collection agencies. It said it sues only those patients who have the ability to pay.

Furthermore,

Johns Hopkins officials acknowledged in interviews that they generate surpluses from the system. Hopkins, Bayview and the University of Maryland Medical Center showed combined surpluses of at least $130 million in the past five years in the final numbers provided by the commission.

The second article in the series documented instances of other highly aggressive and legally dubious collection practices.

Some hospitals have won judgments against patients covered by Medicaid for bills the giant government health plans didn't pay, despite a Maryland law outlawing that, The Sun found in sampling more than 200 court files. Hundreds of patients have filed complaints with state regulators over billing issues, including allegations that hospitals tried to collect amounts beyond what they agreed to accept under insurance company contracts by going directly after patients.

And some hospitals have sued patients three or more years after their stays ended, raising questions about whether the statute of limitations had expired, The Sun found.

Hospitals routinely seek to add interest at the legal maximum of 12 percent a year on judgments, starting 60 days after the patient was discharged. That is legal under a Maryland law that applies to hospitals. But the practice is criticized as unnecessarily aggressive even by some other debt collection lawyers. The Maryland Constitution sets interest rates at 6 percent for most debts, but hospital debts are exempt.

In one case, a hospital sought to collect from a patient after her insurer supposedly refused coverage, but apparently she would have been covered if the hospital had filed the correct paperwork on time.

Tamara Byrd was driving home from her job at the city Department of Social Services on Sept. 9, 2003, when a teenage driver collided with her car, sending Byrd's car smashing into a house. She spent seven days in the trauma center at Sinai Hospital in Baltimore with rib fractures and internal bleeding.

'When I first came home, my parents literally had to tuck me into bed every night. My mother had to bathe me. She had to help me get dressed,' said Byrd, 40, who lives in Randallstown.

Byrd thought her bill was covered by her HMO. But more than two years later Sinai, through Thaler, sued her for $21,595. Byrd's case was on the docket on July 16, 2006. Thaler met her prior to the hearing to discuss a possible settlement.

She recalls encountering a traffic jam of sorts as lawyers for hospitals sought to find the people they were suing to set up conferences. 'It was like a total business,' said Byrd.

Byrd agreed to pay $100 a month after talking to Thaler. She complained to the judge that she didn't think it was fair to be stuck with the bill when she had insurance, but thought she had little choice but to settle. Judge Dorothy J. Wilson marked Byrd's case settled, remarking: 'Well, good luck to you, ma'am,' according to a transcript.

Two months later, Byrd found out that she never legally owed the bill to begin with.

A friend advised Byrd to file a complaint with the Maryland Insurance Administration, which ruled in September 2006 that Byrd was not liable for the charges.

Byrd's HMO had agreed to pay the charges once it was billed by Sinai. But the hospital failed to send the bill within six months as required by state law. Instead, it sued Byrd on Dec. 22, 2005, stating in court papers that she 'refuses to pay the sums due.'

The insurance administration ruled that the hospital acted improperly in suing her, adding that hospitals can't bill patients for covered services that their health plans decline to pay. Officials call these sorts of disputes 'balance billing.'

When asked about some of these practices, hospital leaders seem to put their bottom lines ahead of a mission to treat the poor with compassion. For example, from the first article in the series:

Hospital administrators said they need to pursue unpaid bills because all patients cover the costs of those bills under Maryland's rate-setting system. Hospitals also argue that they must balance their charitable missions against the need to be paid for services.

'The board of trustees expects us to have prudent business practices,' said Ronald R. Peterson, president of the Johns Hopkins Health System. 'We could have bad behavior from people who are in that category of deadbeats.'

(Note that Mr Petersen's total compensation was reported by the Sun to be in excess of $1.4 million a year in 2003.)

I can't comment on the legal issues raised in these articles. But the hospitals' alleged conduct contrasts with the idealistic way they present themselves.

For example, the Johns Hopkins Hospital and Health System evokes its tradition thus:

Mr. Hopkins wanted a hospital with the finest physicians and staff; a hospital which was a charity for the poor of Baltimore without regard to race, color or creed; a hospital which had amenities for those able to pay, so that charity to the poor could be sustained. He wanted a hospital to be a part of or a partner with the University medical school and faculty, with a training school for nurses. He envisioned a place of compassion and caring, high skill, research and education.

Similarly, the Sinai Hospital evokes its tradition thus:

Sinai Hospital was founded in 1866 as the Hebrew Hospital and Asylum and has evolved into a Jewish-sponsored health care organization providing care for all people. Sinai is a nonprofit institution with a mission of providing quality patient care, teaching and research

The attempts to collect from Ms White above do not seem to be a way to sustain charity to the poor. Not much charity infused the characterization of "deadbeats" by Hopkins CEO Peterson. Sinai may have taken care of Ms Byrd's immediate problem, but its collection attempt did not seem to indicate that it cared for Ms Byrd. Many prominent hospitals publicly proclaim their high-minded goals, but their management often seems hostile to their missions.