Eight Lawsuits Added to Class-Action Claim Filed Over Charity Care Provided by Not-for-Profit Hospitals
A coalition of trial lawyers on Tuesday added eight more lawsuits against not-for-profit hospitals to the 13 suits filed last week alleging that the institutions violated their obligation as charities by overcharging uninsured patients, the AP/Minneapolis Star-Tribune reports. Hospitals and health care systems in Arizona, Colorado, Illinois, Missouri and Texas were added to the list of lawsuits targeting facilities in Alabama, Colorado, Georgia, Florida, Illinois, Minnesota, Ohio, Tennessee and Texas (AP/Minneapolis Star-Tribune, 6/23). The suits, which are seeking class-action status, have small variations but all are essentially breach-of-contract suits focused on the idea that not-for-profit hospitals have an explicit or implicit contract with the federal government to serve uninsured patients to receive significant tax breaks.
The suits allege that the hospitals have violated contracts by charging uninsured patients "premium" rates, even though insurers, HMOs and government programs like Medicare and Medicaid pay discounted rates. Some suits also cite particular hospitals' tactics to collect unpaid bills, including placing liens on homes and assessing interest, fines and legal fees. The lawsuits, which allege that hospitals are holding onto large, untaxed sums, seek the creation of a trust fund that the hospitals would finance to provide affordable medical services to the uninsured. The lawyers filing the suits are led by Richard Scruggs, who also participated in class-action lawsuits against the tobacco and asbestos industries in the 1990s (California Healthline, 6/18).
Alicia Mitchell, spokesperson for the American Hospital Association, which has been named in all the lawsuits, said the charges are "baseless and misdirected" (AP/Minneapolis Star-Tribune, 6/23). Illinois-based Resurrection Health Care, which was named in a suit, released a statement on Tuesday stating, "These charges reflect fundamental misconceptions regarding the nature of not-for-profit health care and its practices." The nine-hospital chain added that it plans to mount "a vigorous defense" (Kaiser, Chicago Tribune, 6/23). John Thomas, an attorney for Texas-based Baylor Health Care, said that although he had not yet seen the lawsuit, it was "pretty offensive that an organization that provided $180 million in charity care is now being sued by an out-of-state personal injury lawyer who made billions suing tobacco companies."
Texas attorney R.W. Richards, who will sit as co-counsel on the case with Scruggs, said, "Our lawsuit is basically saying that we think if you have an indigent person, the most you should ask them to pay is the Medicare rate." Richards added, "Don't take the poorest in our communities and charge them the very highest rates of anybody in the community. That's what they've been doing, and it's just wrong. It would appear that the systematic abuse of the poor by people hiding behind a charitable sign seems to be an industrywide problem" (Hancock/Yu, Dallas Morning News, 6/22).