Federal Court Panel Refuses Consolidation of Cases on Not-for-Profit Hospitals’ Billing of the Uninsured

The U.S. Judicial Panel on Multidistrict Litigation on Wednesday denied plaintiff attorneys' request to consolidate 28 class-action lawsuits against the American Hospital Association and not-for-profit health systems that allege the hospitals violate their duties as tax-exempt organizations by overcharging the uninsured, the Sacramento Bee reports (Rapaport, Sacramento Bee, 10/21).

The lawsuits, led by attorney Richard Scruggs, who also participated in class-action lawsuits against the tobacco and asbestos industries in the 1990s, accuse the not-for-profit hospitals of charity care violations. The lawsuits have small differences but are essentially breach-of-contract suits filed on the grounds that not-for-profit hospitals have an explicit or implicit contract with the federal government to serve uninsured patients because they receive significant tax breaks (California Healthline, 8/24).

The cases now will proceed separately to federal district courts (Sacramento Bee, 10/21).