Lawsuit Alleges Sutter Overcharged Uninsured Patients in Northern California
Lawyers on Tuesday filed a lawsuit in San Francisco Superior Court against not-for-profit Sutter Health, alleging that the hospital chain violated its responsibility as a tax-exempt organization to provide charity care by overcharging uninsured patients at 26 hospitals in Northern California, the Sacramento Bee reports.
The suit seeks class-action status and damages, including refunds on medical bills paid by uninsured patients at all Sutter hospitals in Northern California. In the suit, lawyers allege that Sutter charged "unfair, unreasonable and inflated prices to its uninsured patients who are generally least able to pay." The suit also claims that Sutter "pursues aggressive collection techniques that often result in lawsuits, judgments, garnishments and bankruptcies against uninsured patients" (Rapaport, Sacramento Bee, 9/15).
According to the suit, Sutter's policies toward uninsured patients violate the Consumers Legal Remedies Act and the Unfair Competition Act.
The suit was filed on behalf of two uninsured patients who were billed for care at Sutter hospitals in San Francisco. According to the complaint, an uninsured and unemployed patient who was admitted through the emergency department of California Pacific Medical Center for a lymph node infection and spent five days in the hospital received a bill for $17,000 for the hospital stay and $600 for the emergency room visit.
The second plaintiff in the suit visited the emergency department at St. Luke's Hospital after a hit-and-run accident. According to the complaint, the plaintiff informed the hospital that she was unemployed and uninsured but was not given information about any charity care policies. The plaintiff was released after 20 minutes and later received a bill for $574, according to the suit.
David Borgen, an attorney representing the plaintiffs in the case, said, "It's outrageous enough that they charge uninsured people more than they charge insured people. Then, they have these outrageous collection processes. Then, they're holding themselves out as a charitable institution and getting tax benefits under this guise" (Silber, Contra Costa Times, 9/15).
The Service Employees International Union -- the largest health care worker union in the country -- publicized the case "in an effort to gain support" for a bill (SB 379) before Gov. Arnold Schwarzenegger (R) that would establish mandatory charity care guidelines for hospitals in California. The measure, sponsored by Sen. Deborah Ortiz (D-Sacramento), is supported by labor and consumer groups but is opposed by many hospital industry officials.
Sutter was named in a similar suit in federal court in San Francisco in July. The case, which is still pending, alleges that Sutter overbilled uninsured patients and sought refunds for some patients.
Both the state and federal suits were "crafted with support from SEIU," which prepared reports that compared Sutter's charity spending and hospital fees with those of other health care systems, according to the Bee. William Sokol, an attorney for the plaintiffs, "regularly" represents SEIU in labor cases against hospitals, but an SEIU spokesperson said the union did not hire Sokol to file the suit. According to the Bee, SEIU "has a history of labor disputes at Sutter hospitals."
Sutter in February revised its charity care and collection policies after its billing practices were questioned by SEIU, CalPERS and some patient and consumer advocacy groups.
Sutter spokesperson Bill Gleeson said Sutter has implemented new charity care guidelines that require hospitals to provide no-cost or discounted care to uninsured patients with annual incomes as high as 400% of the federal poverty level. Under the new rules, collection agencies cannot intercept wages or foreclose on patients' homes.
Gleeson said that the charges in the class-action suit "are inconsistent with our current systemwide policies" (Sacramento Bee, 9/15). He added, "Our practices have always been lawful." Gleeson said hospitals until this year believed that offering discounted prices to uninsured patients would violate federal regulations (Contra Costa Times, 9/15).