Philadelphia Inquirer Looks at Lawsuits Against Hospitals Over Charity Care
The Philadelphia Inquirer on Sunday looked at the recent series of lawsuits filed against not-for-profit and for-profit hospitals alleging that they overcharge uninsured patients (Goldstein, Philadelphia Inquirer, 8/8). Since June, attorneys led by Richard Scruggs, who also participated in class-action lawsuits against the tobacco and asbestos industries in the 1990s, have filed lawsuits against 300 not-for-profit hospitals nationwide accusing them of charity care violations. The lawsuits, which seek class-action status, 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, 8/6).
Similarly, last week Alabama attorney Archie Lamb, who spearheaded a racketeering class-action lawsuit against the nation's HMOs, filed separate lawsuits against three for-profit hospital chains alleging that they generated hundreds of millions of dollars in profits by charging uninsured patients "inflated rates" (California Healthline, 8/6).
While Scruggs says that he is "trying to solve the nation's crisis of uninsured patients," some critics contend that the lawsuits are "simply exploiting the problem of 44 million people without health insurance to get money from hospitals," the Inquirer reports. Alicia Mitchell, a spokesperson for the American Hospital Association, said, "The lawsuits we have seen to date are baseless and don't begin to help solve the very real problem of the uninsured." According to the Inquirer, hospitals say that they provide patients with "huge amounts of free care" and that "what the uninsured patients really need is available and affordable primary care, not emergency room treatments."
John Reiss, a Philadelphia health care lawyer who represents hospitals, said the suits are "a form of extortion, because if you can get a hospital in front of their community with tales of what most people would think is outrageous behavior," institutions may be inclined to settle. He added, "I don't think they did anything illegal" (Philadelphia Inquirer, 8/8).