USA Today Examines Lawsuits Target Billing Practices at Not-for-Profit Hospitals
USA Today, on Monday examined a "flurry of lawsuits" against not-for-profit hospitals that accuse the facilities of "act[ing] more like for-profit entities than tax-exempt charities." According to USA Today, some 31 lawsuits filed in federal court since June by "high-profile law firms" allege that many of the nation's not-for-profit hospitals "violate an implicit contract with the government to provide charity care in exchange for tax-exempt status" by charging uninsured patients more than insured patients or using aggressive bill collection practices; failing to use large cash reserves to provide charity care; and allowing for-profit organizations, including doctor practices, to use their facilities to earn a profit. Hospitals named as defendants in the lawsuits include the Cleveland Clinic in Ohio, New York-Presbyterian, Sutter Health in California, Advocate Health Care Network in Chicago, Phoebe Putney Health Systems in Georgia, Baptist Health Systems in Alabama and Catholic Healthcare Partners in Cincinnati. The lawsuits are led by attorney Richard Scruggs, who earned recognition for leading multibillion-dollar lawsuits against the tobacco industry. Scruggs is calling on the hospitals to refund money to the uninsured, change their bill collection practices and stop signing exclusive agreements with doctor groups.
The American Hospital Association says the lawsuits are groundless and that hospitals will contest them, according to USA Today. Not-for-profit hospitals say that they provide a number of charitable services that range from providing care to any emergency patient, regardless of ability to pay, to writing off bad debt charity care and financing community health services. According to attorney John Reiss of the law firm Saul Ewing in Philadelphia, the Internal Revenue Service has never made it clear that hospitals' tax-exempt status "actually commits you to providing any particular amount of charity care or anything else." Stuart Gerson, a partner at Epstein Becker & Green in Washington, D.C., said that the implicit contract between the government and not-for-profit hospitals has "never been recognized in the law." Gregg Bloche, a professor of health law at Georgetown University, said, "The behaviors they're targeting ... are atrocious in some circumstances, but they're not illegal. The suits will fail." Alicia Mitchell, a spokesperson for AHA, said, "Our concern is [the lawsuits] will divert focus away from the real issue of how we're going to care for the uninsured in this country." Mark Rukavina of the Access Project said, "Having more scrutiny of billing practices is a good thing, but the risk is we're not taking on big tobacco, we're taking on a vital service. It's an industry I want to preserve, not bring down" (Appleby, USA Today, 7/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.