Hospitals in North Carolina are taking debt-collection to a whole new level.
Certain North Carolina hospitals sued 40,000 patients for unpaid bills between 2005 and 2010, including bringing a $200,000 case against a Vietnam veteran whose leg was amputated.
These nonprofit hospitals are supposed to be providing charity care to North Carolina residents but are engaging in aggressive debt-collection tactics that raise questions about whether they are fulfilling the public mission that entitles them to operate tax-free, according to a series of articles by the Charlotte Observer. When hospitals take legal action against patients, they usually win and can even lay claims on their homes and wages, the newspaper reports. The results include bankruptcy and ruined credit.
(Read the series from the Observer here)
U.S. hospitals lost $39.3 billion in unpaid bills in 2010, which amounted to 5.6 percent of their total expenses, according to the American Hospital Association. Rising health care costs and shrinking payments, especially from Medicare and Medicaid, are squeezing hospitals, which are required by law to treat anyone who shows up needing emergency care regardless of their ability to pay. Nonprofit hospitals are charged with the additional responsibility of providing charity care to the indigent but fall short, according to the Observer.
Hospital debt-collection tactics have come under intense scrutiny in recent days after the New York Times reported that two Minnesota hospitals allowed employees of the debt-collection company Accretive Health to work inside their facilities and pressure patients in emergency rooms and at their bedsides for money. Minnesota Attorney General Lori Swanson, who already sued Accretive Health for losing a laptop with sensitive information about 23,500 patients, issued a lengthy report this week outlining the company's practices.
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In addition, federal lawmakers are taking an interest in the ways hospitals try to get money from patients. Rep. Pete Stark (D-Calif.) Thursday urged the Centers for Medicare and Medicaid Services and the inspector general for the Department of Health and Human Services to investigate Accretive Health. Sen. Al Franken (D-Minn.) will launch an inquiry of his own through a subcommittee he chairs, Minnesota Public Radio reported.
Accretive Health, which works with dozens of U.S. hospitals, has been rocked by the allegations. The company's shares dropped 42 percent on Wednesday and one shareholder is suing Accretive Health over the controversy.
North Memorial Medical Center and Fairview Health Services, two Minnesota hospitals that have been clients of Accretive Health, are facing questions from employees who belong to the Service Employees International Union about their relationship with the debt-collection company and the controversy could disrupt contract negotiations, according Minnesota Public Radio.