Thursday, June 17, 2004
Nonprofit hospitals targeted for charging premium prices needy patients.
Richard Scruggs, the Mississippi lawyer whose legal attack on the tobacco industry helped bring about historic changes -- and multibillion-dollar settlements -- is setting his sights on not-for-profit hospitals which he alleges are overcharging uninsured patients and subjecting some to harsh bill-collection tactics.According the Modern Healthcare's Daily Dose (requires paid subscription), "[t]he charges include breaches of charitable trust, consumer fraud, deceptive business practices, unjust enrichment, and violations of the Emergency Medical Treatment and Active Labor Act."
Late yesterday, Mr. Scruggs and other lawyers -- including some who collaborated with him on the tobacco litigation -- filed class-action suits in federal courts in eight states against about a dozen not-for-profit hospital systems, challenging whether those institutions deserve the tax exemptions they have enjoyed for so long.
The complaints have minor variations, but all are essentially breach-of-contract suits, centered around the notion that not-for-profit hospitals have an explicit or implicit contract with the government to treat needy patients with compassion in return for significant tax breaks. The suits argue that the hospitals have violated that contract by charging uninsured patients premium prices, while they negotiate deep discounts with insurers, HMOs and government programs such as Medicare and Medicaid. Some hospitals go further and use tough tactics to collect unpaid bills, including sometimes placing liens on homes and assessing interest, fines and legal fees.
Think there's any connection between these suits and the letter from Tommy Thompson, Secretary of DHHS, to the president of the American Hospital Association last February, essentially scolding the AHA for suggesting that DHHS rules prohibit hospitals from charging indigent patients less than the full billed charge for hospital services?