When lawyers attack a not-for-profit hospital's billing of uninsured patients, they hook their claim on the hospital's tax-exempt status, arguing that the public has a right to charitable policies in return for the hospital's tax break.
For-profit hospitals pay taxes, but some of the same lawyers involved in the cases against the not-for-profits are dragging the for-profit chains into the legal mess.
Archie Lamb, a lawyer who has been working with the Scruggs Law Firm on some of the cases against not-for-profit hospitals, filed separate class-action lawsuits last week against three investor-owned chains, including the nation's largest for-profit chain, HCA, Nashville. All of the lawsuits allege that a national class of uninsured patients has been damaged by billing practices that charge uninsured patients far more than patients covered by government or private insurance. All three lawsuits seek refunds for patients and changes in the companies' billing and collection policies for uninsured patients.
"They prey upon people who are, with all due respect, unsophisticated, or maybe `naive' is a better word," Lamb said during a conference call with reporters.
Lamb is the lead attorney representing physicians in a federal class-action lawsuit against insurers that has netted settlements of $470 million with Aetna and $540 million with Cigna Corp.
In the hospital lawsuit, Lamb is working with Consejo de Latinos Unidos, an advocacy group that has been pushing for changes in hospitals' billing and collections of uninsured patients.
Lamb filed lawsuits against HCA and King of Prussia, Pa.-based Universal Health Services in Clark County District Court in Las Vegas. Both lawsuits accuse the companies of breaking state racketeering and unfair trade practice laws to the detriment of patients. Both companies operate hospitals in Nevada.
HCA, which has previously tangled with Consejo and the group's executive director, K.B. Forbes, can't solve the problem of the nation's uninsured, said HCA spokesman Jeff Prescott. The company has implemented a discount plan for uninsured patients based on a sliding income scale. HHS issued guidance to providers on billing uninsured patients in February (Feb. 23, p. 6), and the CMS further clarified that guidance during a forum in June, Prescott said. As a result, the company is now able to do what Consejo has asked-bill uninsured patients at rates similar to those charged to managed-care payers, he said.
"We and any other hospitals can fix billing issues," Prescott said.
In the HCA lawsuit, the class includes uninsured patients treated at its hospitals from June 17, 2003, through the date that a judge certifies the class, while the class in the UHS lawsuit includes uninsured patients at its hospitals dating back to Aug. 6, 1994.
In a statement, Steve Filton, vice president and chief financial officer of UHS, said: "We have not been served with the complaint. ... We feel strongly, however, that our hospitals are in compliance with all applicable laws relating to matters of billing and collection."
In Miami-Dade County Circuit Court, Lamb filed a national class-action lawsuit against Health Management Associates, Naples, Fla., under Florida's consumer protection laws. He said any uninsured patient treated at an HMA hospital from Aug. 5, 1994, until the class is certified by a judge is eligible to participate in the lawsuit against HMA.
HMA spokesman John Merriwether said the company had not been served with the lawsuit, but he had read Lamb's news release. "We believe our hospital billing and collection practices are appropriate and reasonable," Merriwether said, asserting that HMA has provided "hundreds of millions" of dollars in uncompensated care. The company plans a vigorous defense, he said.
A spokesman for the Federation of American Hospitals, which lobbies for investor-owned hospitals in Washington, said the group had no comment on the lawsuits.