The settlement between a Mississippi healthcare system and lawyers challenging the way 340 not-for-profit hospitals handle the billing of uninsured patients could lead to free medical help for indigent patients nationwide, Mississippi Attorney General Jim Hood said.
Plaintiffs' lawyers, led by Richard Scruggs of Oxford, Miss., have filed class-action lawsuits in federal court against 40 hospital systems and affiliate hospitals in 21 states. Tupelo-based North Mississippi Health Services, which had not been sued, reached an agreement with Scruggs Aug. 5.
Hood, who replaced Scruggs' longtime friend Mike Moore as attorney general in January, discussed the lawsuits and their potential impact during a recent interview.
Scruggs, who made millions leading the fight against tobacco companies in the 1990s, began filing the lawsuits against the not-for-profit hospitals in June. Not-for-profits make up about 85% of U.S. hospitals.
Scruggs' lawsuits, which represent only one side of a legal argument, claim that the hospitals charge uninsured patients more for care than they charge insurance companies, Medicaid or Medicare. Scruggs also says the hospitals bully poor patients to pay for care and often drive the patients into bankruptcy. He contends the track records of the systems and hospitals show they fail to meet the criteria for tax-exempt organizations.
Hood agrees. "Those hospitals exist because we as taxpayers say, 'All right, we're not going to make you pay any taxes as long as you take care of our indigent,' " he said.
Hood said hospital officials considered settling out of concern that the state would challenge the hospital's not-for-profit status.
Under the $150 million agreement, the hospital is to provide free healthcare to patients who earn up to twice the federal poverty level. Other patients will receive discounts and "no uninsured patient, regardless of income" will be charged more than 10% of the hospital bill, Scruggs has said.
Hood said the settlement is likely to pull other hospitals to the bargaining table.
"I think that those hospitals will (reconsider) spending tons of money on defense firms to defend something that doesn't mean that much to them anyway," he said. Less than 10% of most not-for-profit hospitals' revenue comes from indigent patients, he said.
American Hospital Association President Dick Davidson said in a statement released shortly after the settlement that the agreement had no bearing on the lawsuits brought against the association or the other hospitals.
"We, as well as the hospitals, intend to fight (Scruggs') baseless charges vigorously because they will divert resources hospitals need to care for their communities," the AHA statement said.
The AHA was named in the lawsuits because Scruggs claims the association provides hospitals with management advice that ultimately helps the hospitals avoid providing charity care.