In a sharply critical opinion, a federal judge in New York dismissed with prejudice all federal and state claims in a lawsuit against New York-Presbyterian Hospital and the American Hospital Association that challenged the hospital's tax-exempt status and accused it of unfair billing and collection practices. The decision is the first to dismiss state claims with prejudice in the federal patient-billing lawsuits filed by a legal consortium led by Oxford, Miss., attorney Richard Scruggs. Several courts have dismissed the federal claims with prejudice but allowed state claims to be refiled in state court. "Plaintiffs here have lost their way; they need to consult a map or a compass or a Constitution because plaintiffs have come to the judicial branch for relief that may only be granted by the legislative branch," U.S. District Judge Loretta Preska said in the opinion. Preska criticized the plaintiffs for launching "an orchestrated assault on scores of nonprofit hospitals," necessitating the use of "scare resources to beat back meritless legal claims." New York-Presbyterian said it was pleased with the decision.
The Scruggs Law Firm said in a written statement that it plans to "pursue the rights of the uninsured through all possible avenues, including an appeal." "The court's ruling, logic and the attacks on counsel are disappointing. The fact that this is the only court to dismiss this case completely after more than a dozen rulings speaks volumes," the statement said. Also this week, a federal judge in Arizona dismissed a similar lawsuit against Banner Health, and a federal judge in Chicago dismissed a lawsuit against Advocate Health Care. In both cases, the judges dismissed the federal charges with prejudice and the state charges without prejudice, said Melinda Hatton, vice president and chief Washington counsel for the AHA. -- by Cinda Becker