In an unusual legal tactic, a large, not-for-profit California healthcare system -- besieged by union organizers and class-action litigation alleging discriminatory pricing policies and aggressive debt-collection practices against the uninsured -- last week filed a countersuit demanding payment from those uninsured patients.
The counterclaim filed by Sacramento-based Sutter Health, which operates 25 hospitals in California and Hawaii, is the latest twist in the year-old national class-action litigation brought against more than 400 not-for-profit hospitals by 11 law firms working with Oxford, Miss.-based trial lawyer Richard Scruggs on behalf of uninsured patients (See related story, p. 26).
After a state judge in July denied the health system's motion to dismiss the lawsuit, Sutter filed an 11-page cross-complaint Aug. 17 in state Superior Court. Consumer and advocacy groups attacked Sutter's response as "immoral" and "unconscionable" and plaintiff attorneys called it "unheard of."
Sutter asks the judge to determine how much the uninsured patients should pay for hospital services the system provided and compel those patients to pay, "so long as the members (of the plaintiff class) are not covered by Sutter's charity-care policy." Sutter also said it "does not believe that the class of patients should be certified." Sutter said the potential class of uninsured patients could number in the thousands.
Sutter said the uninsured plaintiffs agreed to pay for the services, but have not yet done so. Sutter alleges breach of contract, unjust enrichment and failure to pay their debts. The system asks the court to require each plaintiff to pay the full amount for services provided, plus interest and court costs.
Kelly Dermody of the San Francisco law firm Lieff, Cabraser, Heimann & Bernstein, who represents the uninsured patients, called the countersuit "one of the more hostile and aggressive litigation tactics I've seen. I have to assume they're trying to intimidate the class here."
Sutter spokeswoman Karen Garner said the legal action is a procedural response necessitated by the Scruggs' lawsuit and the judge's recent order. "This was a technical counteraction to the baseless complaints that were filed last year to preserve our rights during litigation," Garner said. "The working poor and indigent are specifically exempted from this class. We have a very generous charity-care policy. Our No. 1 priority is providing quality care to individuals and families, regardless of their ability to pay."