One West Coast Roman Catholic system felt the sting of a newly filed class-action lawsuit on charity care last week, while a Midwest Catholic system celebrated court victories on the issue. And a new study indicated that tax-exempt hospitals have heard the public outcry and changed their charity-care policies to be more generous.
Last week, Birmingham, Ala., plaintiff attorney Archie Lamb filed a class-action lawsuit against Catholic Healthcare West on behalf of three uninsured Latino patients of the San Francisco-based system. Also named in the Los Angeles County (Calif.) Superior Court lawsuit were 315-bed California Hospital Medical Center, Los Angeles, and the system's Los Angeles subsidiary, Catholic Healthcare West Southern California.
The Oct. 11 lawsuit is the latest salvo in a series of skirmishes against not-for-profit hospitals that began with lawsuits filed against more than 400 hospitals by a national consortium led by Mississippi plaintiff attorney Richard Scruggs. The Catholic Healthcare West lawsuit charges the defendants with price-gouging and exploiting uninsured patients.
The patients in the most recent lawsuit were found by Consejo de Latinos Unidos, an organization that spurred similar lawsuits against for-profit Tenet Healthcare Corp. and HCA. Consejo, which is led by former Republican political operative K.B. Forbes, is not a party to the newest lawsuit.
Lamb said the allegations against Catholic Healthcare West are similar to those against the other tax-exempt hospitals sued, but are based on California state consumer-protection and breach-of-contract statutes and are unrelated to the Scruggs' litigation.
In a statement, 40-hospital Catholic Healthcare West-which is California's largest not-for-profit health system and also operates hospitals in Arizona and Nevada-said its charity-care policies offer free or discounted care to uninsured patients with incomes up to 500% of the federal poverty level. The system said it's proud of its generous charity-care policy.
In the past two years, the system said it enrolled more than 61,000 poor and uninsured patients to obtain coverage and provided $623 million in charity care and community benefits in fiscal 2005, which ended June 30, on total revenue of $6 billion, about 10% of total expenses. Those figures include unpaid costs from government health programs, donations and community health services, to name a few. According to the system's fiscal 2005 consolidated financial reports, it provided $63 million in "traditional charity care," accounting for about 1.1% of total expenses across the system.
Jan Emerson, a spokeswoman for the California Hospital Association, said Catholic Healthcare West offers "one of the most generous charity-care policies in the state. I think CHW has gone beyond what many other organizations have done," Emerson said. "You have to question why that isn't good enough and who is making those allegations."
Also last week, Cincinnati-based Catholic Healthcare Partners announced that state lawsuits filed against two of its systems were dismissed or withdrawn before an expected judicial dismissal. In September, a Hamilton County Common Pleas Court judge dismissed a lawsuit filed against Mercy Health Partners, Catholic Healthcare Partners' southwest Ohio region. The Scruggs' legal team dropped its lawsuit against the system's Lorain region after hearing a Lorain County Common Pleas Court planned a similar dismissal. Federal lawsuits filed earlier this year by the Scruggs team in Cleveland federal court were dismissed and refiled in state courts.
"We are gratified with the court's decision as we have always strived to do the right thing for every patient," said Sister Doris Gottemoeller, senior vice president of mission and values integration for the system, in a news release.
Catholic Healthcare Partners, which owns 29 hospitals in Indiana, Kentucky, Pennsylvania and Tennessee, had a charity care and community benefit total of $211 million, which represents 6.7% of total 2004 operating expenses of $3.14 billion and net operating revenue of $3.24 billion, officials said. Traditional charity care was at just under $55 million-or 1.75% of total operating expenses that year-down from $57.4 million on total community benefit amount of $209.2 million in 2003, according to the system's 2004 financial statements.
Scruggs sounded undeterred in a news release, saying the granting of class certification status earlier this month to an Oregon lawsuit is just the latest win in a "string of victories for uninsured plaintiffs around the country" since the litigation moved into state courts (Oct. 10, p. 10). He said 13 state court judges have denied hospitals' motions for dismissal.
Hospitals seem to have heard the outcry about alleged discriminatory pricing policies, according to a new policy brief issued by the Center for Studying Health System Change, a nonpartisan healthcare research organization. The seven-page study, Balancing Margin and Mission: Hospitals Alter Billing and Collection Practices for Uninsured Patients, found that most of the roughly 50 hospitals interviewed in 12 nationally representative communities now offer free care and sliding-scale discounts to needy, uninsured patients and no longer employ the most aggressive types of debt collection.
The study found that the common threshold for free care was up to 200% of the federal poverty level, with sliding-scale discounts available to uninsured patients earning up to 400% or 500% of the poverty level. It said that hospitals were able to implement the policies with little impact on their bottom lines. In half of the communities studied, at least one hospital or health system had been named in one of the class-action lawsuits.
Principal author Andrea Staiti, a health research analyst at the center, said the interviews might have been conducted too soon to evaluate the bottom-line impact of the new policies and their effect on the uninsured, since many hospitals had just made or were still making changes.