New York hospitals have sued thousands of patients to collect on unpaid medical bills since 2015, calling into question why the not-for-profits have received considerable tax benefits and state funding to treat the poor, according to a new report from the Community Service Society.
The antipoverty not-for-profit found nearly 31,000 civil cases filed by 139 hospitals in 26 New York counties from 2015 to 2019, with a small group of health systems accounting for most of the lawsuits.
Some of the most litigious hospitals were part of the area's largest health systems, including NYU Langone Health, Northwell Health and New York–Presbyterian.
"Many of these charitable institutions are not behaving as altruistically as we would like to see," said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society and a co-author of the report.
Crouse Hospital in Syracuse, a clinical affiliate of Northwell Health, filed the largest number of lawsuits against its patients, 5,546, during the span, nearly double that of the second-most-litigious hospital.
A spokesman for Northwell Health said the report misrepresented the facts by listing Crouse as part of its health system. Northwell doesn't own Crouse or perform its patient billing or collection functions despite their clinical relationship. "There was no attempt to present this information fairly or honestly," he said.
A spokeswoman for Crouse did not immediately respond to a request for comment Wednesday afternoon.
Even when excluding Crouse, Northwell hospitals filed around 10,000 lawsuits against its patients, including 2,233 from North Shore University Hospital.
The New York hospitals join a group of facilities around the country that have been criticized for using aggressive debt-collection practices. The University of Virginia Health System was found to have garnished thousands of patients' paychecks and filed thousands of property liens to collect bills, Kaiser Health News reported. In another example, nonprofit Methodist Le Bonheur Healthcare in Memphis filed 8,300 lawsuits against its patients over a five-year period, ProPublica reported.
One of the contributing factors to the trend has been the rise of high-deductible health plans, which require patients to pay a larger portion of their medical bills. The average deductible in a New York employee's insurance plan was nearly $2,500 in 2018, or almost double the average in 2008, according to the Commonwealth Fund.
The Northwell spokesman said the health system only takes legal action when a patient has been unresponsive to multiple attempts to resolve the existing balance, including offers of financial assistance, and when the patient has "a strong ability to pay."
"Healthcare providers, under the current collection paradigm, are unfairly tasked with pursuing patient cost-sharing responsibilities that should more appropriately be the responsibility of the health insurers," the spokesman said.
The report from CSS found a few hospitals represented an outsize number of the lawsuits. Twenty-five facilities represented 93% of all legal actions.
NYU Winthrop in Mineola, Long Island, filed 2,749 lawsuits from 2015 to 2019. The hospital officially joined NYU Langone in August 2019, and a spokeswoman for the health system said it is now abiding by NYU Langone's more generous financial-aid policy and policy of avoiding litigation against patients.
A breakdown of the lawsuits shows the hospital filed 815 in 2019, which was the most of any year in the five-year span.
"NYU Winthrop adopted NYU Langone's financial assistance program when the two institutions merged, ultimately changing the recoupment practices in place under the previous Winthrop administration," the NYU Langone spokeswoman said.
The median amount hospitals sued for was $1,900, and the median judgment against patients was $2,300, including interest and court fees. Hospitals have as long as six years after treatment to sue and are permitted to charge up to 9% interest on unpaid bills. Not all institutions opt to impose interest.
The report's authors characterize the hospitals' debt-collection practices as particularly egregious given the government benefits they receive as not-for-profits. Those include an estimated $2 billion in tax exemptions and $1.1 billion in money distributed through the indigent care pool, which reimburses hospitals for uncompensated care provided to the poor and uninsured.
"These nonprofit charitable entities get billions in tax relief and capital funding and $1 billion to offset their uncompensated care costs," Benjamin said. "It is really inconsistent with their nonprofit charitable status to be suing patients."
To highlight that disconnect, CSS showed how many hospitals received more in indigent care pool funding than they provided in financial assistance to eligible patients. Crouse received $4.7 million more than it provided to patients in 2018. At New York-Presbyterian, which filed about 2,000 lawsuits against patients, the hospital group received $20.4 million more than it paid out.
A New York-Presbyterian spokeswoman declined to comment on those figures until the health system could review the full report.
Of course, unpaid medical bills add up, and some of the state's not-for-profit hospitals lose money or barely generate revenue beyond their spending. They must keep up the rising cost of labor, pharmaceuticals and equipment. Other patients are also expected to pay their bills, while some would benefit from lax collection policies.
Hospitals operate financial assistance programs to help patients pay bills. In Northwell's case, the health system said patients earning up to 500% of the federal poverty level, or $131,000 for a family of four, are eligible to receive some aid. It provided $250 million in charity care, not including bad debt, in 2018.
Benjamin said the amounts hospitals are suing for are inconsequential and wouldn't make or break a hospital. More hospitals have joined large health systems offering them a backstop of support.
"The amounts they are collecting from these lawsuits are de minimis. It isn't stabilizing anyone's bottom line," Benjamin said. "You're ruining people's lives for $1,900. That's making someone not eat that month—or pay rent or make a car payment."
"New York hospitals have filed thousands of lawsuits against patients" originally appeared in Crain's New York Business.