hospital suits force has name new pain on patients but...
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• 75¢TUESDAY • APRIL 24, 2012 charlotteobserver.comC D E F ■ ■ ■ +
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© 2012 The Charlotte ObserverVol. 143, No. 115
WHAT’S THE FUTURE OFSOCIAL SECURITY AND MEDICARE?Congress must restructure Social Security andMedicare or they will fail, a new government report
says. 2A
The transcendent Anthony DavisTom Sorensen: Former Kentucky Wild-cat Anthony Davis can transform theBobcats overnight. Sports
Positive ‘Greek’ economic news:An HQ for the QC
Chobani Greek Yogurt will open a North Americansales headquarters in uptown Charlotte. 2B
Video games: The plot’s the thingThree new and inexpensive video games will drawplayers into mysteries. 8D
64o 42o
Today: Slight chance of showers.6B
Ask Amy........................................7DBusiness .......................................2BClassified......................................6CComics.......................................6-7DEditorial.......................................10AHoroscope....................................6DLottery............................................1BObituaries.....................................4BSports ............................................1CTV ...................................................8DDelivery assistance or tosubscribe ..............800-532-5350To subscribe to OnTV magazine...................................877-800-1335
AN IMMEDIATE NECESSITYBOSTON COLLEGE LINEBACKER LUKEKUECHLY COULD BE PERFECT FOR PANTHERS SPORTS
9healthy livingproducts worthsplurging on
Living Well, 2D
By Ames Alexander and David Raynor
[email protected], [email protected]
When serious abdominal pains sent Joyce Jones to the hospital, she hoped the bill
would be the least of her problems. She had no job and a bare-bones health insur-
ance policy that she knew would cover only a fraction of her bill. So it helped ease
her worries, she said, when a social worker at Carolinas Medical Center-Mercy told her the
hospital had a fund to help patients like her.
Jones thought the hospitalwas taking care of the cost. Butsoon after her two-week stay,she received a bill for $34,000.
In 2006, the hospital suedher and put a lien on her smallwest Charlotte home. A wid-ow, Jones would like to leavethe house to her disableddaughter some day. But thelien – which will allow the hos-pital to collect money if Jonesdies or sells her home – maymake that impossible.
“All that money they’vegot, they should be helpingpeople,” said Jones, now 65.
Like CMC-Mercy, mostN.C. hospitals are tax-ex-
empt – a distinction thatsaves them millions eachyear. In exchange, these non-profits are expected to pro-vide financial help to thosewithout the means to pay.
But thousands of times ayear, hospitals are suing pa-tients instead, an investiga-tion by the Charlotte Ob-server and The News & Ob-server of Raleigh found.
An in-depth look at someof those cases suggests mostof the patients were unin-sured, and that a significantnumber of them should havequalified for free hospitalcare.
Critics contend those hos-pitals are financially ruiningpeople they could afford tohelp. Carolinas HealthCareSystem, the multibillion-dol-lar public enterprise thatowns CMC-Mercy, has gen-erated average annual profitsof more than $300 millionover the past three years.
During the five years end-ing in 2010, N.C. hospitalsfiled more than 40,000 law-suits to collect on bills.
Most of those suits werefiled by just two entities: Car-olinas HealthCare andWilkes Regional Medical
PROGNOSIS: PROFITS THIRD OF FIVE PARTS
Hospital suits forcenew pain on patients
T. ORTEGA GAINES - [email protected]
Joyce Jones had little money and bare-bones insurance when she was hospitalized. Carolinas HealthCare System sued herto collect $34,000. “I was willing to pay if they set me up on a payment plan,” she said, “but they just want it all.”
Investigation: N.C. hospitals sue 40,000 patients,including many who might have qualified for charity care
SEE HOSPITALS, 8A
INSIDE
HOW TO REDUCEYOUR HOSPITAL BILLControlling costs isn’t easy,but these tips may help. 1D
COLLECTION RULESCAN HELP PATIENTSNorth Carolina isn’t amongstates with safeguards. 9A
MORE ONLINESee more photos and
an interactive map forinformation about yourhospital.charlotteobserver.com
THE SERIESSUNDAY
Nonprofits very profitable
MONDAYCharity care lacking
TODAYSuing the needy
WEDNESDAYStaying strong in Raleigh
THURSDAYNew policies that could help
By Anne Blythe
GREENSBORO — It did not takelong for the John Edwards trialto get tawdry, and for once itwas not the former presiden-tial candidate at the center ofthe salacious allegations.
It was Andrew Young, theformer aide who is expected tobe a key witness for the prose-cution.
Lawyers had just selectedthe nine men and seven wom-en who will spend the next sev-eral weeks in the jury box
when JudgeCatherine Eaglesshifted the focusfrom the defen-dant to Young.His testimonywill be at theheart of the gov-ernment’s claims
that Edwards, 58, violated cam-paign-finance laws in his 2008presidential run to cover up hisextramarital affair with RielleHunter.
With the jury and four alter-nates cleared from the court-room, Eagles revealed that de-fense attorneys had asked per-mission to mention in theiropening statement a one-nightstand that Young, a marriedman and father of three, hadwith a co-worker in 2007.
The defense also wanted tolet jurors know that Young, theaide who wrote an unflatteringtell-all book about the 2008campaign, had telephoned sev-eral witnesses during the lastseveral weeks and asked whatthey were going to say at trial.
Barely one hour into the firstday of testimony, sex and con-niving had already surfaced ina trial based on a scandal firstreported by The National En-quirer.
However, in a courtroompacked with packed with me-dia, sketch artists and curiouslawyers, Eagles muzzled anyunprompted mentioning ofYoung’s alleged sexual liaison.
“The court finds there’s nogood reason to bring this up inopening statements,” Eaglessaid.
The judge did, however,
Edwardstrialopenswith joltDefense asks judgeto allow probe of keywitness’ behavior
SEE EDWARDS, 11A
Edwards
TODAY’S MUST-READYoung Achievers: Charlotte teenager Greyson McClus-key makes the finals of a national invention contest. 4D
Davis
By Andrew Dunn
The Charlotte Hornets are back instyle, and retailers are cashing in on theretro-chic wave of nostalgia.
The purple and teal of Charlotte’s firstNBA team grew popular in the early 1990s.Now, as the decade’s style enjoys a resur-gence, so too have the team’s jerseys, shirtsand, most prominently, snapback hats.
Speculation in recent weeks that theteam’s name could return to Charlottehas made the gear even hotter.
“It’s been on fire,” said Jason Hurley,assistant store manager of the Hat Shackat Concord Mills. “It flies off our shelves.It’s one of our top sellers.”
Panthers quarterback Cam Newtonmemorably donned a Charlotte Hornetscap while sitting courtside next to Mi-chael Jordan in the Bobcats home opener
Hornets gear riding a retro trend
JEFF SINER - [email protected]
Carolina Panthers quarterback Cam Newton sported aCharlotte Hornets cap at a Bobcats game in December. SEE HORNETS, 5A
By Steve Harrison
On the same day the Char-lotte Knights said they secureda naming-rights deal withBB&T Corp. for a new stadi-um, the baseball team faced achilly reception from the Char-lotte City Council, which isconsidering giving the team$8.5 million toward building aballpark uptown.
The team said it needs cityhelp to build the stadium inThird Ward. Total cost is $74million, including $28 millionfrom Mecklenburg County.
It’s unclear whether there isa majority of council membersto back the city subsidy.
Some council members saidthey believe the team couldspend more of its own money ona stadium. Others questionedthe timing of the subsidy, whichcomes as the city is consideringa property-tax increase.
“No matter how you look at it,it’s city money,” said at-largecouncil member Beth Pickering,a Democrat. “We are looking at a9 percent property-tax increase.We have CATS fare increases.We have water bill increases.”
The city has proposed giv-ing the Class AAA team $6 mil-lion from hotel/motel tax reve-nue, which by state law can on-ly be used for tourism-relatedpurposes. Those paymentswould be spread out over 20years.
In addition, the city wouldgive the team $2.5 million. Thatwould essentially be a refundof 90 percent of the propertytaxes the team is expected topay over 20 years.
In March, the Knights askedfor $11 million. The city then of-fered $9 million, with $4.5 mil-lion coming from a portion ofproperty taxes generated fromsurrounding property. Theidea was that the stadiumwould spark development, andthe city would give the teamsome of that new tax money.
After some pushback fromcouncil members, city staffchanged its offer.
The latest plan would givethe team $8.5 million. It limitsthe tax rebates to just the base-ball stadium site, which couldinclude a hotel.
SEE STADIUM, 11A
Stadiumhas namebut noOK, yet BB&T pays for rights;city backing still shaky
Center in North Wilkesboro. Eachfiled more than 12,000 suits over thefive-year period, according to statecourts data. Wilkes Regional, which ismanaged by Carolinas HealthCare,appears to be the state’s most litigiousindividual hospital.
Most N.C. hospitals rarely, if ever,sue patients to collect on bills. But vir-tually all use collection agencies,which can seriously damage a pa-tient’s credit.
Often, the lawsuits hit people whoare among those paying the highestrates for hospital care: the uninsured.Bills for uninsured patients are usual-ly higher because they don’t have in-surance companies to negotiate dis-counts on their behalf.
It’s unclear how many of the patientssued in North Carolina lacked health in-surance and substantial income or as-sets. But in interviews with 25 of thosepatients, the newspapers found 17 ofthem were uninsured; 10 said they werenever told about the hospitals’ financialassistance programs.
Carolinas HealthCare wins most ofthe lawsuits it files, allowing it to putliens on the homes of patients.
“We always struggle with, ‘Shouldwe be doing that (filing lawsuits)?’ ”said Greg Gombar, chief financial offi-cer for the Charlotte-based system.“But it comes back to a message …: Ifyou have the ability to pay, you need topay because other people are.”
The system never forces peoplefrom their homes, but does collectmoney after the patients die or selltheir houses, officials say.
System officials say they file suitonly when people fail to answer re-peated requests for payment.
That, they say, is what happened inJones’ case. The hospital said it senther five statements and left three mes-sages at her home before filing suit.
Jones says she stayed with her broth-er for a long period after she was hospi-talized for pancreatitis, and doesn’t re-member receiving the letters.
She had plenty to worry about atthe time. Her husband had recentlydied, and money was scarce. But shehad one thing – the 1,200-square-foothome that she and her husband hadworked for 30 years to buy.
The home has a tax value of$70,000, but Jones now worries thatthe hospital’s lien may cause the fami-ly to lose it.
It wasn’t until 2009 that she discov-ered the true toll of her unpaid bills.Lacking money to repair a leaky roof,she tried to get a reverse mortgage.Lenders turned her down because ofthe hospital system’s lien, she said.
Her daughter offered to use theequity in her home to raise $10,000 soJones could negotiate a settlement.Jones said she offered to pay thatamount, and to go on an installmentplan to repay the rest. The hospital re-jected her offer.
Adam Searing, director of the N.C.Justice Center’s Health Access Coali-tion, said “the hospital was unwillingto be reasonable” in Jones’ case.
“If you have one person who’s be-ing treated like she’s been treated, I
think you’re failing yourmission,” he said.
Carolinas HealthCareCEO Michael Tarwatersaid the system treatsmore uninsured and un-derinsured patientsthan any other N.C. sys-tem. “We never turn off
somebody’s health (care) becausethey don’t pay,” he said.
The number of lawsuits filed byWilkes Regional has declined mark-edly since 2007, when CarolinasHealthCare began managing the hos-pital, system officials note. CarolinasHealthCare says it has worked withthe hospital to help it become moreselective about which cases it takes tocourt. The hospital once sued patientswith debts as low as $300, but thatthreshold has been increased to $750.
Critics contend it’s inappropriatefor hospitals to sue patients theycould afford to help. And they ques-tion why so many lawsuits are filed bytax-exempt hospitals that are sup-
posed to pursue charitable missions.“Pure and simple, suing people is
not a charitable act, especially whenyou’re dealing with people of limitedfinancial means,” said Mark Rukavi-na, who heads the Access Project, aBoston-based nonprofit.
‘I almost passed out’
It’s unclear how many of the suedpatients could afford to pay their bills.But the newspapers’ investigationfound that many of them are amongthe working poor.
In a sampling of 100 suits that Caro-linas HealthCare filed against Meck-lenburg County residents, the news-papers found that 43 of them eitherdidn’t own property in the county orowned houses assessed at less than$100,000.
Under its current financial assis-tance policy, Carolinas HealthCaresays it offers free care to uninsuredand underinsured patients who earnless than twice the poverty level andhave less than $150,000 in home equi-ty. For an individual, that’s equivalentto earning about $22,000 a year.
Interviews with 14 patients whowere sued suggest at least five of themshould have qualified for the charitycare available at the time they weretaken to court.
Carolyn Barber isgrateful to the doctors atCMC-University, whoshe believes may havesaved her life. She’s lesshappy with the hospi-tal’s billing office.
Suffering from a re-spiratory problem that left her gasp-ing for breath, Barber was hospital-ized for 15 days in early 2009. She was63 at the time, with no health insur-ance, no job and a monthly income ofless than $900.
But about a month after leaving thehospital, she got a bill for more than
$56,000. Collections agents begancalling every other day. Barber toldthem she couldn’t work and couldn’tafford to pay the bill. Then a lawyerfor the hospital sent a sheriff’s deputyto serve her with a lawsuit.
“I almost passed out,” Barber said.“I was scared I was going to be lockedup in jail because of that hospital bill.”
The hospital won a judgment formore than $56,000 in principal, plusinterest – and about $8,500 in attor-ney’s fees.
When Barber tried to refinance herhome in 2010, the mortgage companytold her she couldn’t. The reason: Thehospital had obtained a lien on thehouse. With so little income, sheneeded the extra money a refinancingwould provide.
Barber previously worked at aCharlotte facility that helps peoplewith disabilities. Now she’s on SocialSecurity disability herself.
For half her life, she said, she savedup to buy her home – an immaculatethree-bedroom house near UniversityCity with a tax value of $144,000.
“It’s something I’ve worked hardfor so I can leave something for mythree children,” Barber said. “The wayit is now, I might not be able to.”
Carolinas HealthCare said it unsuc-cessfully tried to qualify Barber forMedicaid. The system said it alsoevaluated her to determine whethershe qualified for financial assistance,but found she had too much in savingsand home equity.
Barber said she deserved help, butthe hospital didn’t get an accurate pic-ture of her finances. Hospital officialsapparently concluded she had toomuch in savings, she said, becausethey confused her savings with hersister’s.
Officials for Carolinas HealthCaresay they provide care to anyone whoneeds it, and work hard to determinewhether patients can afford to pay be-
fore filing suit.“Do we miss some people? We
probably do,” Tarwater said. “We have9 million patient encounters eachyear. And I’m quite sure once in awhile we may miss somebody. … Ifthat’s brought to our attention … wewill work with that person.”
Nationally, it’s not uncommon forhospitals to take aggressive collec-tions actions.
But some states discourage thepractice. Illinois prohibits hospitalsfrom pursuing legal action against un-insured patients who don’t have suffi-cient income or assets to pay theirbills. California, meanwhile, bans hos-pitals from putting liens on the prima-ry residences of patients who are eli-gible for charity care.
North Carolina has no such rules.Patients are suffering as a result,
says Searing, of the Health Access Co-alition. Nonprofit hospitals shouldn’tbe in the business of putting liens onpatient’s houses, he contends.
“That’s not strengthening the com-munity,” he said. “That’s tearing itdown.”
To sue or not to sue
Most N.C. hospitals don’t regularlysue patients. Novant Health, the non-profit chain that owns PresbyterianHospital and 12 other hospitals, has apolicy against doing so.
“In health care, where you havepeople battling for their lives …, wejust decided this is not what a not-for-profit health-care organizationshould do,” says Novant spokesmanJim Tobalski.
Novant’s hospitals are among agrowing number that run credit pro-files on uninsured patients to help de-termine whether they qualify for fi-nancial assistance. The processdoesn’t affect patients’ credit.
Suing patients is “very old school,”says Cecilia Moore, chief operating of-ficer for Duke University MedicalCenter. “It is not a good use of re-sources any more.”
But like most hospitals, Duke andNovant do use commission-drivencollections agencies.
Jen Algire, former director of CareRing, a Charlotte nonprofit that triesto improve access to health care, saidshe has seen hospitals grow more ag-gressive on collections.
“People are declaring bankruptcywhen they have less than $10,000 indebt, partly because they’re being ha-rassed so heavily,” Algire said.
Former patients say the bill collec-tors working on behalf of many N.C.hospitals call repeatedly, sometimeswith threats and misleading claims.
In complaints to state agencies,dozens of former patients contendthat collections agencies harassedthem, sometimes reporting inaccu-rate information to credit bureaus orcontinuing to pursue them long afterthey paid their bills.
In 2008, Elaine Brauninger re-ceived notice from a collections agen-cy that she owed about $275 to Lake
Norman Regional Medical Center inMooresville for medical services shehad received eight years earlier.
The agency didn’t explain whatmedical services had been providedin 2000, Brauninger said. She hadhealth insurance, she said, and didn’trecall any unpaid bills.
“I opened the bill and I said, ‘You’vegot to be kidding me,’ ” the Moores-ville resident said.
She said she spoke by phone with abill collector, who hung up when sheasked for documentation. The collec-tions agency put the account on hercredit report – a fact she and her hus-band later discovered when theysought a loan to buy a condominium.
After Brauninger complained tothe N.C. insurance department, thecollections agency contacted the hos-pital, which agreed to take the ac-count off her credit report.
A spokeswoman for Lake Normansays the hospital “takes seriously anypatient complaints” and is pleasedthat Brauninger’s com-plaint was “resolved toher satisfaction.”
U.S. Rep. Heath Shu-ler, a Waynesville Dem-ocrat, has pushed a billto ease the damage thatmedical debt can do to aperson’s credit rating.Medical bills can remain on a creditreport for up to seven years, even ifthe bill has been paid and the balanceis zero.
Shuler wants to change the law sothat medical debts of less than $2,500are removed from credit reports 45days after the balance goes to zero.
Saying goodbye to good credit
Experts say many collections agen-cies have an incentive to pursue debt-ors aggressively. They often negotiatedeals with hospitals that allow themto keep between 5 and 25 percent ofthe money they collect.
Charlotte lawyer David Badgerspeaks of the pitch that a collectionagent made to one elderly woman:“You have the right to remain silent.”
Many patients complain that suchagencies have destroyed their credit,making it harder to buy a home or car.
The stories have become familiarto Care Ring’s managers. In a 2010survey by the nonprofit, about a thirdof the 327 clients polled said theircredit had been harmed.
Tony Chris Davis knows all toowell about such worries.
When serious respiratory prob-lems sent the Yadkin County residentto Carolinas Medical Center in Octo-ber 2008, he had no health insuranceand just $1,400 a month in incomefrom Social Security disability. Hetold hospital officials he was deeplyconcerned about the cost of care, hesaid.
But following his discharge fromthe hospital, CMC sent him a bill. Thetotal: about $40,000.
Alarmed, Davis called the hospitalsand spoke with an official who, hesaid, told him that he wasn’t eligiblefor charity care because he owned ahome and other assets.
Carolinas HealthCare said Davishad too much in savings to qualify forcharity care, and that he declined to“spend down” those savings in orderto qualify for Medicaid, which wouldhave paid his bills.
Davis’ two-bedroom house has atax value of about $63,000. He hadabout $20,000 in savings, he said, butneeded the money to supplement hisdisability payments.
While he was hospitalized, Davissaid, an official in the business officetold him that CMC had decided totreat his case as charity care. Had heknown the system would reverse itsdecision, he would have left CMC andgone to his local hospital, which hadpreviously given him charity care, hesaid.
The hospital sued him and won ajudgment. “I had perfect credit beforethis happened to me,” Davis said. “Ithas ruined me.”
Alexander: 704-358-5060— OBSERVER STAFF WRITER KAREN GARLOCH,
RESEARCHER MARIA DAVID AND NEWS AND
OBSERVER STAFF WRITER JOSEPH NEFF
CONTRIBUTED.
HOSPITALS• from 1A
Searing
JOHN D. SIMMONS - [email protected]
Tony Chris Davis said Carolinas Medical Center officials told him they’d provide financial help. Instead, the hospitalsued to collect on its $40,000 bill. “If I’d known this would happen, I would have packed my bags and left,” he said.
New federal requirementsIf it survives review by the U.S. Supreme Court, the new health-care law willaffect how hospitals deal with uninsured patients. Detailed rules have yet tobe hammered out by federal agencies, but the Affordable Care Act stipulatesthat hospitals must:
• Develop financial assistance policies. Among other things, hospitals must spellout whether they offer free or discounted care – and specify the criteria for re-ceiving financial assistance. The bill doesn’t detail what those policies must re-quire.
Some lawmakers had previously talked about requiring hospitals to provide aminimum level of charity care. Congress ultimately did not impose such a require-ment.• Limit what they charge. If patients get “medically necessary” care and qualifyfor the hospital’s financial assistance policy, they can’t be charged more than the“amounts generally billed” to insured patients for the same services. The provi-sion is designed to stop the practice of charging uninsured patients much morethan those with insurance.• Refrain from unfair billing and debt collection practices. The law bans nonprofithospitals from engaging in “extraordinary collection actions” before making a“reasonable effort” to determine whether a patient qualifies for the financialassistance policy. The bill doesn’t define the terms “extraordinary” and “reason-able”; that will be up to federal agencies like the IRS.• Assess the needs of their communities. Every three years, hospitals must per-form a survey to determine health needs – and develop a plan to meet them.— AMES ALEXANDER
Barber
Shuler
+
8A Tuesday, April 24, 2012 ■ ■ ■ charlotteobserver.com • The Charlotte Observer +PROGNOSIS: PROFITS
By Ames Alexander
STATESVILLE — Julie Ritchiehad no job and no health insur-ance when she was hospital-ized with an ovarian cyst.
Now she faces another prob-lem: Iredell Memorial Hospital,the Statesville hospital whereshe received treatment in 2008,has sued her for payment.
Julie, her husband, Tim, andtheir teenage child were living ina two-bedroom house valued at$48,000 and surviving on themoney that Tim receives for So-cial Security disability – less than$18,000 annually. He’s bedriddenfrom back injuries suffered dur-ing an accident in the 1980s.
“We told hospital officialstime after time about our situa-tion,” Tim Ritchie said.
The Statesville couple saidthey don’t recall anyone at Ire-dell Memorial mentioning a
charity care policy, and theydidn’t know to ask.
When a hospital bill formore than $13,000 arrived, “Iremember … going ballisticand saying what are we goingto do?” Tim said.
Collections agencies begancalling. Then the hospital suedand won a judgment for theamount of the debt – plus inter-est and court costs.
The Ritchies were amongmore than 2,000 patients suedby the Statesville hospital overthe past five years.
Fred Karnap, vice presidentof finance for the 247-bed hos-pital, said the hospital’s recordsindicate that a financial coun-selor gave Ritchie an applica-tion for charity care while shewas in the hospital.
Later, Karnap said, the hospi-tal sent Ritchie a certified lettersaying her account was seriously
overdue and Iredell Memorialwould take legal action unlessshe made contact to work out a
payment arrangement.The Ritchies say they don’t re-
member getting the letter, and
that they didn’t even realize thehospital had sued them untilthey were contacted by an Ob-server reporter. They also saythey don’t recall getting a charitycare application, and that Juliewas delirious from pain andmedication while in the hospital.
Tim Ritchie said, “$13,000?We would have definitely tak-en advantage of that (charitycare application). We wouldhave been foolish not to.”
Karnap said he’s unsure whythe application was never sub-mitted in Ritchie’s case.
But he acknowledged thatmore patients could qualify forcharity care. About a year ago,he said, the hospital begansending its charity care appli-cation along with the legal no-tice before filing suit.
Iredell Memorial is morecharitable than most N.C. hospi-tals, Karnap noted. The hospi-
tal’s current financial assistancepolicy, which went into placeseveral months after Julie Ritch-ie was hospitalized, offers freecare to uninsured patients withfamily income less than twicethe federal poverty guideline.For an individual, that amountsto about $22,000 a year.
In 2010, the hospital spentabout 5 percent of its budget oncharity care.
“Even with flaws, we’re ap-parently communicating withquite a few folks,” Karnap said.
But the hospital seeks courtjudgments against patients whofail to pay bills exceeding $250and own houses and propertyworth more than $25,000.
“We owe it to everyone elsein the community not to letthose who can pay off the hooktoo easily,” Karnap said.— NEWS & OBSERVER DATABASE EDITOR
DAVID RAYNOR CONTRIBUTED.
Iredell hospital sues woman with no job or insurance
JEFF SINER - [email protected]
Julie Ritchie said she doesn’t recall anyone mentioning theavailability of charity care at Iredell Memorial Hospital.
+
The Charlotte Observer • charlotteobserver.com ■ ■ ■ Tuesday, April 24, 2012 + 9APROGNOSIS: PROFITS
By Joseph Neff
DURHAM — Betsy Stevens waspleased with her medical care atDuke Eye Center in July 2010. Shewas disgusted with the hospital’sbusiness operations.
Duke submitted the wrong code toher insurance company, which deniedher claim. For six months, Stevens triedto get Duke to fix its error, sending re-peated letters and emails. The chair ofthe Duke Eye Center sent her a letter ofapology in November 2010, promisingto make things right.
That same month, Duke sent hercase to a collection agency, AbsoluteCollection Service, which reportedStevens in March to the national creditagencies, spoiling her credit rating.
“The arrogance and insoucianceshown by the Duke business office isdownright appalling,” Stevens, abusiness professor who lives in Ala-mance County, wrote in a complaintto the state Attorney General.“…There are a number of others inthis same situation, poor, elderly orperhaps lacking the education ittakes to challenge an institution likeDuke.”
While some hospitals in the Char-lotte area sue thousands of patients,many hospitals elsewhere depend oncollection agencies.
Hospitals seldom report patientsto credit agencies, but their collec-tion agencies do: 52 percent of casesreported to credit agencies involveunpaid medical bills.
One key reason many hospitalshave turned to collection agencies:It’s cheaper.
“The reason we outsource is that itis more costly to do it ourselves,” saidKenneth Morris, chief financial offi-cer at Duke Hospital.
Confusing the consumer
Adam Linker, a policy analyst atthe Health Access Coalition in Ra-leigh, says medical debt differs fromall other consumer debt andshouldn’t be treated like moneyowed on a flat-screen television.
“I don’t think medical debt shouldgo on credit reports, period,” he said.“People aren’t going into medical treat-ment because they have extra moneyand think it’s a fun thing to do.”
In letters to state agencies, con-sumers complain about being caughtin a vortex of dunning letters and ha-rassing phone calls. They have com-plained that collection agencies ha-rass the innocent, or continue to pur-sue patients who have paid their bills.
In the Triangle area, many hospi-tals have turned to Raleigh-basedAbsolute Collection Service.
Hospital officials at UNC HealthCare, Duke, Rex Healthcare and Wake-Med say they are pleased with Abso-lute Collection. At UNC and Rex, hos-pital officials say they were unaware ofany complaints about the company.
Files at the state Attorney Gener-al’s Office tell a different story. Atleast 169 consumer complaints havebeen filed about Absolute over thepast five years, second in collectioncomplaints only to a national agency.The Better Business Bureau has 101complaints on file; it says all were re-solved favorably and gives Absolutean A+ rating.
Those complaints represent a tinyfraction of the hundreds of thou-sands of accounts the company pro-cessed in that period, said Ken Per-kins, the company’s legal counsel.
Perkins acknowledged that collec-tion agencies won’t ever win popu-larity contests, but said Absolutetrains its employees to be courteousand professional.
“We really try to help patients re-solve their bills,” Perkins said. “Youdon’t get this work from major hospi-tal groups by being a jerk on thephone. Hospitals want to retain theirpatients.”
The founder and owner of thecompany, Raleigh native Harry ScottJr., has done well for himself since hestarted the company in 1989 shortlyafter graduating from UNC. He ownsa beach house valued at $1.7 millionin a gated community in HiltonHead, S.C., and is part-owner of aNASCAR team.
Problems after paying
Diane Russell’s run-in with Abso-lute started in 2008, after her hus-band Jerry was treated at Moore Re-gional Hospital in Pinehurst. Russellreceived bills from the hospital andfrom the emergency room doctors.Jerry Russell had experienced seri-ous medical conditions over the pre-ceding years, and Diane Russell re-quested financial assistance. Thecouple had no insurance.
The hospital reduced her bill by 80percent, and Russell paid it. Russellmade the same request to the emer-
gency room doctors, but did not get aresponse.
In the fall of 2008, Absolute begandemanding that Russell pay the $501doctor bill. After four months ofphone calls and letters from Abso-lute, Russell wrote a check to thedoctors for the entire bill.
Absolute did not let up, sendingletters each month. Each time, DianeRussell called the collection agencyto tell it she had paid the bill. Eachletter escalated the language: “Weare dismayed by your inaction,” Ab-solute wrote in February 2009.
On March 31, Absolute wrote thatit would report the past-due debt tothe national credit bureaus and theinformation would stain her creditrating for seven years.
Fed up, Russell called the BetterBusiness Bureau, which forwardedher complaint to Absolute. The nextday, Absolute told the Better Busi-ness Bureau that Russell had beencorrect all along. The bill had beenpaid for more than three months.
When Russell sued, Absolute de-clined to settle.
The company said that it wasn’t itsduty to check a patient’s claim that abill was paid. It relies on a list fromthe hospital.
The case went to trial in federalcourt in Greensboro in April of lastyear. Suzanne Begnoche, one of Rus-sell’s lawyers, said she believes this isthe only case that has gone to trial inNorth Carolina under the federalFair Debt Collections Practices Act.
The jury found for Russell on allcounts and imposed the maximumpenalties allowed. The jury foundthat Absolute had used unfair threatsor coercion; fraudulent, deceptive ormisleading representations; and un-fair practices.
The jury awarded Russell $37,501.Absolute is contesting the verdict.
Neff: 919-829-4516
Persistent collections notunique to Charlotte area
SHAWN ROCCO - [email protected]
Betsy Stevens repeatedly told the Duke Eye Center it sent the wrong codeto her insurance company, but Duke sent her case to a collection agency.
By Ames Alexander
Increasingly, hospitals are encour-aging patients to pay their bills witha new tool: medical credit cards.
Those cards typically offer rea-sonable terms for patients who re-pay their debts promptly.
AccessOne, a fast-growing FortMill company that works with morethan two dozen hospitals, lets pa-tients repay without interest if theyretire the balances within a year.
But the consequences of late pay-ment can be severe.
Huntersville resident Sue Bosticsaid she doesn’t recall exactly howshe wound up getting a credit card topay off a $1,600 hospital bill fromCarolinas Medical Center-Mercy.
The AccessOne card carried aninterest rate of 9.25 percent. Butwhen she was late making a pay-ment, she got a notice that the ratewould climb to 18 percent if shedidn’t pay on time.
“Why do they have to charge peo-ple who are sick 18 percent?” Bosticasked. “When they couldn’t affordinsurance to begin with – they’re go-ing to charge them 18 percent?”
AccessOne officials say their pro-gram gives patients a convenientway to manage hospital bills andavoid the collections process. Enroll-ment is voluntary, they say.
Unlike some medical credit cards,AccessOne doesn’t report patientsto credit agencies or bill collectors ifthey default on payments, its execu-tives say. It simply returns the ac-counts to the hospitals.
That, they say, is what happenedin Bostic’s case. When Bostic wrotea letter objecting to the interestcharges, AccessOne waived all fi-nance charges and late fees, compa-ny officials said. Company officialssaid the card would not have been
issued without Bostic’s approval.AccessOne President Rusty Sal-
ton, a family physician wholaunched the company 10 years ago,says his card helps both hospitalsand patients.
“How many families can write a$2,500 or $5,000 check? Very few,”Salton says. “… What I honestly be-
lieve is patients wantto pay. But the hospitaldoesn’t give them away to pay it. We’vesolved it.”
At the hospital, pa-tients are given the op-tion of signing up withAccessOne. The com-
pany doesn’t reject any applications,Salton says.
When patients enroll, the compa-ny puts them on a monthly repay-ment plan and charges the hospitalsan administrative fee. That arrange-ment has helped hospitals increasetheir collection rates and lower thecost of collections, Salton says.
Carolinas HealthCare System, theCharlotte-based hospital chain thatowns CMC, is AccessOne’s largestclient. The hospital system collected$8 million through the program in2009, says Greg Gombar, chief finan-cial officer for CHS.
But what may be good for hospi-tals is not always healthy for patients,says Mark Rukavina, executive di-rector of the Access Project, a non-profit working to improve access tohealth care.
Rukavina says his staff has talkedwith many patients who felt pres-sured to sign up for such cards. Onsome cards, he said, those who arelate on payments may see damage totheir credit ratings, along with soar-ing interest rates.
Alexander: 704-358-5060
Medical credit card helps, but watch the rising interest
Bostic
When David Griffin got behind onpayments for his hospital bill, WilkesRegional Medical found a way to getits money: taking it from his pay-check.
Griffin was left with substantialout-of-pocket expenses severalyears ago, after he was treated at theWilkesboro hospital for a collapsedlung.
Taking advantage of a state lawthat allows public hospitals to gar-nishee wages, Wilkes Regional got acourt order allowing it to take 10 per-cent of Griffin’s pay until his $8,000debt is paid off. The hospital isowned by the town of North Wilkes-boro.
A welder by trade, Griffin said thatliving on $60 less each week hasbeen painful.
“You definitely know it’s gone,”the Wilkesboro resident said.
The Observer found other casesin which Wilkes Regional Medicalgarnisheed wages, but it’s unclearhow often the hospital takes thatstep.
Top officials at the 130-bed hospi-tal referred reporters to CarolinasHealthCare System, which managesthe hospital.
System officials did not answerthe Observer’s question about whyWilkes Regional garnishees wages.— AMES ALEXANDER
Hospitals can seize wages
Some states have made it more dif-ficult for hospitals to take aggressivecollections action against patients.
At least 14 states set rules aboutwhat hospitals can and can’t do to col-lect on debts. North Carolina is notamong them.
Among the rules elsewhere:• In California, hospitals can’t reporta patient’s debt to a credit reportingagency earlier than 150 days after the
initial billing. Hospitals are alsobarred from seizing patients’ wages orplacing a lien on their primary resi-dences.• In New York, hospitals can’t permitthe forced sale or foreclosure of a pa-tient’s primary residence in order tocollect on a bill.
Hospitals also can’t send an ac-count to collection while a patient’sapplication for financial aid is being
evaluated. Additionally, the state requires hos-
pitals to notify patients at least 30 daysbefore sending their accounts to col-lection.• In Minnesota, hospitals must estab-lish “zero tolerance” policies for abu-sive debt collections practices. Underan agreement with the state AttorneyGeneral’s office, hospitals must re-view the practices of collections agen-
cies working on their behalf, and en-sure that default judgments aren’t ob-tained until patients have a fair oppor-tunity to respond.• In Illinois, hospitals can’t pursuecollections actions until patients haveentered into a “reasonable” paymentplan and have defaulted on payments.• In North Dakota, hospitals cancharge only up to $25 per month in in-terest for late payments.
• In Rhode Island, hospitals are pro-hibited from forcing a patient’s homeinto foreclosure.
Such rules are crucial to poor anduninsured patients, advocates say.“The intent here is that underservedpopulations are able to get the carethey need – and not be ruined finan-cially as a result,” says Mark Rukavina,director of the nonprofit Access Proj-ect. — AMES ALEXANDER
PROTECTIONS AVAILABLE FOR PATIENTS
14 states regulate collection, but not N.C.