seizing paychecks and putting liens
on homes
Heather
Waldron and John Hawley are losing their four-bedroom house in the hills above
Blacksburg, Va. A teenage daughter, one of their five children, sold her
clothes for spending money. They worried about paying the electric bill.
Financial disaster, they say, contributed to their divorce, finalized in April.
Their
money problems began when the University of Virginia Health System pursued the
couple with a lawsuit and a lien on their home to recoup $164,000 in charges
for Waldron’s emergency surgery in 2017.
The
family has lots of company: Over six years ending in June 2018, the health
system and its doctors sued former patients more than 36,000 times for over
$106 million, seizing wages and bank accounts, putting liens on property and
homes and forcing families into bankruptcy, a Kaiser Health News analysis has
found.
Unpaid
medical bills are a leading cause of personal debt and bankruptcy, with
hospitals from Memphis to Baltimore criticized for their
role in pushing families over the financial edge. But UVA stands out for the
scope of its collection efforts and how persistently it goes after payment,
pursuing poor as well as middle-class patients for almost all they’re worth,
according to court records, hospital documents and interviews with hospital
officials and dozens of patients.
UVA
sued patients for as little as $13.91 and as much as $1 million during most of
that period, until July 2017, when it restricted lawsuits to those owing more
than $1,000, the analysis shows.
Every
year, the health system sued about 100 of its own employees who also happened to
be patients. It garnished thousands of paychecks, largely from workers at
lower-pay employers such as Walmart, where UVA took wages more than 800 times.
Under
a Virginia program designed to help state and local governments collect debt,
it also seized $22 million in state tax refunds to patients with outstanding
medical bills in the last six fiscal years — most of it without court
judgments, said health system spokesman Eric Swensen.
Over
many years, it filed thousands of property liens from Albemarle County all the
way to Georgia.
Beyond
its recovery of debts, UVA dunned some former patients an additional 15 percent
for legal costs, plus 6 percent interest on their unpaid bills, which over the
course of years can add up to more than the original bill.
The
health system also has the most restrictive eligibility guidelines for
financial assistance to patients of any major hospital system in Virginia,
interviews and written policies show. Savings of only $4,000 in a retirement
account can disqualify a family from aid, even if its income is barely above
poverty level.
The
hospital ranked No. 1 in Virginia by U.S. News & World Report is
taxpayer supported and state-funded, not a company with profit motives and
shareholder demands. Like other nonprofit hospitals, it pays no federal, state
or local taxes on the presumption it offers charity care and other community
benefits valued at least as much as those breaks. Gov. Ralph Northam (D), a
pediatric neurologist, oversees its board.
UVA
officials defended the institution’s practices as legally required and
necessary “to generate positive operating income” to invest in medical
education, new facilities, research and the latest technology.
They
point to the Virginia Debt Collection Act of 1988, which requires state
agencies to “aggressively collect” money owed.
During
the six-year period studied, UVA had an estimated six million visits and cared
for those patients “regardless of their ability to pay,” said Swensen, the
health system spokesman.
“For
the vast majority of patients, we are able to agree upon workable payment plans
without filing a legal claim,” he said. Suing patients or using collection
agencies are “a last resort,” he added.
Before
patients got court summons, they would have received “four to five” bills over
several months, along with instructions about how to apply for financial
assistance, Swensen said.
During
the most recent fiscal year, which ended in June, he said, UVA approved almost
10,000 applications for assistance under charity care guidelines set by the
state. Most of those patients paid nothing beyond a $6 co-pay.
In
addition, UVA is undertaking “a comprehensive review” of its charity care rules
and “considering policies to provide additional financial assistance to low-income
patients,” he said.
Swensen
declined to discuss the circumstances of individual patients, saying the
hospital was bound by patient confidentiality. UVA Health CEO Pamela
Sutton-Wallace declined an interview request. A spokeswoman for Northam did not
respond to repeated requests for comment.
Though
there is no national data on hospital debt collection, UVA’s pursuit of
patients goes beyond that of a number of other institutions.
Johns
Hopkins Hospital in Baltimore has sued roughly 240 patients a year on average
since 2009, according to a May report in the Baltimore Sun. UVA, by
comparison, often sues that many former patients in a week, and averages more
than 6,000 cases a year, court data show.
Private,
nonprofit Yale New Haven Health System files liens only if a bill is over
$10,000, and then only if the property is worth at least $300,000, a spokesman
said. Falls-Church, Va.-based Inova Health says it does not file liens on
patient homes or garnish wages.
Tenet
Healthcare, a national, for-profit chain whose stock trades on Wall Street,
says it does not sue uninsured patients who are unemployed or who lack
significant assets other than their house.
Industry
standards are few and vague. The American Hospital Association says its members
follow Internal Revenue Service guidelines, which merely require hospitals to
have a financial assistance policy and to make “reasonable efforts” to
determine whether a patient qualifies for help before initiating collections.
Patients
find themselves unable to pay UVA bills for many reasons: They are uninsured or
sometimes have short-term coverage that does not pay for treatment of
preexisting illnesses. Or they are out of network, or have a “high-deductible” plan
— increasingly common coverage nationwide that can require patients to pay more
than $6,000 before insurance kicks in. Virginia’s Medicaid expansion, which
took effect this year, covers families with low incomes but is still projected
to leave hundreds of thousands uninsured.
Patients
also have trouble because like many U.S. hospitals, UVA bills people lacking
coverage at rates far higher than what insurance companies pay on behalf of
their members. Such bills often have little connection to the cost of care,
experts say. Insurers obtain huge discounts off hospital sticker prices — 70
percent on average in UVA’s case, according to documents it files with
Medicare.
UVA
offers uninsured patients 20 percent off to start and another 15 to 20 percent
if they pay promptly, Swensen said. Few are able to do that. Patients are
subject to collections and lawsuits if they do not pay, or arrange to do so,
within four months, he said.
The
$164,000 billed to Waldron for intestinal surgery was more than twice what a
commercial insurer would have paid for her care, according to benefits firm
WellRithms, which analyzed bills for Kaiser Health News using cost reports UVA
files with the government. Charges on her bill included $2,000 for a $20
feeding tube.
UVA
would not disclose basic information about patient lawsuits, liens and
garnishments. Reporters reconstructed the hospital’s practices by talking
directly with patients, analyzing court documents and hospital bills and
observing the legal process in court. They gathered records in Charlottesville
to supplement a courts database compiled by nonprofit Code for Hampton Roads,
which works to improve government technology.
The
picture that emerges is one of little accountability for UVA — or of redress
for its patients.
Waldron,
38, an insurance agent and former nurse, appreciates the treatment she received
for an intestinal malformation that almost killed her. But, she says, “UVA has
ruined us.”
'Here for a hospital case?'
District
Court Judge William Barkley doesn’t announce the UVA cases as he takes the
bench each Thursday in the historic brick courthouse in Charlottesville. At one
hearing in March, he waves a thick stack of litigation at defendants, asking,
“Is anybody here for a hospital case?”
A
recent NPR report noted that nonprofit Mary Washington Healthcare, in
Fredericksburg, Va., had 300 cases in court in one month. (The hospital said it
was suspending such patient suits after that report.) Barkley’s court often
handles 300 UVA suits in a week, court data show.
The
health system sends collections representatives, not lawyers, who sit near the
judge’s bench. They give patients two weeks to commit to an interest-free
payment plan, according to courtroom meetings witnessed by a reporter.
Otherwise, “we’re already going to be reviewing it for garnishment,” a UVA
official tells a car accident victim. With bills often in the tens of thousands
of dollars, even the five-year, interest-free plans are unaffordable, patients
said.
Swensen
said those deadlines are imposed at least 150 to 200 days after they were sent
their first bills.
Zann
Nelson, sued by UVA for $23,849 a few years ago, is a rare patient who fought
back. The now 70-year-old Reva resident was admitted with newly diagnosed
uterine cancer, bleeding and in pain when she signed an open-ended payment
agreement. In court, she argued it was so vague as to be unenforceable.
She
lost. The judge, according to court records, said that Nelson had “the ability
to decline the surgery” if she didn’t like the terms of the deal. She lived
with a lien on her farm until she managed to pay off the debt.
'Can't afford to go back'
The
medical center, the flagship of UVA Health System, earned $554 million in
profit over the six years ending June 2018, and holds stocks, bonds and other
investments worth $1 billion, according to financial statements. CEO
Sutton-Wallace makes $750,000, with bonus incentives that could push her annual
pay close to $1 million, according to a copy of her employment contract,
obtained under public information law.
Yet
UVA offers more limited financial assistance than any other major health system
in Virginia, according to an analysis of policies at organizations including
Inova, Sentara Healthcare, Riverside Health and Carilion Clinic.
To
qualify for help, UVA patients must earn less than 200 percent of federal
poverty guidelines and own less than about $3,000 in assets, not counting a
house, according to the hospital’s website and guidelines UVA files with the
state.
Carilion
Clinic, by contrast, provides aid to families with income up to 400 percent of
poverty guidelines and assets less than $100,000 other than a house. If bills
at Riverside Health exceed household income over 12 months, the hospital
forgives the whole amount.
The
only other policy in Virginia similar to UVA’s is that of VCU Health, a sister
state hospital system with the same income and asset guidelines. In July, VCU
said it started offering help to some patients with “catastrophic” and
“prohibitively expensive” bills who don’t otherwise qualify.
“We
are considering those updates,” Swensen said of VCU’s changes.
UVA
sued Carolyn Davis, 55, of Halifax County, for $7,448 to pay for nerve
injections to treat back pain that she hadn’t realized would be out of network.
Her
husband is a cook at Hardee’s, taking home $500 to $600 a week, she said. UVA
refused their application for financial assistance because his Hardee’s 401(k)
balance of $6,000 makes them too well off, she said.
“We
don’t have that kind of money,” Davis said. The hospital insisted on a monthly
payment of $75. She was meeting it by charging it to her credit card at 22
percent interest.
Charges
for Davis’s treatment were about twice as much as what a commercial insurer
would have paid, according to an estimate by WellRithms.
Leigh
Ann Beach, 37, of Palmyra experienced how differently hospitals treat those who
cannot pay after hurting her ankle in a bike accident.
Sentara
Martha Jefferson Hospital, which first treated her, canceled the entire $4,650
bill based on her family’s income and the need to support her seven children,
her paperwork shows. UVA, where she got surgery and metal implants, sued her
for $9,505 and rejected her request for financial help.
A UVA
representative said she could sell some acreage from her small rural home to
pay the bill, she said. She limps and is in pain, but “I can’t afford to go
back,” she said.
Resorting to bankruptcy
When
Jesse Lynn, 42, of Orange County, bought short-term coverage to tide him over
between policies, he and his wife, Renee, didn’t realize the plan considered
Jesse’s old back problems a preexisting illness, and therefore would not pay
for treatment.
After
back surgery at Culpeper Medical Center, a UVA affiliate, he came out with a
bill for about $230,000, Renee Lynn said.
The
surgeon reduced his portion of the charges — from $32,000 to $4,500, which they
thought was reasonable. They asked for a similar break or a payment delay from
UVA. “We are not a lending institution,” the billing office told her, she said.
The
Lynns decided bankruptcy was their only option.
“I probably see at least a couple a month,”
said Marshall Slayton, a Charlottesville bankruptcy lawyer, holding up a new
file. “This is the third case this week.”
UVA
says it doesn’t foreclose on primary residences. But often a UVA lawsuit leads
to home loss because patients’ credit is downgraded and they cannot keep up with
hospital payment plans and mortgages.
Property
liens do give UVA a claim on the equity in patients’ homes.
“We
see a lot of them,” said Tina Merritt, a partner with True North Title in
Blacksburg. “And a lot of people don’t even know until they go to sell the
property.”
It
took Priti Chati, 62, of Roanoke six years to pay a $44,000 UVA bill for brain
surgery and have a home lien removed last year, court records show. The health
system seized bank funds intended for her daughters’ college costs, she said.
She sold jewelry and borrowed from friends, eventually paying more than $70,000
including interest, she said.
Paul
Baker, 41, of Madison County, ran a small lawn service and with his wife, owes
more than $500,000 for treatment after their truck rolled over. He is grateful
to UVA “for saving my life,” he says. But he is “frustrated they are ultimately
taking my farm” when he sells or dies, as a result of UVA’s lawsuit.
Indigent care
Swensen
said the medical center gave $322 million in financial assistance and charity
care in fiscal 2018. But legal and finance experts say that’s not a reliable
estimate.
The
$322 million “merely indicates the amount they would have charged arbitrarily”
before negotiated insurer discounts, said Ge Bai, an accounting and health
policy professor at the Johns Hopkins Carey Business School.
The
figure is “based on customary reporting standards used by hospitals across the
U.S.,” Swensen said.
Insurers
would have paid UVA only $88 million for that care, according to an
accounting of unpaid bills presented last year to the UVA Health board.
Even that unpaid figure didn’t come out of UVA’s purse since federal and state
governments provided “funding earmarked to cover indigent care” for almost all
of it — $83.7 million, according to Bai.
The
real, “unfunded” cost of UVA’s indigent care: $4.3 million, or 1.3 percent of
what it claims, according to the document.
“That’s
nothing,” given how much money UVA makes, Bai said. “Nonprofit hospitals
advance their charitable mission primarily through providing indigent care.”
The
hospital recorded another $109 million in uncollectible debts not considered
indigent care, the document shows.
Nacy
Sexton, who is in his 30s and lives outside Richmond, hoped he might get a
break on his medical bills as a student enrolled at the University of Virginia.
He was close to finishing a bachelor’s degree in 2015 when he was hospitalized
for lupus. When he was unable to cover the reduced bill offered by the
hospital, the university blocked his enrollment, a notice he received from
student financial services shows.
“The
university places enrollment holds on student accounts for many reasons,
including unpaid tuition and medical bills,” said university spokesman Wesley
Hester. This semester, the university has “active holds” on 20 students because
of unpaid health system bills, which might or might not block their attendance,
depending on when the hold was placed, he said.
Sexton
still has about $4,000 to go on a bill that he said was more than $30,000
before UVA’s discount, a fundraising campaign and other payments. He hopes to
re-enroll and finish his degree in education next year.
“When
you get sick, why should it affect your education?” he asked.
Shirley
Perry, once a registered nurse at UVA, became chronically ill, lost her job and
insurance, and then needed treatment from her former employer. UVA sued her for
$218,730 plus $32,809 in legal fees. She died last year at age 51, with a UVA
lien on her townhouse. It was auctioned off on Aug. 7 at the Albemarle County
Courthouse.
Waldron's 'devastation'
For
Heather Waldron, the path from “having everything and being able to buy things
and feeling pretty good” to “devastation” began when she learned after her UVA
hospitalization that a computer error involving a policy bought on
HealthCare.gov had led her insurance to lapse.
She
is now on food stamps and talking to bankruptcy lawyers. A bank began
foreclosure proceedings in August on the Blacksburg house she shared with her
family. The home will be sold to pay off the mortgage. She expects UVA to take
whatever is left.
health-science@washpost.com
Kaiser Health News (KHN) is a nonprofit
news service covering health issues. It is an editorially independent program
of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.