Over six years, the state institution
filed 36,000 lawsuits against patients seeking a total of more than $106
million in unpaid bills, a KHN analysis finds.
By Jay Hancock and Elizabeth Lucas September
10, 2019
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 filed 36,000 lawsuits against patients seeking a total of more than
$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 hospital
bills are a leading cause of personal debt and bankruptcy across the nation,
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 seeks payment, pursuing poor as well as middle-class
patients for almost all they’re worth.
KHN’s findings,
based on court records, documents and interviews with hospital officials and
dozens of patients, show UVA:
·
Sued patients for as much as $1 million and as little as $13.91,
and garnished thousands of paychecks, largely from workers at lower-pay
employers such as Walmart, where UVA took wages more than 800 times.
·
Seized $22 million over six years in state tax refunds owed to
patients with outstanding bills, most of it without court judgments, under a
program intended to help state and local governments collect debts.
·
Sued about 100 patients every year who also happened to be UVA Health
System employees and filed thousands of property liens over the years, from
Albemarle County all the way to Georgia.
·
Dunned some former patients an additional 15% for legal costs,
plus 6% interest on their unpaid bills, which over years can add up to more
than the original bill.
·
Has the most restrictive eligibility guidelines for patient
financial assistance of any major hospital system in Virginia. Savings of only
$4,000 in a retirement account can disqualify a family from aid, even if its
income is barely above the 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 worth at least
as much as those breaks. Democratic Gov. Ralph Northam, a pediatric
neurologist, oversees its board.
UVA 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.
“Sending unpaid
bills to a collection agency or pursuing a civil claim is a last resort,” said
UVA Health System spokesman Eric Swensen. Two years ago, he said, the health
system limited lawsuits to cases in which patients owe more than $1,000. “For
the vast majority of patients, we are able to agree upon workable payment plans
without filing a legal claim,” he said.
In addition, UVA is
“making a comprehensive review” of its charity care rules and “considering
policies to provide additional financial assistance to low-income patients not
covered by our existing charity care policies,” he said.
Swensen declined to
discuss individual cases, 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 institutions. Johns Hopkins Hospital in Baltimore
has sued patients 240 times a year on average, 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
annually, 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 that can require patients to pay more than
$6,000 before insurance kicks in. Virginia’s Medicaid expansion, effective this
year, covers families with low income 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 members. In
addition, experts say such bills often have little connection to the cost of
care. Insurers obtain huge discounts off hospital sticker prices — 70% on
average in UVA’s case, according to documents it files with Medicare.
UVA offers
uninsured patients 20% off to start and an additional 15% to 20% 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 Heather 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, where the UVA
Health System is located, to supplement a courts database compiled by the
nonprofit Code for Hampton Roads, which works to improve government technology.
The picture that
emerges is of a trusted institution whose practices violate its stated public
mission, with little accountability or 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 said, “UVA has ruined
us.”
‘Here For A
Hospital Case?’
UVA sues so many
patients that District Court Judge William Barkley doesn’t announce the cases
as he takes the bench each Thursday in the historic brick courthouse in
Charlottesville. On this day, he waves a thick stack of litigation at
defendants, asking, “Is anybody here for a hospital case?” Nobody needs to ask
which hospital.
A recent NPR report noted that nonprofit Mary Washington
Healthcare, in Fredericksburg, Va., had 300 cases in court in one month.
(Following that report the hospital announced that it would suspend the
practice of suing patients for unpaid bills.)
Barkley’s court often
handles 300 UVA suits in a week, data shows.
The court often
operates like a UVA billing office. UVA 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
patients in court would have already received “four to five” bills over several
months and notifications about potential financial assistance.
Zann Nelson — who
is 70, lives in Reva, Va., and was sued by UVA for $23,849 a few years ago — is
a rare patient who fought back. Admitted with a newly diagnosed uterine cancer,
she was bleeding and in pain when she signed an open-ended payment agreement.
In court, she argued it was so vague as to be unenforceable. (C-Ville Weekly, a
local paper, wrote about her case in 2014.)
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’
UVA Medical Center,
the flagship of UVA Health System, earned $554 million in profit over the six
years ending in June 2018 and holds stocks, bonds and other investments worth
$1 billion, according to financial statements. CEO Sutton-Wallace earns a
salary of $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
financial assistance that’s more limited 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% of federal poverty guidelines
($34,000 for a couple) 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% of poverty guidelines
and assets of 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.
Sentara slashed
lawsuit volume by using software to rule out patients who were unlikely to pay,
said spokesman Dale Gauding. “We write off a lot of bad debt rather than put
someone through a judgment they can’t pay and an additional black mark on their
credit,” he said.
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 started
offering help to some patients with “catastrophic” and “prohibitively
expensive” bills who don’t otherwise qualify, a spokesman said.
“We are considering
those updates,” Swensen said of VCU’s changes. He noted that for the most
recent fiscal year UVA approved almost 10,000 applications for charity care.
Most of the patients who qualify pay nothing beyond a $6 copay, he said.
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% interest.
Charges for Davis’
treatment were about twice what a commercial insurer would have paid, according
to an estimate by WellRithms.
Sometimes patients
who are prepared to pay cash for UVA treatment find they can’t afford the
charges. Wayne Williams, 43, of Charlottesville, is a custodian at a community
college. He was uninsured but feared he had strep throat last year.
“I thought they
were going to give me some antibiotics,” he said.
Instead, UVA’s
emergency department gave him a CT scan, a bill for $6,931 and, when he didn’t
pay, a lawsuit. UVA did give him a 30% discount based on his financial
circumstances, he said — meaning the sore throat would cost about $4,800.
WellRithms
calculated that a commercial insurance company would have paid $992 for the
care Williams received, which would have covered costs and generated a profit.
Leigh Ann Beach,
37, of Palmyra, experienced how differently hospitals treat those who cannot
pay after hurting her ankle in a bike accident.
Rising premiums
left her uninsured when she fell off a bike and hurt her ankle last year. Her
husband works in construction to provide for their family with seven children.
A rainy 2018 washed out working days and his income. They couldn’t afford their
$667 monthly insurance premium.
Sentara Martha
Jefferson Hospital, which first treated her, canceled the entire $4,650 bill in
light of her family’s income, 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 as a bridge between policies,
he and 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 said 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. She had had a
pre-Obamacare policy that did not cover preexisting illness. 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 said. But he is “frustrated they are ultimately taking
my farm” when he sells or dies, 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 said 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
associate 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 in September 2018 to
the UVA Health board. Even that unpaid figure did not 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 indigent care: $4.3 million, or 1.3% 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 an additional $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 Virginia. He was close to graduation in
2015 when he was hospitalized for lupus. After 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
medical center 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 was a
registered nurse at the medical center who was “so proud of working at UVA,”
said her mother, Vera Perry. She 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.
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 to a lapse in her insurance.
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.
Methodology
KHN analyzed
Virginia civil case records from both the district and circuit courts from July
2012 through June 2018, based on the date a case was filed. These case records
were acquired from Ben Schoenfeld, a volunteer for Code for America, a
nonprofit focused on improving government technology. Schoenfeld compiles court
records that are available directly from Virginia’s court system (from both circuit
and district
courts) and posts them on the website VirginiaCourtData.org.
The Circuit Courts
of Alexandria and Fairfax do not use the statewide case management system and
are not included in this analysis.
The online circuit
court cases do not include the amount for which the plaintiff sued. KHN went to
the Albemarle Circuit Court (where most of the UVA circuit cases were filed)
and looked up each of over 900 cases by hand to obtain the dollar amount, which
totaled over $60 million.
The online district
court cases do include a principal amount sought in a “Warrant in Debt” case.
However, if the case is settled or dismissed, the principal amount is zero.
Therefore, KHN’s reporting of the total for which UVA has sued its patients
during this period is likely a low estimate.
KHN focused on
district cases that were “Warrant in Debt” cases and circuit cases that were
“Complaint — Catch-all” or “Contract Action.” UVA sues to recover patient debt
from all three categories. For cases brought by the University of Virginia, the
plaintiff names (as entered by the court) vary widely: “University of
Virginia,” “Rectors and Visitors of UVA” or just “UVA” are some examples. We
included cases that mentioned the UVA Physicians Group and Health Services
Foundation (although these were much less prevalent). In some cases, the UVA
Medical Center was named specifically; in others, it was not. KHN analyzed
cases brought by the university whether or not the case specifically mentioned
the medical center, knowing that some cases omit this detail. We took a random
sample of 30 “Warrant in Debt” cases from the Albemarle District Court in 2017
that were filed by “Rectors and Visitors” but did not specify the medical
center. We looked up the original records at the courthouse; each one was
related to the medical center.
KHN also found
several 2012 cases filed in the Albemarle Circuit Court by UVA that were not in
the public data available online, which suggests that the data is not
necessarily complete.
KHN contacted UVA
directly on multiple occasions. We filed several public records requests for
the number of cases involving medical debt and the total amount sought, as well
as the total amount recovered. Each time our request was denied.
Jay Hancock: jhancock@kff.org, @JayHancock1
Elizabeth Lucas: elucas@kff.org, @eklucas
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