ALBANY — Despite a pandemic that has left millions out of work and financially stressed, Capital Region hospitals have continued to sue patients for medical bills in a practice that appears to disproportionately affect those with low incomes and communities of color.
While New York halted the collection of medical debt owed to state-run hospitals last spring, court records show that many nonprofit hospitals have continued to try to collect through litigation — often for amounts that have negligible impact on their bottom lines but major impact on patient's lives, advocates say. In some cases patients' wages are garnished; in others liens are placed on their homes.
"The first tenet of medicine is to 'do no harm,'" said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York (CSS), an anti-poverty group that has been investigating the practice. "Suing patients harms them economically because they have to choose between paying a medical debt judgment versus paying rent, food, school supplies."
CSS found that high rates of medical debt collection activity in Albany County preceded the pandemic.
Between 2015 and 2020, five of the Capital Region's nonprofit hospitals sued 2,900 Albany County residents for past-due medical bills, according to an analysis published by CSS last March. After the pandemic hit, the suits continued — with area hospitals filing 548 lawsuits against Albany County residents between March and December 2020 alone, the group recently found. That number grows to 738 if you include patients from outside the county.
An analysis of a representative sample of lawsuits filed in Albany County courts found that 30 percent of patients sued live in communities with high uninsured rates, 28 percent live in communities where the majority of residents are people of color, and 26 percent live in communities where at least half the households have incomes below $50,000.
Credit bureau data tracked by the Washington, D.C.-based Urban Institute sheds further light on these disparities: the latest available data show 26 percent of residents in Albany County's communities of color with medical debt in collections compared to just 10 percent of residents in white communities.
"We believe the data here make the case that the aggressive litigation practices of these Albany hospitals not only make Albany a medical-debt hotspot but is what is driving the profound racial disparities in medical debt in Albany County," Benjamin said.
The hospitals responsible for the lawsuits include Albany Memorial, St. Peter's and Samaritan hospitals, owned by the Catholic-sponsored St. Peter's Health Partners; Albany Medical Center; and Ellis Hospital, which is pursuing a merger with St. Peter's.
The St. Peter's network of hospitals is responsible for 71 percent of all medical debt lawsuits filed in Albany County courts between 2015 and 2020, the CSS report found. Albany Medical Center is responsible for 23 percent and Ellis Hospital is responsible for 5 percent. By number of cases alone, Albany Memorial ranks first with 1,195 lawsuits during this period, followed by Albany Med with 682, St. Peter's with 456, Samaritan with 410 and Ellis with 130.
Hospitals defend lawsuits
In response to questions from the Times Union, area hospitals defended the practice of suing for back medical debt, with some calling it a "last resort" option that is only used after other attempts to collect payment have failed.
Robert Webster, a spokesperson for St. Peter's, said the hospital system paused its process for collecting unpaid medical bills last March when the pandemic first hit but resumed it in the summer when the state began to reopen some businesses and activities.
"These cases were ones that had been active since the summer of 2019, well in advance of the COVID pandemic," he said.
Hospitals in the St. Peter's network filed lawsuits against 653 patients between March and December of last year, including 497 in Albany County alone.
Webster said the hospital considers each patient on a case-by-case basis, has exceptions in place for low-income and uninsured patients, provides financial assistance to patients who are identified as eligible, and offers payment plans to patients willing to work with the hospital.
"In recognition of the emotional and financial hardships that many are still facing at this time, we continue to work with those individuals to identify long-term solutions," he said.
Ellis Medicine — whose anticipated merger with St. Peter's has already raised concerns over access to health care services — sued 63 patients between March and December of last year. Spokesperson Philip Schwartz said the hospital uses collection litigation "sparingly and only in specific and limited situations" in which it believes the patient has ability to pay.
"Litigation is always a last resort," he said.
A review of wage garnishment data by CSS found that many patients who are sued by Capital Region hospitals do not work in high-paying positions. The most common employers were health care providers, followed by retailers like Walmart, the group said.
Albany Medical Center sued far fewer patients during the pandemic than other area hospitals — just 22 as of December 2020, according to the CSS analysis. But the major regional hospital was more likely prior to the pandemic to have sued patients from communities of color than other local hospitals, the analysis found.
"Any patient with outstanding payments is contacted twice by mail and numerous times by phone before further action is considered," said Matthew Markham, a spokesperson for the hospital. "Funding, of course, is critical to continue providing the services our community expects and deserves. But our mission to care for our patients comes first—whatever their needs, regardless of their ability to pay."
All three hospital systems reported providing millions of dollars in charity care in 2020 to patients who were unable to pay: Albany Med said it gave $23.5 million, St. Peter's said it gave $16.8 million and Ellis said it gave $3.9 million.
Hospitals receive millions of dollars in funds each year from the state's Indigent Care Pool program to help pay for care for those who can't afford it.
Hospitals are required to provide financial assistance to eligible patients in order to receive the funds, but an analysis by CSS (and other organizations over the years) has found some hospitals routinely take in more than they give out. In 2019, for example, Albany-area hospitals received roughly $24 million in ICP funds but reported spending only $12 million on financial assistance for eligible patients.
During the pandemic, hospitals have also received millions of dollars in federal aid to make up for operating losses related to a decline in emergency room visits and non-urgent care delivery.
A review of court records has found instances, though, in which hospitals are failing to provide financial assistance on patients' bills even though they're eligible for it.
In 2017, a disabled veteran was sued by Samaritan Hospital for over $5,000 after he failed to pay a bill for care provided after a heart attack, according to documents filed in Gloversville City Court. The case was ultimately discontinued after the Legal Aid Society stepped in and argued the man, who was on public assistance, should have been eligible for — and received — financial assistance.
"These are charities, and religious charities to boot," Benjamin said, referring to Samaritan's Catholic affiliation. "You could ask, you know... why are they suing patients during a pandemic? But you could also ask, why are they suing patients at all?"
The analysis by CSS found that the median amounts claimed by hospitals against Albany County residents is $1,955 and the median judgment is $2,190 — indicating that court fees and interest accrued are raising the overall cost for patients. Hospitals can charge up to 9 percent interest on unpaid medical bills.
Legislation has been proposed that would shrink the amount hospitals can charge in interest on unpaid medical bills. The Patient Medical Debt Protection Act, sponsored by Gustavo Rivera in the Senate and Dick Gottfried in the Assembly, would also institute a number of other changes in New York designed to simplify medical billing and reduce debt.
"If you add up all these lawsuits together it's not going to make a difference for these hospitals' bottom line," Benjamin said. "But $2,000 is all the difference in the world for a patient. It means not making their rent. It means not having food. It means not buying school clothes. It means selling your car."
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