When Nonprofit Hospitals Sue Their Poorest Patients In exchange for tax breaks, nonprofit hospitals provide assistance to poor patients. But some hospitals seize wages from poor patients with unpaid bills — even those who qualify for reduced-cost care.

When Nonprofit Hospitals Sue Their Poorest Patients

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We're going to take a look now at a striking trend in this country. Millions of Americans are getting their wages seized because they owe money. NPR News has reported on this in the past and now we have more on nonprofit hospitals forcing patients to pay medical bills by going to court to seize funds right out of their paychecks. Steve Inskeep spoke with NPR's Chris Arnold and ProPublica reporter Paul Kiel.

STEVE INSKEEP, BYLINE: Gentlemen welcome back.


PAUL KIEL: Thanks.

INSKEEP: How widespread is this?

ARNOLD: Well, we believe it is quite widespread. There's no good national data, but we looked at six different states and in state after state after state we saw nonprofit hospitals suing hundreds of their patients. And what Paul was able to do in Missouri, the state of Missouri in particular, was to get very, very good data. He got all the debt collection cases for the entire state of Missouri so we could get a really good look at what's going on there.

INSKEEP: OK, so an opportunity to use one state as a case history - what's happening in Missouri, Paul?

KIEL: Well, we found quite a few hospitals that's were suing in the hundreds. But we found some hospitals that go after patients a lot more. And in fact we found one hospital in St. Joseph - it's up in the northwest corner of the state - it's suing thousands of patients a year, over 2,000 patients a year. And seizing three times more money than any other hospital in the state. And that hospital's called Heartland Regional Medical Center.

INSKEEP: Well, now what's wrong with this - because, of course, people run up bills. They're supposed to pay them.

ARNOLD: Well, Steve, nonprofit hospitals get a huge tax break and in return they're supposed to provide financial assistance, or charity care it's called, to lower income patients.

INSKEEP: Oh, people who can't pay the bill, but they need the medical care.

ARNOLD: Right and that's sort of the tray off. They don't have to pay taxes, but, you know, they're supposed to help out lower income people. But when we took a close look we found that some patients who seemed like they should qualify for financial assistance aren't getting it. And instead they're getting sued by their local hospital and getting their wages seized.

INSKEEP: So what are some of the cases of individuals that you found when you were looking at this?

ARNOLD: Paul and I went to St. Joseph, Missouri, and we met first with Keith and Kathleen Herie at their house in St. Joe. Back some years ago, he was working as a truck driver. She was a stay-at-home mom with their two kids. Keith Herie was making around $30,000 a year then and he said he just couldn't afford health insurance on that kind of income. But sometimes things happen and you have to go to the hospital, like when their 2-year-old got into a jar of lamp oil.

KATHLEEN HERIE: It was the night of my sister's wedding. We used lamp oil for her alter. We was bringing things home and they were sitting on my table and then a curious 2-year-old walked up and he drank it. I was like oh, crap, are you serious? And that's when he kind of laid down and his eyes rolled back into the back of his head. And then we took him to the hospital.


ARNOLD: You can hear their little dog - he's named Peaches - in the background there. Their son, whose name is Chance, we should absolutely say was OK, but soon the family was back at Heartland Hospital. Kathleen this time had doubled over with a burst appendix and needed an emergency operation.

KATHLEEN HERIE: I felt sharp pains. I was vomiting. I was running a fever. It was bad.

ARNOLD: That operation went upwards of $14,000 in medical bills. The couple says the hospital told them they could apply for financial aid.

KATHLEEN HERIE: Keith did go out there at one time and tried to get things set up, but we, apparently, did not qualify.

KEITH HERIE: They basically told me I made too much.

KATHLEEN HERIE: He made too much money.

ARNOLD: So the hospital sued the Heries in 2006 and got a court judgment for the full bill plus legal fees for more than $18,000 total and, ever since, the hospital has been taking 10 percent out of Keith Herie's paychecks. He says that's also hurt his credit score.

KEITH HERIE: Oh, definitely. You know, where I should be making a $250-a-month car payment, I'm making $368 payments. When I talk to mortgage places and it shows I got thousands and thousands of dollars of medical bills they won't touch you, so it affects everything.

ARNOLD: To make some more money Kathleen Herie got a low-wage retail job at Sam's Club. But then Heartland Hospital began seizing 25 percent of her paychecks after taxes too. And on top of that the hospital placed a lien against their home.

KATHLEEN HERIE: They're greedy. I owe more in interest on those bills than I do the bill alone.

ARNOLD: The hospital's also been charging them the maximum interest rate allowed under state law - that's 9 percent.

KEITH HERIE: So it's, like, a never-never plan. You're never going to get rid of it and you're never going to get ahead of it.

ARNOLD: As far the hospital's finances go, it's doing well. Heartland brought in $605 million in revenues last year and 45 million of that was profit.

TAMA WAGNER: We've been very successful in terms of being profitable and being a good community asset.

ARNOLD: That's Tama Wagner, Steve. She's the chief brand officer for Heartland Hospital, which is in the midst of changing its name to Mosaic Life Care. One thing the hospital's done - in recent years it has gotten more generous with its financial aid policy. So under the current policy, anyone making less than three times the poverty line can qualify to get their bill cut in half and if they make less than twice the poverty line the entire bill is forgiven. And she says that the hospital makes every effort to let patients know that this is the kind of help that they can qualify for.

WAGNER: Financial counselors are available if a patient asks for that.

ARNOLD: But in 2010, Keith and Kathleen Herie, the couple we were just talking to, they were sued again by the hospital. Keith Herie had chest pains and tests done and another big bill. And this time, based on the income on their tax returns, they could've qualified to get their entire bill forgiven, but they say that nobody told them that and they didn't formally apply for aid. The hospital went ahead and sued them and in total this couple now owes more than $25,000 to this hospital.

INSKEEP: But this is a family the hospital has some experience with, Chris Arnold. Weren't they aware that this is a family that's pretty low income at this point?

ARNOLD: Well, that's right and this is a key point. This is a family that they've not only had contact with, but they've sued. And when a hospital sues a patient and garnishes their wages it learns how much the patient makes, but even if they're low income, Heartland Hospital doesn't consider that. Once you get sued, Tama Wagner says, it's the hospital's policy that you no longer qualify for assistance.

WAGNER: The time to do that would have been back when you got the bill or when the bill initially went to collections. It should never really have to get to court.

ARNOLD: But the world's not a perfect place and if it does get to court and someone owes 20-grand and they're really poor and they qualify for charity care, I mean, why not give them the charity care?

WAGNER: Can I check on that to see...

ARNOLD: At this point another hospital spokesperson, Tracey Clark, breaks the silence, but then the brand officer, Tama Wagner, answers again.

WAGNER: If he was somebody who's making $10 an hour and they have a $20,000 debt, you know, we don't want to be punitive or ridiculous. And so it would make sense that we would figure something out. Common sense would tell you that.

ARNOLD: Maybe, but one patient we interviewed, Steve, said that she was making $8 an hour working at Taco John's. And according to court records, the hospital's been garnishing her wages for years. Just last year, Steve, this hospital seized the wages of more than 400 former patients who work at Walmart, fast food places, such as McDonald's, and a local pig slaughterhouse. That's according to court records.

INSKEEP: So you've done this case history, Chris Arnold and Paul Kiel, - what happens if a hospital does go too far, Paul Kiel?

KIEL: Well, we asked that question of Mark Rukavina. He's an expert who works with hospitals on these issues.

MARK RUKAVINA: If a hospital gets too aggressive with debt collection, they're putting at risk their federal tax exemption.

ARNOLD: And, Steve, we brought this to the board of Heartland Hospital to make sure they knew what was going on here. And after we did that, the board says it is now reviewing the hospital debt collection practices. Mark Rukavina, our expert here, says that nonprofit hospitals around the country should do the same.

INSKEEP: Chris Arnold of NPR news and Paul Kiel of ProPublica, thanks to you both.

ARNOLD: Thanks, Steve.

KIEL: Thanks.

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