One Wisconsin study found that unpaid hospital bills had led to a massive increase in the number of lawsuits (37 percent) from 2001 to 2008. This increase was parallel to a separate rise in wage garnishment from lawsuits, which increased 27 percent over the same period. The study raised eyebrows because the lawsuits disproportionately targeted African American individuals and those from rural areas. Many people didn’t even realize that hospitals can sue over unpaid bills.
Study co-author Zack Cooper said, “We have a health system that is putting immense financial pressure on patients. Whether it’s surprise medical bills or this rise in hospitals suing over unpaid medical bills, these kinds of financial risks make patients wary of going to the hospital for care they need.”
He added, “Our findings that hospitals are suing patients more frequently underscores the need to reform a health system that is, too often, geared towards the convenience of the people working in it, not those using it.”
The doctors and nurses on the front lines of the coronavirus pandemic might say that was an argument framed in a poor choice of words, but the point is made.
There are many creditors’ rights laws on the books, and one of those guarantees that hospitals have the option to sue when bills remain unpaid for a significant length of time, especially when payment plans are devised as an alternative. The problem is, many people who require quality healthcare are already living in poverty.
Cooper acknowledged, “As the findings demonstrate, medical debt continues to hit Black families the hardest. These lawsuits create a double whammy for low-income Black patients, who are less likely to be insured. As the cost of medical care continues to rise, access to care will grow further out of reach for low-income people, who are disproportionately people of color.”
Wage garnishment results from these lawsuits, which forces a demographic already living in poverty to see a further reduction in quality of life. The only option for many is to declare bankruptcy.
Economic Professor Neale Mahoney at Stanford University, co-author, said, “I was disappointed to learn that nonprofit and critical access hospitals, which receive significant government support in part to help them provide care to low-income and rural communities, have been the most aggressive in suing their patients. Critical access hospitals are oftentimes the only accessible option for rural residents in need of essential services.”
Mahoney added, “COVID-19 has increased awareness about the financial burden that can result from medical care. With some hospitals around the country voluntarily pausing collections and lawsuits during the pandemic, now is the time to keep up the momentum and pass legislation that provides a comprehensive and lasting fix to this problem.”
The study shed light on another factor: Where someone receives care determines the chance of a subsequent lawsuit should a patient not be able to pay. 25 percent of all lawsuits came from only 5 percent of hospitals.