Money Changers In The Hospitals

As a working, medically uninsured American, I am watching the progress of these lawsuits closely.

Richard Scruggs, the Mississippi litigator who took on and beat big tobacco, has declared war again. This time around he’s targeted the non-profit hospital industry, unleashing a barrage of lawsuits challenging their business and accounting practices.

A team of consultants working under Scruggs’ direction has built a mountain of evidence against 13 of the nation’s largest non-profit hospital chains, including Advocate Health Care Network, Catholic Healthcare Partners (CHP), Baptist Health South Florida and Provena Health. The claims are revealed in 13 class action complaints filed Wednesday in various federal courts across the nation and obtained by Mother Jones. The suits provide a glimpse into the underbelly of the non-profit hospital industry, accusing Advocate and others of systematically defrauding the American public.

The suits seek undisclosed damages, including “revenues in an amount sufficient to provide the Plaintiffs and the class mutually affordable medical care.” Scruggs, whose $286 billion settlement against cigarette makers made history and netted him a fortune, says the new fight will likely be even bigger. Given the number of plaintiffs, the extent of their holdings, and the ambitious nature of the damages being sought, Scrugg could be right. And, as in 1994 when he joined with Mississippi Attorney General Michael Moore in suing the cigarette makers, Scruggs is hoping to convince several states to join the fight. Because the class action alleges abuse of public funds and resources, Scruggs is hopeful that a number of attorneys general “will take notice of this and take action.”

Scruggs says the legal argument behind the suits is a fairly simple one. “A non-profit hospital, in order to obtain freedom from taxation, has to prove that they provide charity care.” The beneficiary of that care, he says, should be the poor and uninsured. But the suits’ plaintiffs contend that non-profit hospitals have systematically reneged on their obligation, ignoring charity care in order to make – and keep – more money. — MOTHER JONES

These cases accuse the hospitals of breaches of contract, breaches of good faith and fair dealing, breaches of charitable trust, consumer fraud and violations of the Emergency Medical Treatment and Active Labor Act (EMTALA).

EMTALA requires that hospitals treat patients in emergency cases regardless of whether they are insured or not. The lawsuits contend the hospitals would not admit a patient unless the patient agreed to pay charges in full. — REUTERS

The lawsuits claim the hospitals used bogus accounting, reporting the costs of caring for uninsured patients at the so-called sticker prices instead of at the actual cost or at the reduced costs often negotiated by insurance companies.

The bookkeeping techniques, Scruggs said, “grossly distort the small amount of charity care they provide to uninsured patients” in exchange for tax exemptions.

Scruggs also said patients who couldn’t pay their bills were harassed “through, among other tactics, aggressive collection efforts such as garnishment of wages and bank accounts, seizures of homes, and personal bankruptcies.” — GUARDIAN

a thought by jillian at June 19, 2004 04:27 PM | TrackBack