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Nonprofit Hospitals More Likely to Sue, Seek Garnishments: Study

Nonprofit hospitals are more likely to garnish wages and see debt collection “to the final stage,” according to a study that was published in the Journal of the American Medical Association yesterday.

The study looked at court records from 2017 in Virginia and found more than 20,000 lawsuits and 9,000 garnishments that were sought by hospitals. More than 36% of hospitals garnished wages of individuals with unpaid debts, and 71% of those facilities were nonprofits, according to the study. Five hospitals, four of them nonprofit, accounted for 51% of all the garnishments that were filed. The average amount garnished by a hospital was $2,783.

One hospital is known for filing so many lawsuits that a court reserves one morning every month just to hear cases it has filed. The hospital has employees throughout the courthouse, seeking to work out repayment plans for those defendants who show up.

“It’s important to us, as a small community, and a safety net hospital, that we’re doing everything we can for our patients to avoid aggressive collections,” says Lisa Henry, communications director for the health care system.

Henry says Mary Washington has a months-long process for trying to reach patients before it takes legal action. “By phone, by mail, by email — any access point we’re given from them when they register,” she says.
“Unfortunately, if we don’t hear back from folks or they don’t make a payment we’re assuming that they’re not prepared to pay their bill, so we do issue papers to the court,” she says.

Of the hospitals that garnished wages, those facilities tended to have more beds than those that did not garnish wages, but had lower average revenues. The average gross revenue of facilities that did garnish wages was $806 million, compared with $946 million for those hospitals that did not garnish.

“… hospitals with greater financial need (nonprofit, lower annual gross revenue) may be pursuing debt collection to the final stage of garnishment,” concluded the researchers.

Consumer advocates and community organizations are noticing the increasing number of lawsuits that are being filed against individuals to seek repayment of healthcare debts. Johns Hopkins Hospital in Baltimore was cited last month for allegedly targeting individuals in low-income neighborhoods with lawsuits for unpaid medical care.

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