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Washington Post, Sept. 11, 2019
‘UVA has ruined us’: Health system sues thousands of patients, seizing
paychecks and putting liens on homes
By Jay Hancock and Elizabeth Lucas
Heather Waldron and John Hawley are losing their four-bedroom house in
the hills above Blacksburg, Va. A teenage daughter, one of their five
children, sold her clothes for spending money. They worried about paying
the electric bill. Financial disaster, they say, contributed to their
divorce, finalized in April.
Their money problems began when the University of Virginia Health System
pursued the couple with a lawsuit and a lien on their home to recoup
$164,000 in charges for Waldron’s emergency surgery in 2017.
The family has lots of company: Over six years ending in June 2018, the
health system and its doctors sued former patients more than 36,000
times for over $106 million, seizing wages and bank accounts, putting
liens on property and homes and forcing families into bankruptcy, a
Kaiser Health News analysis has found.
Unpaid medical bills are a leading cause of personal debt and
bankruptcy, with hospitals from Memphis to Baltimore criticized for
their role in pushing families over the financial edge. But UVA Health
System stands out for the scope of its collection efforts and how
persistently it goes after payment, pursuing poor as well as
middle-class patients for almost all they’re worth, according to court
records, hospital documents and interviews with hospital officials and
dozens of patients.
UVA sued patients for as little as $13.91 and as much as $1 million
during most of that period, until July 2017, when it restricted lawsuits
to those owing more than $1,000, the analysis shows.
Every year, the health system sued about 100 of its own employees who
also happened to be patients. It garnished thousands of paychecks,
largely from workers at lower-pay employers such as Walmart, where UVA
took wages more than 800 times.
Under a Virginia program designed to help state and local governments
collect debt, it also seized $22 million in state tax refunds to
patients with outstanding medical bills in the last six fiscal years —
most of it without court judgments, said health system spokesman Eric
Swensen.
Over many years, it filed thousands of property liens from Albemarle
County all the way to Georgia.
Beyond its recovery of debts, UVA hit some former patients with an
additional 15 percent for legal costs, plus 6 percent interest on their
unpaid bills, which over the course of years can add up to more than the
original bill.
The health system also has the most restrictive eligibility guidelines
for financial assistance to patients of any major hospital system in
Virginia, interviews and written policies show. Savings of only $4,000
in a retirement account can disqualify a family from aid, even if its
income is barely above poverty level.
The hospital ranked No. 1 in Virginia by U.S. News & World Report is
taxpayer supported and state-owned, not a company with profit motives
and shareholder demands. Like other nonprofit hospitals, it pays no
federal, state or local taxes on the presumption it offers charity care
and other community benefits valued at least as much as those breaks.
Gov. Ralph Northam (D), a pediatric neurologist, oversees its board.
UVA officials defended the institution’s practices as legally required
and necessary “to generate positive operating income” to invest in
medical education, new facilities, research and the latest technology.
They point to the Virginia Debt Collection Act of 1988, which requires
state agencies to “aggressively collect” money owed.
During the six-year period studied, UVA had an estimated six million
visits and cared for those patients “regardless of their ability to
pay,” said Swensen, the health system spokesman.
“For the vast majority of patients, we are able to agree upon workable
payment plans without filing a legal claim,” he said. Suing patients or
using collection agencies are “a last resort,” he added.
Before patients got court summons, they would have received “four to
five” bills over several months, along with instructions about how to
apply for financial assistance, Swensen said.
During the most recent fiscal year, which ended in June, he said, UVA
approved almost 10,000 applications for assistance under charity care
guidelines set by the state. Most of those patients paid nothing beyond
a $6 co-pay.
In addition, UVA is undertaking “a comprehensive review” of its charity
care rules and “considering policies to provide additional financial
assistance to low-income patients,” he said.
Swensen declined to discuss the circumstances of individual patients,
saying the hospital was bound by patient confidentiality. UVA Health CEO
Pamela Sutton-Wallace declined an interview request. A spokeswoman for
Northam did not respond to repeated requests for comment.
Though there is no national data on hospital debt collection, UVA’s
pursuit of patients goes beyond that of a number of other institutions.
Johns Hopkins Hospital in Baltimore has sued roughly 240 patients a year
on average since 2009, according to a May report in the Baltimore Sun.
UVA, by comparison, often sues that many former patients in a week, and
averages more than 6,000 cases a year, court data show.
Private, nonprofit Yale New Haven Health System files liens only if a
bill is over $10,000, and then only if the property is worth at least
$300,000, a spokesman said. Falls-Church, Va.-based Inova Health says it
does not file liens on patient homes or garnish wages.
Tenet Healthcare, a national, for-profit chain whose stock trades on
Wall Street, says it does not sue uninsured patients who are unemployed
or who lack significant assets other than their house.
Industry standards are few and vague. The American Hospital Association
says its members follow Internal Revenue Service guidelines, which
merely require hospitals to have a financial assistance policy and to
make “reasonable efforts” to determine whether a patient qualifies for
help before initiating collections.
Patients find themselves unable to pay UVA bills for many reasons: They
are uninsured or sometimes have short-term coverage that does not pay
for treatment of preexisting illnesses. Or they are out of network, or
have a “high-deductible” plan — increasingly common coverage nationwide
that can require patients to pay more than $6,000 before insurance kicks
in. Virginia’s Medicaid expansion, which took effect this year, covers
families with low incomes but is still projected to leave hundreds of
thousands uninsured.
Patients also have trouble because like many U.S. hospitals, UVA bills
people lacking coverage at rates far higher than what insurance
companies pay on behalf of their members. Such bills often have little
connection to the cost of care, experts say. Insurers obtain huge
discounts off hospital sticker prices — 70 percent on average in UVA’s
case, according to documents it files with Medicare.
UVA offers uninsured patients 20 percent off to start and another 15 to
20 percent if they pay promptly, Swensen said. Few are able to do that.
Patients are subject to collections and lawsuits if they do not pay, or
arrange to do so, within four months, he said.
The $164,000 billed to Waldron for intestinal surgery was more than
twice what a commercial insurer would have paid for her care, according
to benefits firm WellRithms, which analyzed bills for Kaiser Health News
using cost reports UVA files with the government. Charges on her bill
included $2,000 for a $20 feeding tube.
UVA would not disclose basic information about patient lawsuits, liens
and garnishments. Reporters reconstructed the hospital’s practices by
talking directly with patients, analyzing court documents and hospital
bills and observing the legal process in court. They gathered records in
Charlottesville to supplement a courts database compiled by nonprofit
Code for Hampton Roads, which works to improve government technology.
The picture that emerges is one of little accountability for UVA— or of
redress for its patients.
Waldron, 38, an insurance agent and former nurse, appreciates the
treatment she received for an intestinal malformation that almost killed
her. But, she says, “UVA has ruined us.”
'Here for a hospital case?'
District Court Judge William Barkley doesn’t announce the UVA cases as
he takes the bench each Thursday in the historic brick courthouse in
Charlottesville. At one hearing in March, he waves a thick stack of
litigation at defendants, asking, “Is anybody here for a hospital case?”
A recent NPR report noted that nonprofit Mary Washington Healthcare, in
Fredericksburg, Va., had 300 cases in court in one month. (The hospital
said it was suspending such patient suits after that report.) Barkley’s
court often handles 300 UVA suits in a week, court data show.
The health system sends collections representatives, not lawyers, who
sit near the judge’s bench. They give patients two weeks to commit to an
interest-free payment plan, according to courtroom meetings witnessed by
a reporter. Otherwise, “we’re already going to be reviewing it for
garnishment,” a UVA official tells a car accident victim. With bills
often in the tens of thousands of dollars, even the five-year,
interest-free plans are unaffordable, patients said.
Zann Nelson, sued by UVA for $23,849 a few years ago, is a rare patient
who fought back. The now 70-year-old Reva resident was admitted with
newly diagnosed uterine cancer, bleeding and in pain when she signed an
open-ended payment agreement. In court, she argued it was so vague as to
be unenforceable.
She lost. The judge, according to court records, said that Nelson had
“the ability to decline the surgery” if she didn’t like the terms of the
deal. She lived with a lien on her farm until she managed to pay off the
debt.
'Can't afford to go back'
The medical center, the flagship of UVA Health System, earned $554
million in profit over the six years ending June 2018, and holds stocks,
bonds and other investments worth $1 billion, according to financial
statements. CEO Sutton-Wallace makes $750,000, with bonus incentives
that could push her annual pay close to $1 million, according to a copy
of her employment contract, obtained under public information law.
Yet UVA offers more limited financial assistance than any other major
health system in Virginia, according to an analysis of policies at
organizations including Inova, Sentara Healthcare, Riverside Health and
Carilion Clinic.
To qualify for help, UVA patients must earn less than 200 percent of
federal poverty guidelines and own less than about $3,000 in assets, not
counting a house, according to the hospital’s website and guidelines UVA
files with the state.
Carilion Clinic, by contrast, provides aid to families with income up to
400 percent of poverty guidelines and assets less than $100,000 other
than a house. If bills at Riverside Health exceed household income over
12 months, the hospital forgives the whole amount.
The only other policy in Virginia similar to UVA’s is that of VCU
Health, a sister state hospital system with the same income and asset
guidelines. In July, VCU said it started offering help to some patients
with “catastrophic” and “prohibitively expensive” bills who don’t
otherwise qualify.
“We are considering those updates,” Swensen said of VCU’s changes.
UVA sued Carolyn Davis, 55, of Halifax County, for $7,448 to pay for
nerve injections to treat back pain that she hadn’t realized would be
out of network.
Her husband is a cook at Hardee’s, taking home $500 to $600 a week, she
said. UVA refused their application for financial assistance because his
Hardee’s 401(k) balance of $6,000 makes them too well off, she said.
“We don’t have that kind of money,” Davis said. The hospital insisted on
a monthly payment of $75. She was meeting it by charging it to her
credit card at 22 percent interest.
Charges for Davis’s treatment were about twice as much as what a
commercial insurer would have paid, according to an estimate by WellRithms.
Leigh Ann Beach, 37, of Palmyra experienced how differently hospitals
treat those who cannot pay after hurting her ankle in a bike accident.
Sentara Martha Jefferson Hospital, which first treated her, canceled the
entire $4,650 bill based on her family’s income and the need to support
her seven children, her paperwork shows. UVA, where she got surgery and
metal implants, sued her for $9,505 and rejected her request for
financial help.
A UVA representative said she could sell some acreage from her small
rural home to pay the bill, she said. She limps and is in pain, but “I
can’t afford to go back,” she said.
Resorting to bankruptcy
When Jesse Lynn, 42, of Orange County, bought short-term coverage to
tide him over between policies, he and his wife, Renee, didn’t realize
the plan considered Jesse’s old back problems a preexisting illness, and
therefore would not pay for treatment.
After back surgery at Culpeper Medical Center, a UVA affiliate, he came
out with a bill for about $230,000, Renee Lynn said.
The surgeon reduced his portion of the charges — from $32,000 to $4,500,
which they thought was reasonable. They asked for a similar break or a
payment delay from UVA “We are not a lending institution,” the billing
office told her, she said.
The Lynns decided bankruptcy was their only option.
“I probably see at least a couple a month,” said Marshall Slayton, a
Charlottesville bankruptcy lawyer, holding up a new file. “This is the
third case this week.”
UVA says it doesn’t foreclose on primary residences. But often a UVA
lawsuit leads to home loss because patients’ credit is downgraded and
they cannot keep up with hospital payment plans and mortgages.
Property liens do give UVA a claim on the equity in patients’ homes.
“We see a lot of them,” said Tina Merritt, a partner with True North
Title in Blacksburg. “And a lot of people don’t even know until they go
to sell the property.”
It took Priti Chati, 62, of Roanoke six years to pay a $44,000 UVA bill
for brain surgery and have a home lien removed last year, court records
show. The health system seized bank funds intended for her daughters’
college costs, she said. She sold jewelry and borrowed from friends,
eventually paying more than $70,000 including interest, she said.
Paul Baker, 41, of Madison County, ran a small lawn service and with his
wife, owes more than $500,000 for treatment after their truck rolled
over. He is grateful to UVA “for saving my life,” he says. But he is
“frustrated they are ultimately taking my farm” when he sells or dies,
as a result of UVA’s lawsuit.
Indigent care
Swensen said the medical center gave $322 million in financial
assistance and charity care in fiscal 2018. But legal and finance
experts say that’s not a reliable estimate.
The $322 million “merely indicates the amount they would have charged
arbitrarily” before negotiated insurer discounts, said Ge Bai, an
accounting and health policy professor at the Johns Hopkins Carey
Business School.
The figure is “based on customary reporting standards used by hospitals
across the U.S.,” Swensen said.
Insurers would have paid UVA only $88 million for that care, according
to an accounting of unpaid bills presented last year to the UVA Health
board. Even that unpaid figure didn’t come out of UVA’s purse since
federal and state governments provided “funding earmarked to cover
indigent care” for almost all of it — $83.7 million, according to Bai.
The real, “unfunded” cost of UVA’s indigent care: $4.3 million, or 1.3
percent of what it claims, according to the document.
“That’s nothing,” given how much money UVA makes, Bai said. “Nonprofit
hospitals advance their charitable mission primarily through providing
indigent care.”
The hospital recorded another $109 million in uncollectible debts not
considered indigent care, the document shows.
Nacy Sexton, who is in his 30s and lives outside Richmond, hoped he
might get a break on his medical bills as a student enrolled at the
University of Virginia. He was close to finishing a bachelor’s degree in
2015 when he was hospitalized for lupus. When he was unable to cover the
reduced bill offered by the hospital, the university blocked his
enrollment, a notice he received from student financial services shows.
“The university places enrollment holds on student accounts for many
reasons, including unpaid tuition and medical bills,” said university
spokesman Wesley Hester. This semester, the university has “active
holds” on 20 students because of unpaid health system bills, which might
or might not block their attendance, depending on when the hold was
placed, he said.
Sexton still has about $4,000 to go on a bill that he said was more than
$30,000 before UVA’s discount, a fundraising campaign and other
payments. He hopes to re-enroll and finish his degree in education next
year.
“When you get sick, why should it affect your education?” he asked.
Shirley Perry, once a registered nurse at UVA, became chronically ill,
lost her job and insurance, and then needed treatment from her former
employer. UVA sued her for $218,730 plus $32,809 in legal fees. She died
last year at age 51, with a UVA lien on her townhouse. It was auctioned
off on Aug. 7 at the Albemarle County Courthouse.
Waldron's 'devastation'
For Heather Waldron, the path from “having everything and being able to
buy things and feeling pretty good” to “devastation” began when she
learned after her UVA hospitalization that a computer error involving a
policy bought on HealthCare.gov had led her insurance to lapse.
She is now on food stamps and talking to bankruptcy lawyers. A bank
began foreclosure proceedings in August on the Blacksburg house she
shared with her family. The home will be sold to pay off the mortgage.
She expects UVA to take whatever is left.
Hancock is a senior correspondent and Lucas is Data Editor for Kaiser
Health News (KHN), a nonprofit news service covering health issues. It
is an editorially independent program of the Kaiser Family Foundation
that is not affiliated with Kaiser Permanente.
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