Garnishing wages for medical debt
June 27, 2019
Topics: Quote of the Day
By William E. Bruhn, BS; Lainie Rutkow, JD, PhD, MPH; Peiqi Wang, MD, MPH; Stephen E. Tinker, BS; Christine Fahim, PhD; Heidi N. Overton, MD; Martin A. Makary, MD, MPH
JAMA, June 25, 2019
An estimated 20% of US consumers had medical debt in collections in 2014. Medical debt has been increasing with direct patient billing, rising insurance deductibles, and more out-of-network care being delivered, even at in-network facilities. Bills sent directly to patients may use the undiscounted price of a hospital’s services and can result in financial hardship and avoidance of future medical care. Hospitals need to be paid for care delivered, but some bills are unpaid. Hospitals may negotiate, reduce, or write off payments. Some have begun adopting a range of aggressive strategies for collecting unpaid bills, including suing patients and garnishing their wages or bank savings. We examined garnishment legal actions among Virginia hospitals.
From the Discussion
Thirty-six percent of Virginia hospitals garnished wages in 2017, with a small number of hospitals accounting for most cases. Some characteristics suggest that hospitals with greater financial need (nonprofit, lower annual gross revenue) may be pursuing debt collection to the final stage of garnishment.
The Nonprofit Hospital That Makes Millions, Owns a Collection Agency and Relentlessly Sues the Poor
By Wendi C. Thomas
ProPublica, June 27, 2019
From 2014 through 2018, Methodist Le Bonheur Healthcare filed more than 8,300 lawsuits, according to an MLK50-ProPublica analysis of Shelby County General Sessions Court records.
Other hospitals in Memphis and around the country also sue patients. According to a study published Tuesday in the Journal of the American Medical Association, researchers found more than 20,000 debt lawsuits filed by Virginia hospitals in 2017.
Its handling of poor patients begins with a financial assistance policy that, unlike many of its peers around the country, all but ignores patients with any form of health insurance, no matter their out-of-pocket costs. If they are unable to afford their bills, patients then face what experts say is rare: A licensed collection agency owned by the hospital.
Lawsuits follow. Finally, after the hospital wins a judgment, it repeatedly tries to garnish patients’ wages, which it does in a far higher share of cases than other nonprofit hospitals in Memphis.
Its own employees are no exception. Since 2014, Methodist has sued dozens of its workers for unpaid medical bills, including a hospital housekeeper sued in 2017 for more than $23,000. That year, she told the court, she made $16,000. She’s in a court-ordered payment plan, but in the case of more than 70 other employees, Methodist has garnished the wages it pays them to recoup its medical charges.
Debt That Will Follow Her to the Grave
Judge Betty Thomas Moore called Carrie Barrett’s name again.
Barrett stood, and (hospital attorney Dewun) Settle asked the judge to set her payments at $100 a month.
The judge agreed, denying Barrett’s motion to pay $40 per month.
Months later, Barrett was still bothered by the outcome.
“If you know I can’t pay $40, why you think I can pay $100?” Barrett said.
Between February and May, Barrett managed to make her payments on time, by shorting other bills and relying on payday loans. But this month, she missed her payment due date.
If Methodist doesn’t add any interest to Barrett’s debt and she pays as ordered, she will pay it off in 330 months.
She will be 90 years old.
Not long after her day in court, Barrett filed her 2018 taxes.
She made $13,800.
“It’s in the hands of God now,” she said. “There’s only so much I can do.”
When Hospitals Sue For Unpaid Bills, It Can Be ‘Ruinous’ For Patients
By Selena Simmons-Duffin
NPR, June 25, 2019
(Daisha) Smith is unflinching when she talks about Mary Washington and what happened to her after she went to the hospital in 2017.
At the time she didn’t have insurance. She was working part time at Walmart for $11 an hour. She doesn’t want to give the details about why she ended up at the hospital. “I was not myself,” she says. “So I walked myself into Mary Washington to get help — to get myself on track.” She says she was admitted for two weeks.
The hospital sued her for $12,287.68. She had a default judgement against her and did not realize she had been sued until she saw her paycheck mysteriously disappearing.
“When I looked at my pay stub, I’m like, ‘Why do I only have like $600-something in my account?’ ” She noticed “garnish” written on the bottom of her pay stub. “So I called my company and asked them, ‘Who’s garnishing my check?’ ” They told her it was Mary Washington.
With the garnishment, her take-home pay for a month of work comes to about $1,400. Her rent is $1,055. “I literally have no food in my house because they’re garnishing my check,” she says.
Comment:
By Don McCanne, M.D.
Even with insurance, our current health care financing system does not prevent medical debt for millions of workers and their families. For far too many, essential expenses such as housing, food, and transportation exceeds their incomes. What does adding to this the stresses of wage garnishment and taking out usurious loans from payday lenders do? Who benefits when the hole is only dug deeper?
Under a single payer Medicare for All program that eliminates premiums and cost sharing, no medical debt accrues since the health care system is prepaid through equitable taxes. Taxes should not create the same kind of financial burden since progressive taxes are based on the ability to pay.
Yet most of the Democrats in the presidential debate last evening want to protect the private, employer-sponsored insurance system that covers about half the population. They seem to feign obliviousness to the consequences of such a financing system including potential exposure to wage garnishment and usurious payday loans. Not that the Republicans are any better since they keep promising a better system but than never deliver.
Single payer Medicare for All removes financial barriers to care. It’s that simple.
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About the Commentator, Don McCanne
Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.
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