Nonprofit hospitals in Virginia garnish wages more often than for-profit hospitals, yielding only small payoffs

Nonprofit hospitals in Virginia are more likely to garnish patients' wages if they don't pay their medical bills than for-profit hospitals in the state, and ultimately, the practice does little to drive revenue for those hospitals, according to a JAMA study published this week.

Researchers examined Virginia court records from 2017 that dealt with completed "warrant in debt" lawsuits, or cases where a party sues an individual for unpaid debt. They examined how hospital characteristics link to wage garnishments, and found that 71% of hospitals in Virginia that garnished wages were nonprofit.

A recent ProPublica report highlighted Methodist Le Bonheur Healthcare, which it said filed more than 8,300 lawsuits from 2014 through 2018. Methodist isn't alone. The JAMA researchers unearthed more than 20,000 debt lawsuits filed by various Virginia hospitals in 2017; more than 9,300 garnishment cases took place that year, and almost three in four were liked to nonprofits.

Some even sue their own employees. Again looking at Methodist, ProPublica found the hospital has sued more than 70 of its employees for unpaid medical bills since 2014, including a suit brought against a hospital housekeeper in 2017 for $23,000 -- $7,000 more than her annual salary.

Methodist responded by pointing out its considerable charity care, with community contributions estimated at more than $226 million annually. The federal government expects nonprofit hospitals to provide charity care and financial assistance since those hospitals are exempt from local, state and federal taxes.

WHAT'S THE IMPACT

Just five hospitals -- four of them nonprofit -- were responsible for more than half of the garnishment cases in the state, JAMA researchers found. Overall, 48 out of 135 Virginia hospitals garnished patient wages, amounting to 36 percent.

Despite the high prevalence of the practice, the money collected from garnishments comprised a minuscule share of hospital revenue. Hospitals that garnished wages collected annual gross revenue that averaged out to $806 million, while garnishments accounted for $722,342. That's about 0.1% of gross revenue.

The garnishments, which ranged from $24.80 to $25,000, averaged $2783.15 per patient, researchers found.

According to a report filed by NPR, nonprofit Mary Washington Hospital in Fredericksburg was the hospital that sued the most patients in Virginia in 2017 -- so much so that Fredericksburg General District Court reserved a morning each month to hear its cases.

The day after NPR published its report, Mary Washington announced its intention to suspend the practice of suing patients for unpaid bills, saying it was committed to a "complete re-evaluation of our entire payment process."

The JAMA study found that, of those whose wages were garnished, Walmart, Wells Fargo, Amazon and Lowes were the most common employers.

THE LARGER TREND

Though researchers focused on Virginia, suing patients over medical debt is not a trend that's unique to the state. Arizona hospitals have gone to court over personal injury claims, and Johns Hopkins Hospital in Baltimore, Maryland, was recently presented with a petition from citizens and unions to drop medical debt lawsuits.
 

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com