Talk Justice, an LSC Podcast: Medical Debt Suits Plague Courts and Patients—Is There Another Way?
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WASHINGTON– Guests from Kansas and Tennessee discuss the growth of medical debt lawsuits, their impact on patients, and efforts to mitigate these suits on the latest episode of LSC's “Talk Justice” podcast, released today. LSC President Ron Flagg hosts the conversation with Matt Keenan, Executive Director of Kansas Legal Services (KLS), and Dana Schmidt, Manager of Mediation Programs for the Tennessee Supreme Court Administrative Office of the Courts.
The Wall Street Journal recently reported on this issue in Kansas in an article, “In This Kansas Courtroom, the Hospital Dominates the Docket.” A hospital sued 400 of the 9,000 people living in Pratt County over a period of less than a year. The story says that in recent years, some hospitals have been suing patients frequently—especially in rural areas where residents are often older and uninsured, and hospitals are under financial pressure.
About a year ago, a woman came to the self-help legal center at the Wyandotte County Court and met Keenan. She described how the hospital was suing for her husband’s unpaid medical bills. Keenan thought that this was likely the tip of the iceberg, and soon KLS heard from another person with the same problem. A grandmother had brought her grandson to the Pratt hospital to receive treatment for an injury, and because she filled out the paperwork, she was named in a medical debt lawsuit for $9,000.
“She lived well below the poverty line and by all metrics would be somebody who would qualify for charity care—this was a nonprofit hospital,” says Keenan.
After KLS entered their appearance on behalf of the woman, the case was dismissed. Keenan suspects that the hospital realized that the patient would have qualified for charitable care.
“[The hospital] did the right thing, they dismissed the case, but we suspect there are many other patients, former patients in the area that have had judgments entered against them and have had their paychecks garnished and all those things, so we are working to bring greater visibility to this issue across the state,” Keenan says.
Debt collection lawsuits are the highest-volume case type in civil courts. It is difficult to ascertain just how many of these cases are from medical debts at the national level, but research shows that medical debt suits are common. Kaiser Health News studied 500 U.S. hospitals and found that 300 regularly filed debt collection lawsuits against patients, and an additional 100 hospitals were selling patient debt to third-party companies who pursued lawsuits.
It is estimated that as many as 70% of medical debt collections suits result in default judgments. There are several reasons that patients fail to respond to these suits in court—the most obvious being that if the patient cannot afford to pay their medical bills, they also likely can’t afford an attorney and may not know about legal aid. But Keenan says it is more complicated than that.
“A lot of these clients, they feel guilty that they were in a period of time when they didn't have insurance,” Keenan says. “They are not disputing or denying that they received care and, in some cases, perhaps life-sustaining care and they feel guilty and they really are not in a mood to resist or to object or to look for alternatives to paying these debts.”
From her perspective as a court administrator in Tennessee, Schmidt has seen the impact that this influx of medical debt cases is having on the court. She says that the increased filings are affecting the court’s ability to provide timely and efficient services to the community.
“The more cases on the docket, the further out the dates go just to have that first appearance with the judge,” Schmidt says. “And then [there are] what I call the ‘aftermath issues.’”
“Aftermath issues,” Schmidt explains, are the problems and questions that an individual comes back to the court with after they learn there has been a judgment against them. Often, the individual may not realize they were sued until they see the garnishment on their paychecks.
“And so, what happens is they go back to the place where they understand this happened, which is the court, and they want to speak to the court clerk, the person at the counter processing the paperwork. They don't have an answer, they just know what the paper says, but they want to talk to someone, they can't afford an attorney,” Schmidt says. “And so what happens is there's this aftermath of back and forth and confusion.”
To help address the issues that patients, courts and hospitals are facing around medical debt suits, Tennessee launched a pilot program for online dispute resolution in Hamilton County. This is a pre-suit intervention that allows patients or guarantors to attempt to settle their dispute with Chattanooga’s Erlanger Hospital without needing to go to court. In 2020, the pilot began with the creation and testing of the online platform.
The program really kicked off and began settling cases in 2022. The patient or guarantor receives an email from the hospital informing them of the debt and inviting them to participate in online dispute resolution. Within the online platform, a volunteer mediator works with the debtor and the hospital to reach a settlement. The process is totally free, entirely online and available 24/7.
“When you access this platform and you say, ‘yes, I want to work with the hospital,’ you're not working with a middleman,” Schmidt says. “You are actually working with hospital staff who have been assigned the case and who will sit down and talk back and forth with you to figure out what works best—and because of that, what the hospital saw was they were getting more cooperation than the general regular debt collection process.”
Talk Justice episodes are available online and on Spotify, Stitcher, Apple and other popular podcast apps. The podcast is sponsored by LSC’s Leaders Council.