How rich hospitals profit from patients in car crashes in the US

When Monica Smith was badly hurt in a car accident, she assumed Medicaid would cover the medical bills. Smith, 45, made sure to show her insurance card after an ambulance took her to Parkview Regional Medical Center in Fort Wayne, Indiana. She spent three days in the hospital and weeks in a neck brace.

But the hospital never sent her bills to Medicaid, which would have paid for the care in full, and the hospital refused requests to do so. Instead, it pursued an amount five times higher from Smith directly by placing a lien on her accident settlement.

Parkview is among scores of wealthy hospitals that have quietly used century-old hospital lien laws to increase revenue, often at the expense of low-income people like Smith. By using liens — a claim on an asset, such as a home or a settlement payment, to make sure someone repays a debt — hospitals can collect on money that otherwise would have gone to the patient to compensate for pain and suffering.

They can also ignore the steep discounts they are contractually required to offer to health insurers, and instead pursue their full charges.

The difference between the two prices can be staggering. In Smith’s case, the bills that Medicaid would have paid, $2,500, ballooned to $12,856 when the hospital pursued a lien.

“It’s astounding to think Medicaid patients would be charged the full-billed price,” said Christopher Whaley, a health economist at the RAND Corp. who studies hospital pricing. “It’s absolutely unbelievable.”

The practice of bypassing insurers to pursue full charges from accident victims’ settlements has become routine in major health systems across the country, court records and interviews show. It is most lucrative when used against low-income patients with Medicaid, which tends to pay lower reimbursement rates than private health plans.

In a memo that surfaced in 2014 litigation, a hospital in Washington state estimated that this practice generated $10 million annually.

As part of its check-in process, a Catholic hospital in Oklahoma offers some accident victims a waiver to sign stating they do not want their health plan billed for care. One patient received the waiver shortly after a car accident in which her head hit the windshield. She said she had no recollection of signing the document, but faced a $34,106 lien as a result.

“The way they are spinning it is, you don’t want to use your health insurance because someone else caused this,” said Loren Toombs, an Oklahoma trial lawyer who represented the patient. “It’s clearly a business tactic and a huge issue, but it’s not always illegal.”

Hospitals have come under scrutiny in recent years for increasingly turning to the courts to recover patients’ unpaid bills, even in the midst of the coronavirus pandemic. Hospitals, many of which received significant bailouts last year, have used these court rulings to garnish patients’ wages and take their homes.

But less attention has been paid to hospital lien laws, which many states passed in the early 20th century, when fewer than 10% of Americans had health coverage. The laws were meant to protect hospitals from the burden of caring for uninsured patients, and to give them an incentive to treat those who could not pay upfront.

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A century later, hospital liens are most commonly used to pursue debts from car accident victims. The practice can be so lucrative, documents and interviews show, that some hospitals use outside debt collection companies to scour police records for recent accidents to make sure they identify which of their patients might have been in a wreck, so that they can pursue them with liens.

Some laws limit what share of a patient settlement a hospital can lay claim to, and others allow only nonprofit hospitals to collect debts this way. Certain states require hospitals to bill accident victims’ health plans rather than using a lien. This approach is seen as more consumer-friendly because patients benefit from the discounts that health plans have negotiated on their behalf.

“If there is a patient that has viable coverage from multiple sources, it would be a reasonable position to seek payment from whoever is going to pay more,” said Joe Fifer, chief executive of the Healthcare Financial Management Association, a trade group of hospital financial officers.

Fifer said that state and federal laws often dictate which insurer should be billed, and that hospitals regularly must navigate between health and auto insurers that claim the other is responsible. He advises member executives to be clear at the outset with patients about how the lien process works.

“I feel sorry for patients in these situations,” Fifer said.

When states have permissive hospital lien laws, some hospitals take advantage in ways that hurt patients. These hospitals tend to be wealthier, The New York Times found, and many of those that received hundreds of millions of dollars in federal bailout funding during the pandemic are among the most aggressive in pursuing payment through hospital liens.

Community Health Systems, which owns 86 hospitals across the country, received about $250 million in federal funds during the pandemic, according to data compiled by Good Jobs First, which researches government subsidies of companies.

One of its hospitals in Tennessee refused to bill Medicare or the veterans health insurance of Jeremy Greenbaum after a car crash aggravated an old combat wound to his ankle. Instead, the hospital filed liens in 2019 for the full price of his care, records show.

“I could cut off a finger and the VA would cover it,” Greenbaum said, adding “the insurance is just that good.” The worst part, Greenbaum said, was the nearly constant collection calls that made him feel like a “real deadbeat.” Greenbaum is now part of a lawsuit against the hospital, Tennova Healthcare Clarksville, that accuses it of predatory lien practices.

Ann Metz, a spokeswoman for Tennova, said that “Tennessee state law allows hospitals to file provider liens as a way to ensure that health care providers can be paid for treatment.”

Multiple lawyers identified the WellStar Health System in the Atlanta area as another that frequently pursued liens against patients.

Dennis Denson, a 53-year-old logistics manager, was treated at a WellStar hospital for injuries he suffered after being rear-ended three years ago. Denson said he presented his health insurance card as soon as he got to the emergency room. But he is still fighting with the hospital, which, unlike the ambulance provider, didn’t bill his health insurance. Instead, the hospital placed a $13,469 lien against his auto accident settlement.

For Denson, the lien is like a cloud hanging over his recovery. To cover his ensuing bills — the cost of a replacement car; the chiropractic treatment; everyday expenses after a stint out of work — he had to go into debt.

“I really feel angry,” Denson said. “You are going into a fight with the hospital that you don’t know the rules of.”

A WellStar spokeswoman said the hospital uses liens only when privately insured patients don’t provide coverage. The hospital and Denson disagree on when proof of coverage was provided: He recalls giving it at the emergency room, while the hospital says it was not given until more than a year after the accident.

Such liens can torpedo patients’ credit scores and leave them unable to pay for needed follow-up care.

Mary Edmison, an 86-year-old widow, said she tried everything to get Mary Washington, a hospital in Fredericksburg, Virginia, to bill her insurance — Medicare and private coverage — for the treatment she received in a 2016 crash. She called; she went to the hospital’s billing department; she sent a handwritten letter.

“Again and again, I’ve asked Mary Washington to send their bills through the proper channels,” she wrote in a 2017 letter. “I don’t know what their problem is.”

In August 2017, the hospital sued her for more than $6,000. Edmison, who has since settled the issue with the help of a lawyer, was shocked. “I’m on a fixed income and those kind of charges would have sunk me,” she said.

Eric Fletcher, a spokesman for Mary Washington, declined to comment on Edmison’s case but said the hospital complies with state and federal lien laws. “We never want a patient to endure hardship related to medical bills,” he said.

In the early 2010s, Indiana legislators passed a law that required hospitals to bill insured patients’ coverage before pursuing additional debts with a lien.

The legislation initially specified Medicare, Medicaid and private health plans as those that had to be billed. At the last minute, Medicaid was taken out. Supporters of the new law paid little attention to the change, assuming that legislation requiring hospitals to bill “health insurance” would suffice.

The Parkview Hospital system, a nonprofit in Fort Wayne, saw things differently. Parkview was already known for having the second-highest health care prices in the country. Multiple trial lawyers in Indiana have identified it as the most aggressive hospital when it comes to liens.

Even after the lien reform, the hospital continued to bypass Medicaid patients’ coverage and pursue its full-billed charges. Liens challenged in court, ranging from $307 to $117,272, most likely represent a small fraction of those filed against patients.

“Other hospitals don’t do this — they abide by the law,” said David Farnbauch, a trial lawyer who has sued Parkview over its lien practices.

Parkview has faced at least nine lawsuits over liens related to Medicaid. It has filed counterclaims against at least one patient, tacking interest and attorney fees onto the outstanding debt.

When Smith and other Medicaid beneficiaries sued Parkview over their liens this summer, the hospital responded by arguing that Medicaid is “government assistance” and not health insurance, thus not covered under the new lien law.

“Parkview denies that Medicaid coverage is insurance,” the hospital argued in a June 2020 legal brief.

The hospital contended that patients should be held accountable for their medical bills rather than relying on the government. “By forcing hospitals like Parkview to submit its charges to the state-administered Medicaid program, the court will ignore the public policy goals of holding individuals responsible for their actions,” Parkview argued.

Judge Craig Bobay said he noticed “a lot” of these cases coming into his courtroom in 2019 making the same arguments.

He rejected Parkview’s claims last summer, finding that “Indiana plainly defines the term Medicaid as ‘health insurance.’”

“Before filing a hospital lien, Parkview must first reduce its bill by the amount of benefits to which a patient is entitled under the terms of medical insurance, including Medicaid,” he wrote.

Parkview Hospital declined an interview for this article but provided a statement from its chief legal officer, David Storey. He said the health system no longer filed liens against Medicaid patients. “Parkview has always taken a conservative and fair approach to collections,” he said.

Smith received her full settlement in 2020, nearly four years after her accident.

“At first I thought it was a registration error, but shame on them for basically trying to get more money out of the situation,” she said. “It felt like, what is even the point of having health insurance if you won’t bill it?”