System settles charity suit, and other payouts likely
The recent settlement of the Scruggs charity care lawsuit by a prominent West Coast health system means that more are probably on the way, says Bryan Liang, MD, PhD, JD, a professor of law, medicine, and public policy, and executive director of the Institute for Health Law Studies at California Western School of Law in San Diego.
The lawsuits filed nationwide in 2004 charge that nonprofit hospital systems and hospitals have failed to provide government required charity care to uninsured patients. There are 60 lawsuits against hospitals and health systems, covering hundreds of facilities, the plaintiffs' attorneys report.
Providence Health System in Portland, OR, recently announced a settlement in a lawsuit filed in December 2004 that questioned Providence's charity care practices and billing policies. The agreement reached with plaintiffs in the case is one of the first settlements among scores of similar lawsuits filed around the country challenging charity care standards and billing and collections practices affecting uninsured patients at dozens of large nonprofit hospitals, says Providence chief executive Russ Danielson.
"While we disagree with the allegations made in the lawsuit, settling it made sense to avoid the tremendous costs associated with a trial and allow us to focus on our mission," he says. "The content of the settlement affirms our efforts over the past several years to make our charity care and financial assistance policies clearer and more consistent."
Settlement retroactive three years
Danielson says under terms of the settlement, Providence's current charity care policies will be applied retroactively to supplement the charity care previously made available to uninsured patients who obtained care at Providence hospitals in Oregon over the last three years. The system's current charity care policies provide financial assistance for uninsured patients with limited assets and incomes at less than 400% of the federal poverty level. Patients with limited assets earning 200% or less of the federal poverty level pay nothing.
Providence also offers to discount billings for all uninsured patients, regardless of their income, to the same "preferred provider" rates paid by most of its insured patients. Providence's charity care policies adjust uninsured patients' personal responsibility for their hospital bills based on their individual financial circumstances, assets, and income.
Providence also has agreed to continue to make information about how to access its financial assistance programs available to all patients and will continue to work with patients individually to offer financial help that takes into account the individual patient's ability to pay. Under some circumstances, Providence also will forgo interest on debts.
Avoiding a long court war
Danielson says the settlement was a pragmatic move that allows the organization to focus on providing care to the needy instead of fighting a lengthy court battle. "Given our values, we feel it was more important to use our resources for the good of our communities instead of expending them in costly litigation," he says.
John Phillips, JD, lead attorney for the plaintiffs, says the settlement restores some fairness to the system for uninsured patients at Providence. "Other hospital systems continue to fight these suits and fail to appreciate that charging uninsured patients more than anyone else makes no sense morally or economically, and is clearly indefensible — especially for a nonprofit hospital system," Phillips says. Brian Campf, JD, one of the Oregon attorneys representing the uninsured plaintiffs in the case, called the Providence settlement historic and added that it "levels the playing field between a powerful hospital system and the uninsured whose rights are too often overlooked and whose voices are too often unheard."
Sid Backstrom, JD, of the Scruggs Law Firm, praised the Providence move and said that other hospitals should take the same step. "From the beginning, Providence expressed its interest in leading the way for fair treatment of the uninsured. Other hospitals around the country should take a hard look at this resolution and do what is morally right," he says. "Clearly, investing a huge amount of resources to fight these cases will ultimately be a losing formula for these hospitals. This issue, when exposed to the decent working people of America on juries all over the country, will incite outrage at the hospitals, and justice will certainly prevail."
Likely more to follow
Liang says he expects more hospital systems to follow in Providence's foot steps and settle their cases.
"People are going to start to settle these things because the costs are racking up," he says. "All the state cases are a little different, and no two hospitals are looking at exactly the same situation, but when a large system like Providence settles, that has to give momentum to the plaintiffs and make the other hospitals look harder at that option."
Settlements can start to look like a good option if you think the lawsuits are starting to hurt your public image, Liang says. He suspects that concern was a driving force in the Providence settlement. Plus, the image of your organization can determine whether this type of lawsuit is ever brought against you in the first place.
"If your community sees you as a facility that is basically raping the uninsured consumer, then you are going to be seen as a big corporate behemoth that needs to be taken down," he says. "But if you are seen doing good things for people in the community, people aren't going to feel it necessary to go after you. Your public image is everything."
Sources
For more information about the charity care lawsuits and how to protect your organization from similar allegations, contact:
- Brian Campf, Williams Love O'Leary Craine & Powers, 9755 S.W. Barnes Road, Suite 450, Portland, OR 97225. Telephone: (503) 295-2924.
- Russ Danielson, Chief Executive, Providence Health System, 4805 N.E. Glisan St., Portland, OR 97213. Telephone: (503) 215-1111.
- Bryan Liang, Institute of Health Law Studies, California Western School of Law, 350 Cedar St., San Diego, CA 92101. Telephone: (619) 515-1568. E-mail: [email protected].
- John Phillips, The Phillips Law Group, 315 Fifth Ave. S., Suite 1000, Seattle, WA 98104-2682. Telephone: (206) 382-6163.
- Richard F. Scruggs and Sid Backstrom, The Scruggs Law Firm, 120A Courthouse Square, P.O. Box 1136, Oxford, MS 38655. Telephone: (662) 281-1212.
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