An electronic article in the August 23, 2004 American Medical News reported that a Mississippi hospital, North Mississippi Health Services, which has 650 beds and more than $1 billion in annual billings, is the first facility to settle a nationwide class action targeting non-profit hospitals and the methods they use for charging the unisured for health related services.
Interestingly, North Mississippi Health Services was not even among the facilities sued in the class action. According to the CEO of the hospital the hospital system agreed to the settlement to avoid the distraction and cost of a potential suit.
The article summarizes the terms of the settlement as follows, "uninsured patients who were being charged higher rates than those with private insurance or Medicare will now pay rates based on the hospital's Medicare charges. The lower an uninsured person's income, the less he or she would be charged."
The settlement has been filed in the U.S. District Court for the Northern District of Mississippi. According to the article, "North Mississippi Health Care Services will give free care to patients making up to 200% of the federal poverty level. It also agreed to discounted prices, which range from 50% of the Medicare rate for people earning between 201% and 250% of the federal poverty level to 85% of the Medicare rate for those making between 301% and 350% of the poverty level. In addition, the hospital agreed that it would not try to collect more than 10% of someone's income in a given year to recoup medical bills."
Nonprofit hospitals were the first to face these class action styled lawsuits in June 2004. However, now for-profit hospitals are being targeted. Earlier this month lawyers in Florida and Nevada filed actions against for-profit hospitals, including Health Management Associates, Universal Health Services and HCA, Inc. Archie Lamb, the Alabama lawyer who helped physicians bring lawsuits against managed care companies for their billing practices, is among the lawyers suing the for-profit facilities.
According to the article, "[t]he lawsuit in Florida alleges that Health Management Associates, a Naples-based hospital chain, billed uninsured patients for amounts far greater than what Medicare and insurance companies would have been charged for the same services. The lawsuit alleges that these higher charges violate Florida's Deceptive and Unfair Trade Practices Act." The article goes on to states that the lawsuits in Nevada Lamb against Universal Health Services and HCA Inc. alleges that the hospital systems violated state anti-racketeering laws.
Having been involved in large class actions filed against hospitals I can certainly understand the position taken and empathize with the CEO of the Mississippi hospital who stated that his hospital wanted to avoid the distraction and cost of a potential suit. The fact that the hospital is willing to settle a potential class action claim before any formal action is filed against the hospital speaks volumes about the power of a "threat" of class action has on business and industry. The mere fact of being drawn into a class action lawsuit, whether or not the action is frivilous or has merit, can be a daunting and distracting undertaking for any business or health care provider.
For more information about the non-profit hospital class action litigation you can visit the website set up by the law firms involved in the case. This website includes a summary of the litigation, documents filed in the action, press releases about the case, law firms and lawyers involved in the case, etc.