One Thing the Pandemic Hasn’t Stopped: Aggressive Medical-Debt Collection

Darcel Richardson knows she’s fortunate in one sense: She still has her job as a vocational counselor in Baltimore. But despite that, she won’t be able to make her rent payment this month because she’s not getting her full salary for a while. More than $400 per biweekly paycheck — about a quarter of her after-tax income — has been siphoned off by Johns Hopkins University for unpaid medical bills at one of its hospitals.

Richardson, 60, got word of the garnishment from her employer just as the coronavirus pandemic was arriving in full force last month. “My job was going to take the money out. They don’t want to get in trouble,” she said. “I spoke with our payroll accountant, and the bottom line was, even though the crisis had begun, they still had to pay my money to them.”

In a moment when hospitals nationwide are being heralded for their role at the front lines of fighting the pandemic, some Americans continue to experience a less favorable side of hospital operations: aggressive collection for unpaid medical bills, even at a time when many of the debtors are seeing their income plunge. Debt collection is occurring on other fronts as well, over unpaid college and bank loans among others, prompting debates over protecting people’s economic stimulus checks from collection agencies or suspending garnishments outright. But collection by the very hospitals that are treating coronavirus patients brings the health and economic exigencies of the moment into especially stark relief.

In a few cases, hospitals have brought new cases against former patients in recent weeks, such as in Wisconsin, where Froedtert Hospital in Milwaukee filed 46 small-claims lawsuits even after the governor declared a state of emergency on March 12, and other hospital systems in the state filed dozens more, according to a report by Wisconsin Public Radio and Wisconsin Watch. Steve Schoof, Froedtert’s director of external communications, told ProPublica in a statement that the hospital stopped filing small claims suits on March 18. “Moving forward,” the statement continued, “Froedtert Health will no longer be filing small claims suits for medical debt collection. Unfortunately, there was a miscommunication that resulted in small claims filings after March 18. We immediately rectified this miscommunication and dismissed these small claims cases that were filed after March 18.”

More often, though, the collection stems from cases filed months before the pandemic arrived, as the legal process grinds its way forward. “Where debt collection is underway for pre-COVID medical debt, they will continue to do that,” said Jenifer Bosco, a staff attorney for the National Consumer Law Center.

In Richardson’s case, the debt stemmed from a two-day 2018 visit to Johns Hopkins Bayview Medical Center in southeast Baltimore, one of a string of medical visits she has had to make over the years to deal with a knee injury from a fall, a hip injury from a car accident, hernia repairs and back trouble. She had insurance coverage through her job, which at the time was with the state Division of Correction, but it left a balance of almost $1,000 for her to pay. Richardson, who lives by herself in a modest apartment complex just east of the city, started hearing from a collections lawyer for Hopkins last fall and tried to work out a payment schedule with him, but she couldn’t make it work.

“I just didn’t have the money,” she said. “I said to the lawyer, I might be able to pay an amount monthly, but when it came time, I just didn’t have it. What can you do when you’re caught between a rock and a hard place? I prioritize. I’m going to try to pay my rent first, pay for gas and electric, cellphone costs. And I’ve got to eat.”

The court judgment was finally entered against Richardson in Baltimore City District Court in January: $923.21, plus $34 in court costs and $138.49 in attorney’s fees. The notice of wage garnishment went out on March 6 — the day after Maryland Gov. Larry Hogan announced the state’s first three coronavirus cases. The garnishment was confirmed by Richardson’s new employer, the nonprofit drug treatment organization Gaudenzia, on March 16, the day that Hogan decreed the closure of all bars, restaurants, gyms and movie theaters, and three days after Richardson and her colleagues were barred by safety precautions from providing counseling inside prisons. She now works at a small treatment center that houses seven women, where social distancing is easier.

Johns Hopkins, by far the largest private-sector employer in the state and the largest beneficiary of billionaire Michael Bloomberg’s charitable giving, has long faced scrutiny for its aggressive collection of medical debt, including from the many low-income Baltimore residents it serves, who in theory should be able to qualify for the hospital’s charity care programs. In 2008, The Baltimore Sun reported that Hopkins and other Maryland nonprofit hospitals had filed more than 32,000 debt-collection suits over the past five years, winning at least $100 million in judgments. Last May, a coalition that includes the AFL-CIO and National Nurses United, which has been trying to organize Hopkins nurses, released a report finding that Hopkins had launched 2,400 lawsuits in Maryland courts since 2009 against patients with unpaid bills, increasing from 20 in 2009 to a peak of 535 in 2016.

In response to the 2019 report, Hopkins officials said they offered considerable free and discounted services, and that “for patients who choose not to pursue those options or who have a demonstrated ability to pay, we will make every effort to reach out to them and to accommodate their schedule and needs. In those rare occasions when a patient who has the ability to pay chooses not to, we follow our state required policies to pursue reimbursement from these patients.”

The cases have slowed in pace but not stopped altogether since the report. Bayview, one of several hospitals under the Hopkins umbrella, has filed about 60 cases over the past year, according to Maryland court records. Dozens of them, including Richardson’s, remain open.

Kim Hoppe, vice president for communications for Johns Hopkins Medicine, said in a statement that after looking into the matter, the medical system has become aware of nine garnishments that went into effect in February and March, and that it has now placed a “hold” on them. “Johns Hopkins remains committed to providing affordable access to all patients in need of our care, regardless of ability to pay,” Hoppe said. “We also make numerous efforts to communicate with patients who have overdue bills. Typically, patients receive more than a dozen contacts via mail or phone call along with multiple opportunities to file for medical or financial hardship. At all points in that process, patients are encouraged to speak with financial counselors; their bills will be forgiven if they can show financial hardship or inability to pay.”

For Cheri Long, aggressive medical debt collection came with less warning than it did for Richardson. Long, a nurse at an assisted living center in northern West Virginia, had stopped by a Dollar General on March 23 to pick up some groceries for her kids and some requests for residents at the center: prunes, caramel candies and adult diapers. When she went to pay with her debit card, the machine told her she had insufficient funds. She checked the account after leaving the store and found there had been a debit for about $900. She assumed her account had been hacked and the funds would be restored. In fact, the bank told her, her account had a hold on it from the magistrate court.

She told the bank she had not received any notification. But that night, a card was waiting in her mailbox alerting her that there was a certified letter waiting for her at the post office. She picked the letter up the next day and rushed to the magistrate court, and she learned that the account had been garnished by West Virginia University Hospitals, the official name for J.W. Ruby Memorial Hospital, the large nonprofit academic medical center in Morgantown that is the flagship of the WVU Medicine system.

The bills were for care received by her husband, Seth — after a motorcycle accident seven years ago and after a visit for alcohol rehab after he had started drinking heavily upon losing his coal mining job three years ago. He had insurance coverage at the time of both hospital stays, even supplemental motorcycle insurance, but the coverage had left a balance of about $3,500. Seth had gotten work at another mine but lost it again two years ago, leaving the family relying on Cheri’s income, about $3,000 per month in take-home pay. “Times are hard,” she said in an interview. “That [medical bill] was my last priority. I didn’t think they would do anything over $3,500.”

The bank garnishment sent her into a panic. She was in tears at the courthouse, pleading for someone to help her. She eventually filed for an “affidavit for exemption” through the sheriff, seemingly got the garnishment lifted temporarily and changed her direct deposit to another account to be on the safe side. But when she went for groceries again on April 3, her card was declined. Her account had been zeroed out again despite the exemption, apparently due to a bureaucratic oversight.

She borrowed money for groceries and gas from her co-workers, nursing aides who make minimum wage. Her father-in-law offered to cover the house payment. And, on Easter Sunday, she started writing emails — to the governor, to the attorney general. “It was a very depressing time,” she said later. “I’m out working, busting my butt, and they’re going to take my money.”

At last, she got help. The National Consumer Law Center put her in touch with a local legal aid lawyer, Jennifer Wagner with Mountain State Justice. Wagner filed a lawsuit on behalf of Long, arguing that it was unconstitutional to seize her property when the closure of the court system undermined her ability to seek due process.

On April 15, Preston County Judge Steven L. Shaffer issued an emergency order halting seizure of both Long’s bank account and her imminent stimulus funds, thereby restoring the money already taken. “Seizure of personal property during the court closure and stay at home order and related state of emergency … violates due process of law,” he wrote in the order, first reported by the Times West Virginian newspaper.

In a statement, WVU Medicine spokeswoman Angela Knopf said that the system gave guidance to its third-party collection vendors in March to be mindful of the economic impact of the pandemic crisis in seeking repayment, but it did not order them to hold back entirely. “At WVU Medicine, we need to balance our need to liquidate patient balances with the needs of our community, especially during times of disruption,” read the guidance. “Collection calls and letters can continue. However, please take a soft approach to calls and express the compassion that WVU Medicine has for our community during this difficult time. We do not want to beat our patients up as they are sequestered in their homes, compounding the stress of the current situation. We want to be a partner in helping them through this.” The guidance instructed vendors not to file any new lawsuits for “at least the next 60 days,” but it does not explicitly address the garnishing of accounts from cases launched before the crisis.

Wagner, the legal aid lawyer, said she is getting calls from more than a dozen other people in the area facing collection from the hospital and is considering filing a class-action lawsuit over the garnishments. “We’re contemplating seeking broader relief because of our concerns that they haven’t stopped, notwithstanding the order,” she said. “It’s actually going to dissuade people from seeking medical care during a time when it’s really important to seek medical care, and that is really alarming.”

Governors have issued orders temporarily banning wage and bank garnishments in several states, including in Illinois, Massachusetts and Washington. The Texas Supreme Court has decreed that any new garnishment orders not be served until after May 7. Governors or state attorneys general have taken the more limited step of barring the seizure of stimulus checks during bank account garnishments in some other states, among them California, New York and Ohio. But this leaves several dozen states where medical debt collection can still carry forward, with or without the ability to seize stimulus checks in the process.

In recent years, revelations of aggressive medical debt collection have been especially prevalent in states that chose not to expand Medicaid under the Affordable Care Act, which has left hospitals with more unreimbursed care than in states that did expand Medicaid. Kaiser Health News reported on 36,000 lawsuits filed in recent years by the University of Virginia medical system, most predating the state’s expansion of Medicaid in 2018, and ProPublica last year reported on 8,300 lawsuits over five years by Methodist Le Bonheur Healthcare in Memphis, where Tennessee lawmakers have refused to expand Medicaid. That reporting resulted in a pullback by Methodist, which announced that, while not altogether abandoning collection lawsuits, it would expand its financial assistance policy and stop suing its own employees over medical debts.

Meanwhile, though, another Memphis hospital, Baptist Memorial, has kept up aggressive collection during the economic crisis. The Shelby County court system lists about 20 garnishments for Baptist Memorial debts initiated last month alone, some of them for debts going back more than a decade.

One of the Baptist Memorial targets found out that she was about to have her paycheck garnished for a 13-year-old debt when she received a letter in the mail from a lawyer seeking to represent her in the matter. “It’s just been very hard,” said the woman, who asked that her name not be used. “I had offered a settlement, but they wouldn’t work with me. They’re playing hardball.”

A Baptist Memorial spokeswoman said in a written response, “These are not new cases; these judgments were made months ago. You’re looking at renewals that were filed in January — well before the first known COVID case was diagnosed in the U.S. If any of these people lost their jobs, we would stop trying to collect. If they have other financial issues, they can contact us and we’ll work with them. We have modified payment plans for hundreds of patients since the COVID pandemic began.”

Critics of the hospital debt collection say they are aware that hospitals may be more sympathetic creditors at the current moment, when they are strapped by the demands of treating victims of the pandemic, while losing much of their usual business. Johns Hopkins, for one, announced this week that it was running a $100 million deficit, due largely to a dropoff in the elective medical procedures that provide much of its revenue base.

But the National Consumer Law Center notes that hospitals nationwide are receiving $100 billion in the federal relief packages to help recover some of the costs of the crisis. And Cecilia Behgam, an AFL-CIO researcher who helped produce the 2019 report on Hopkins, notes that collection on unpaid bills makes up just a tiny sliver of hospital revenue — for a giant institution like Hopkins, typically less than one-tenth of a percent. “This is not making a significant difference in the budget of these hospitals,” she said.

Behgam also noted that in cities such as Baltimore and Memphis, the lawsuits and garnishments are being brought mostly against exactly the demographic that has been shown to be most vulnerable in the pandemic: lower-income African Americans with underlying health conditions. “These are people who are already disproportionately feeling the impact of the epidemic,” she said.

In Baltimore, Darcel Richardson says she has so far managed to talk the managers of her apartment complex into letting her pay the outstanding balance of her rent once the garnishments stop. They might even be willing to cancel the usual fees for late payment, she said. “I am a firm believer in trusting God,” she said. “He’ll meet my needs. So far, he’s still kept the roof over my head.”

Wendi C. Thomas contributed reporting.