NY hospitals filed 4,880 liens against homes of patients for unpaid medical bills: report
Dozens of hospitals in New York imposed a total of 4,880 liens on the homes of their patients with outstanding medical bills, a new report shows.
Between 2017 and 2018, 56 hospitals across New York deployed the controversial debt-collection practice against mostly low-income patients, according to the Community Service Society report.
Many of the liens targeted patients in rural communities across upstate New York, spanning counties in the Southern Tier, Hudson Valley, Finger Lakes and Mohawk Valley.
Some urban communities in the Capital Region and on Long Island also had some of the highest lien totals.
Two of the Southern Tier hospitals — Cortland Medical Center and Corning Hospital — said last week they will end the practice of imposing liens on the primary homes of patients due to medical bills. It announced the move in response to USA TODAY Network New York questions about the report.
“We do not believe that healthcare bills should place a family home in jeopardy, and we are taking immediate action,” said Dr. Edmund Sabanegh, president and CEO of Guthrie, the hospitals’ parent network.
All the 56 hospitals operated as nonprofits as required by state law and regulations. That means the hospitals are tax exempt but required to provide various financial aid and charity care.
State law permits hospitals to file a lien to enforce a court judgment for a medical bill, but only 30% of the 189 hospitals in the study used the practice, which underscored national debate over aggressive debt-collection efforts in health care.
“These are hospitals that sue and do really extreme collection activities that you would expect from the most avaricious vulture capitalists,” said Elisabeth Benjamin, co-author of the report.
“This is not what charities do,” she added.
How NY hospitals file liens for medical debts?
As nonprofits, New York hospitals that imposed liens are exempt from paying income and property taxes, the report noted.
The state also supports its nonprofit hospitals with an annual $1.1 billion indigent care pool fund. It is designed to support financial aid to low- and moderate-income patients, as well as offset hospitals’ uncompensated charity care losses.
The 56 hospitals that filed liens received a total $442 million from that indigent care fund.
As a condition of receiving that money, hospitals can file a lien to enforce a court judgment for a medical bill.
By contrast, the 4,880 patients’ homes are endangered by the liens because the hospitals are attempting to collect an estimated $9.3 million in outstanding medical bills, the report noted, citing the median medical-bill collection lawsuit in New York of $1,900.
While hospitals are barred legally from physically foreclosing on the liens, the existence of a lien can significantly destabilize a patient’s economic security, the report asserted.
For example, a lien can prevent the homeowner from selling the property without paying the debt. It also can prevent them from mortgage refinancing or obtaining an additional loan.
Benjamin suggested many of the patients facing liens were unaware they qualified for financial assistance, citing in part the complicated process of filing for the aid at many hospitals.
Further, many judges rule for hospitals by default in lien cases, Benjamin said, because patients are not represented by attorneys and unaware of their rights.
Which NY hospitals are filing liens on homes?
Some of the highest per capita rates of hospitals filing liens unfolded in small rural communities relying on a single hospital, the report shows.
For example, Schuyler County in the Fingers Lakes region is the second-least populous county in the state but had the highest rate of liens placed per capita: 38 for every 10,000 residents. Schuyler Hospital, which is part of the Cayuga Health System, placed all 67 liens in the county.
Fulton County had the next highest rate at 34 liens per 10,000 residents. All 358 of those liens were secured by Nathan Littauer Hospital.
In Madison County, 22 out of every 10,000 residents had liens placed on their homes due to the 316 liens placed by one hospital, Oneida Healthcare.
Many of the liens also fell under specific health systems, including United Health Services based in Binghamton, which imposed 395 liens on patients’ homes. That ranked it fourth-highest lien total overall, behind Albany-based St. Peter’s Health Partners, Northwell Health based on Long Island, and Albany Medical Center.
Cayuga Health, Nathan Littauer, Oneida Health and United Health Services did not immediately respond to questions about the report.
Other health systems that imposed at least 100 liens covered communities across large swaths of New York.
In the Hudson Valley, Nuvance Health had 159 liens, with most tied to Vassar Brothers Medical Center in Poughkeepsie.
Nuvance Health, which was formed in 2019 through a regional health system merger, said the liens were imposed by Health Quest, one of its now defunct health systems.
Health Quest discontinued the practice of imposing liens in January of 2018, said Nuvance spokesman John Nelson, adding the network provides care to anyone who needs it, regardless of their ability to pay for that care.
“Medical bills can be complex and sometimes overwhelming for some and we encourage any of our patients who face hardship to reach out to our financial counselors for assistance,” he said.
Also, in the Hudson Valley, WMC Health had 148 liens, with most tied to HealthAlliance Hospital in Ulster County. It did not immediately respond to questions from the USA TODAY NETWORK.
In the Southern Tier, Guthrie’s leader, Sabanegh, asserted the health network was taking additional measures to help make care more accessible and affordable beyond its decision last week to end the liens policy.
For example, he noted an internal review earlier this year prompted it to revise its income guidelines for financial aid, citing added need during a pandemic and tough economy.
Guthrie has pledged “to work with those who are struggling to pay their bills,” Sabanegh said. He noted it provided about $8.9 million in uncompensated care to the Corning and Cortland communities between July 2020 and June 2021, while receiving $800,000 from the state's indigent care fund.
“Cost must not be a barrier to care, and people should not hesitate to seek Guthrie’s care for fear of inability to pay,” he added.
What lawmakers are doing about medical debt
Outside of New York, 10 states — including Texas, Florida and Maryland — have laws that provide unlimited protection for their residents’ homes in court actions, typically called “homestead exemption” statutes, the report noted.
Three other states — Ohio, Louisiana and West Virginia — provide specific protections for patients’ homes.
For example, the Louisiana statute prohibits creditors from seeking to place a lien or foreclose on the full value of a debtor’s home if the debt is the result of a catastrophic or terminal illness or injury.
New York’s current homestead exemption law is far more restrictive, only protecting a dollar value that ranges from $75,000 to $150,000 depending on the region, the report noted.
“Taking liens on the homes of patients destabilizes their families, threatens their long-term economic security, and potentially exacerbates the very health conditions for which they incurred their medical bills,” the report added.
Meanwhile, legislation is being debated in Albany that seeks to prohibit hospitals from imposing liens against patients’ primary residences or garnishing wages in medical-debt collection actions.
About 50,000 New York patients have been sued for medical debt by hospitals in the past five years, including at least 4,000 during the COVID-19 pandemic, the legislation justification statement noted.
Communities of color in New York are almost twice as likely to have medical debt than their white counterparts, the statement added.
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