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Stop Suing Patients, Advocates Advise Memphis Nonprofit Hospital System

Methodist Le Bonheur Healthcare promised a 30-day review of its collection policy after MLK50 and ProPublica found it sued thousands of low-income patients. Here’s what experts say the hospital should do.

Methodist University Hospital in Memphis. (Andrea Morales for MLK50)

This article was produced in partnership with MLK50, which is a member of the ProPublica Local Reporting Network.

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MEMPHIS, Tenn. — As the region’s largest hospital system wraps up a 30-day review of its collection and charity care policies, consumer advocates encouraged officials to make fundamental changes that will lift the threat of lawsuits or even wage garnishments for low-income patients who cannot afford their hospital debts.

“They could immediately decide to stop suing patients,” Jenifer Bosco, a staff attorney at the National Consumer Law Center, said in a commentary piece for MLK50 this month. “They could decide to stop garnishing wages. It’s not that they have to do those things.”

MLK50 and ProPublica detailed last month how Methodist Le Bonheur Healthcare, a faith-based nonprofit system, aggressively pursued debts incurred by poor people and even its own employees. From 2014 through 2018, Methodist filed more than 8,300 lawsuits in Shelby County General Sessions Court, more than all but one other creditor.

Defendants talked about how the lawsuits upended their lives and left them in a position where they would never be able to pay off their debts, which grew from year to year as interest and fees mounted. Methodist not only pursues debts differently than other Memphis hospitals — it also takes a different approach to charity care, offering no relief to patients who have any form of insurance.

On June 30, following the articles, Dr. Michael Ugwueke, Methodist’s CEO and president, announced the hospital would undertake a 30-day review of its policies, which is scheduled to conclude this week. A few days later, the hospital suspended ongoing and new legal actions against patients. Methodist did not respond to questions about the status of its review but has defended itself and highlighted the benefits it delivers to the community.

During the past month, MLK50 consulted with consumer advocates and legal experts around the country about how Methodist could reform its policies. For many, the top priority was to stop the lawsuits. Close behind, they said, was for the hospital to expand its financial assistance policy to include poor people who have health insurance but can’t afford their deductibles or co-pays.

Aggressive debt collection practices are not only bad for patients, they’re also bad for the hospital, if it wants patients to be able to pay their hospital bill at some time in the future, said Simon Sandoval-Moshenberg, legal director at the Legal Aid Justice Center in Virginia.

“By getting a judgment against somebody, you are trashing their credit and thereby making it that much more difficult to ever lift themselves out of poverty,” Sandoval-Moshenberg said.

One tool that could help low-income patients, he said, would be presumptive eligibility, similar to the free lunch model adopted by public school districts. Instead of figuring out which students in which schools come from low-income families, some high-poverty districts provide free lunches to all students. “They just take out the cash registers,” he said. Methodist could exempt from lawsuits all patients who live in high-poverty ZIP codes, Sandoval-Moshenberg said.

Methodist’s aggressive collection practices stand out in a city where nearly 1 in 4 residents live below the poverty line. Memphis anchors the second-poorest large metropolitan area in the nation, where jobs have long been concentrated in low-wage industries such as warehousing and logistics. More than 40% of Memphis workers earn less than $15 an hour, according to one economic development report.

Going forward, the hospital must work closely with patients to understand their unique financial situations and train staff to help patients apply for any assistance available, said Jessica L. Curtis, a senior adviser at Community Catalyst, a national advocacy organization, and Mark Rukavina, business development manager at Community Catalyst’s Center for Consumer Engagement in Health Innovation.

“According to Methodist’s own tax documents, half of their bad debt — outstanding bills Methodist was unable to collect — were associated with people who should have qualified for their financial assistance policy,” they wrote in a July 19 column for MLK50.

“This is a high percentage, and Methodist should work with patients and their advocates to understand what went wrong. The burden here is on the hospital, not its patients, to improve its procedures.”

A Reprieve, Not a Solution

Methodist suspended court collection activities over unpaid medical bills on July 3. Since then, the hospital’s attorneys have dropped more than 100 suits, temporarily sparing those defendants, including one who had been sued for just under $25,000.

But a reprieve is not a solution, said Dr. Marty Makary, a Baltimore surgeon and author of “The Price We Pay: What Broke American Healthcare — and How to Fix It.”

“Suspending lawsuits is one step, but where’s the apology for suing low-income patients?” he asked. “Where’s the humility that we got this wrong? Where’s the honesty instead of the corporate speak and PR-authored statements?”

Methodist, which is affiliated with the United Methodist Church, has declined repeated requests to interview hospital executives. But over the last few weeks, hospital administrators have held more than 20 meetings with their employees to get feedback on billing and financial assistance policies.

The hospital has also taken its listening tour to Methodist clergy members. On July 10, the Rev. Dr. Albert Mosley, Methodist’s chief mission integration officer and senior vice president, met at Covenant United Methodist Church with about 50 clergy members, including the Rev. Anthony Anderson, a United Methodist elder at Faith United Methodist.

Anderson said he’s told hospital leaders that the only acceptable resolution is forgiving all existing debt, in keeping with the Old Testament practice known as the Year of Jubilee.

Anderson was surprised to hear Mosley tell the clergy gathered that Methodist does not sue patients who earn less than $50,000.

Mosley’s statement is contradicted by court records. A reporter reviewed more than 100 sworn affidavits filed by people sued by Methodist. In only two cases did a defendant report an income over $50,000.

In addition, a reporter also reviewed the income tax returns or pay stubs of several defendants, including Carrie Barrett, a clerk at Kroger who was profiled in the first MLK50-ProPublica story. She made $13,800 in 2018, according to her tax return.

Methodist officials did not answer questions about whether Mosley misspoke or if lawyers or others working for the hospital-owned collection agency had violated the hospital’s rules. In a statement sent Monday, a hospital spokesperson said Methodist is “still engaged in the comprehensive review of our financial assistance policies and procedures and will share an update when the review is complete.”

Meanwhile, local elected officials, including Shelby County Commissioner Tami Sawyer, a Democrat, continue to explore government solutions.

On July 17, Sawyer, who chairs the commission’s law enforcement committee, called for ideas to help low-income defendants without attorneys who have been sued for unpaid hospital or medical debt or who are facing eviction.

Commission Chairman Van Turner, an attorney who represents clients in General Sessions Court, suggested the county hire an advocate or staff attorney for litigants representing themselves.

However, Shelby County attorney Marlinee Clark Iverson said the county can only employ attorneys to represent the county. She suggested that any advocate for low-income defendants be funded by a grant and managed by a nonprofit such as Memphis Area Legal Services, which already provides help for defendants facing evictions, as well as limited assistance for people who have been sued for hospital or medical debt.

In their column, Curtis and Rukavina praised the hospital’s community health initiatives and its Congregational Health Network, a partnership between the hospital and around 500 faith-based organizations.

“This is a golden opportunity for Methodist, as a charitable institution, to right a wrong and learn from its mistakes. Taxpayers support nonprofit hospitals, and in turn, these hospitals have a legal obligation to provide benefits to the communities they serve,” they wrote.

“Nonprofit hospitals interested in improving community health ignore their own billing and collections policies at their peril — and at the cost of patient well-being.”

Makary, the Baltimore surgeon, devoted a chapter in his book to a hospital system in Virginia that regularly sued poor patients. He and his colleagues would go to court to advocate on behalf of the patients. Last month, that hospital also suspended lawsuits.

“Billing quality is medical quality,” Makary said. “The financial toxicity is a medical complication. How you treat a patient both medically and financially is part of how you are caring for them.”

Wendi C. Thomas is the editor of MLK50: Justice Through Journalism. Email her at [email protected] and follow her on Twitter at @wendicthomas.

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