Hospital lawsuits, the next tobacco industry?
Mon Jul 19, 2004 10:18 am
Unfortunately I have been paying close attention to this since I work in the industry. Scruggs is trying to make this the next tobacco suit. Already one hospital has lost its not-for-profit status over this, which is an unbelievably huge deal. The fines they are talking about are can be enormous, and many hospitals just won't be able to afford them. Here in NY, they just named our largest health system as a defendant.
If this is successful, we will see hospital closing in large numbers for the first time. And while I don't think that the hospitals are innocent, this isn't the issue to get them on. Again....my $.02.
By Julie Appleby
USA TODAY
The hospital industry, already facing criticism on several fronts, has a new concern: a flurry of lawsuits against non-profit facilities by high-profile law firms.
The cases are adding to a growing debate over charity care provided by the nation's non-profit hospitals, which represent 85% of the industry.
Led by attorney Richard Scruggs, well known for spearheading multibillion-dollar lawsuits against the tobacco industry, the firms have filed 31 lawsuits in federal court since June. The cases target nearly 300 facilities, alleging they act more like for-profit entities than tax-exempt charities.
The hospitals, through their trade group, the American Hospital Association, say the lawsuits are baseless and will be fought. ''Our concern is they will divert focus away from the real issue of how we're going to care for the uninsured in this country,'' says AHA spokeswoman Alicia Mitchell. ''The lawsuits will consume already limited health resources.''
The lawsuits come after a year that has seen the industry under attack on several fronts: for charging uninsured patients more than what insurers would pay for the same services, rapidly rising prices and aggressive collection practices. Such practices have included placing liens on homes, attaching wages and even arresting some debt-owing patients.
Scruggs says he wants hospitals to refund money to uninsured patients whom he says were overcharged for services, stop hounding low-income patients for payments and stop signing exclusive agreements with groups of doctors in which the physicians get free use of the facilities, but other doctors are shut out. If successful, judges also could award attorney's fees to the law firms based on a portion of the amount repaid by hospitals or a flat fee.
Some hospitals have recently changed their billing and collection programs by offering sliding-scale discounts to low-income uninsured patients.
Patient advocates, who were the first to publicize some of the concerns now included in Scruggs' cases, have mixed thoughts on the lawsuits. ''This is a huge wake-up call,'' says Claudia Lennhoff of the Champaign County Health Care Consumers group in Illinois.
They also worry about the financial effect of the cases on non-profits.
''Having more scrutiny of billing practices is a good thing, but the risk is we're not taking on big tobacco, we're taking on a vital service,'' says Mark Rukavina of the Access Project, a national resource center that works with local groups on health care issues. ''It's an industry I want to preserve, not bring down.''
Some health law attorneys are skeptical that Scruggs' arguments will succeed.
''The behaviors they're targeting (billing and collection practices against the uninsured) are atrocious in some circumstances, but they're not illegal,'' says Gregg Bloche, a law professor of health law at Georgetown University. ''The suits will fail.''
Nor do they think there is an implied contract between hospitals and the government.
''That's never been recognized in the law,'' says Stuart Gerson, a partner at Epstein Becker & Green in Washington, D.C., who represents a hospital being sued. ''The idea of an individual citizen, a taxpayer, seeking to enforce charitable obligations is, at least, a very novel argument that finds little support.''
If any laws are being broken by the common hospital practice of allowing for-profit doctors to use their facilities, or if facilities are improperly steering business to trustees' companies, those arguments should be heard by taxing authorities or federal and state antitrust or anti-kickback regulators, Gerson says.
The lawsuits are renewing debate over the legal and ethical responsibility the nation's non-profits have to provide charity care.
''The IRS has never been really clear about what the grant of tax-exempt status means,'' says attorney John Reiss of the law firm Saul Ewing in Philadelphia. ''It's never been clear that it actually commits you to providing any particular amount of charity care or anything else.''
Non-profit hospitals say they provide a variety of charitable services. Hospitals have different ways of classifying such care, with some saying charity is providing medical services to anyone who walks in the ER, regardless of their ability to pay.
Others consider write-offs for bad debt charity care or financing community services, such as supporting health clinics.
In late June, hospital CEOs were called before Congress. At that hearing, House Ways and Means Committee Chairman Bill Thomas, R-Calif., challenged the non-profit side of the industry.
''If in fact there are as many for-profits that can be shown to give a break to low-income (patients) as not-for-profits, then that's not really a difference for receiving the tax benefit,'' Thomas said.
If this is successful, we will see hospital closing in large numbers for the first time. And while I don't think that the hospitals are innocent, this isn't the issue to get them on. Again....my $.02.
By Julie Appleby
USA TODAY
The hospital industry, already facing criticism on several fronts, has a new concern: a flurry of lawsuits against non-profit facilities by high-profile law firms.
The cases are adding to a growing debate over charity care provided by the nation's non-profit hospitals, which represent 85% of the industry.
Led by attorney Richard Scruggs, well known for spearheading multibillion-dollar lawsuits against the tobacco industry, the firms have filed 31 lawsuits in federal court since June. The cases target nearly 300 facilities, alleging they act more like for-profit entities than tax-exempt charities.
The hospitals, through their trade group, the American Hospital Association, say the lawsuits are baseless and will be fought. ''Our concern is they will divert focus away from the real issue of how we're going to care for the uninsured in this country,'' says AHA spokeswoman Alicia Mitchell. ''The lawsuits will consume already limited health resources.''
The lawsuits come after a year that has seen the industry under attack on several fronts: for charging uninsured patients more than what insurers would pay for the same services, rapidly rising prices and aggressive collection practices. Such practices have included placing liens on homes, attaching wages and even arresting some debt-owing patients.
Scruggs says he wants hospitals to refund money to uninsured patients whom he says were overcharged for services, stop hounding low-income patients for payments and stop signing exclusive agreements with groups of doctors in which the physicians get free use of the facilities, but other doctors are shut out. If successful, judges also could award attorney's fees to the law firms based on a portion of the amount repaid by hospitals or a flat fee.
Some hospitals have recently changed their billing and collection programs by offering sliding-scale discounts to low-income uninsured patients.
Patient advocates, who were the first to publicize some of the concerns now included in Scruggs' cases, have mixed thoughts on the lawsuits. ''This is a huge wake-up call,'' says Claudia Lennhoff of the Champaign County Health Care Consumers group in Illinois.
They also worry about the financial effect of the cases on non-profits.
''Having more scrutiny of billing practices is a good thing, but the risk is we're not taking on big tobacco, we're taking on a vital service,'' says Mark Rukavina of the Access Project, a national resource center that works with local groups on health care issues. ''It's an industry I want to preserve, not bring down.''
Some health law attorneys are skeptical that Scruggs' arguments will succeed.
''The behaviors they're targeting (billing and collection practices against the uninsured) are atrocious in some circumstances, but they're not illegal,'' says Gregg Bloche, a law professor of health law at Georgetown University. ''The suits will fail.''
Nor do they think there is an implied contract between hospitals and the government.
''That's never been recognized in the law,'' says Stuart Gerson, a partner at Epstein Becker & Green in Washington, D.C., who represents a hospital being sued. ''The idea of an individual citizen, a taxpayer, seeking to enforce charitable obligations is, at least, a very novel argument that finds little support.''
If any laws are being broken by the common hospital practice of allowing for-profit doctors to use their facilities, or if facilities are improperly steering business to trustees' companies, those arguments should be heard by taxing authorities or federal and state antitrust or anti-kickback regulators, Gerson says.
The lawsuits are renewing debate over the legal and ethical responsibility the nation's non-profits have to provide charity care.
''The IRS has never been really clear about what the grant of tax-exempt status means,'' says attorney John Reiss of the law firm Saul Ewing in Philadelphia. ''It's never been clear that it actually commits you to providing any particular amount of charity care or anything else.''
Non-profit hospitals say they provide a variety of charitable services. Hospitals have different ways of classifying such care, with some saying charity is providing medical services to anyone who walks in the ER, regardless of their ability to pay.
Others consider write-offs for bad debt charity care or financing community services, such as supporting health clinics.
In late June, hospital CEOs were called before Congress. At that hearing, House Ways and Means Committee Chairman Bill Thomas, R-Calif., challenged the non-profit side of the industry.
''If in fact there are as many for-profits that can be shown to give a break to low-income (patients) as not-for-profits, then that's not really a difference for receiving the tax benefit,'' Thomas said.
Mon Jul 19, 2004 11:17 am
Let me explain how that worked out for the smokers.
Used to be, before the lawsuits, I could buy a carton of cigarettes for approximately 20 dollars. After the lawsusit were filed and setled I paid thirty dollars a carton.
Under the old system the government took roughly half of the 20 dollars and Phillip Morris took the other half. A 50% tax! WOW!
Now they both get their Ten Dollars. But that extra Ten PM takes and hands over to the Lawsuits. So now in effect the product price went up by 50% and now the government gets over 70%! (including state and federal taxes)
So if these lawsuits are played out what do you think is going to happen?
The cost of these lawsuits are going to be passed on to the consumer. So those "low-income" people that slimeball Scruggs says he is trying to help are going to end up being charged even more for services (some life threatening) that they couldn't afford in the first place!
Used to be, before the lawsuits, I could buy a carton of cigarettes for approximately 20 dollars. After the lawsusit were filed and setled I paid thirty dollars a carton.
Under the old system the government took roughly half of the 20 dollars and Phillip Morris took the other half. A 50% tax! WOW!
Now they both get their Ten Dollars. But that extra Ten PM takes and hands over to the Lawsuits. So now in effect the product price went up by 50% and now the government gets over 70%! (including state and federal taxes)
So if these lawsuits are played out what do you think is going to happen?
The cost of these lawsuits are going to be passed on to the consumer. So those "low-income" people that slimeball Scruggs says he is trying to help are going to end up being charged even more for services (some life threatening) that they couldn't afford in the first place!
Mon Jul 19, 2004 11:21 am
I bet Scruggs is all set to give his fees to the people that lost out .... RIIIIIIIIGHT. Laywers like him make me sick too and are the cause of more probelms than solutions.
Mon Jul 19, 2004 11:37 am
Gotta go with Ingus and Face on this one...thill will end up hurting the people that Scruggs gives lip-service to wanting to help.
Speaking of lawyers like him...isn't there someone running for national office that made millions in a similar fashion...hmm...name's Edwards or something like that....
Originally posted by Face
I bet Scruggs is all set to give his fees to the people that lost out .... RIIIIIIIIGHT. Laywers like him make me sick too and are the cause of more probelms than solutions.
Speaking of lawyers like him...isn't there someone running for national office that made millions in a similar fashion...hmm...name's Edwards or something like that....
Mon Jul 19, 2004 11:41 am
It took ALL my willpower to exclude that from my post ... but the damn is broken now *SPLASH* 