Despite State Measures, New Yorkers Fear Health Care Over Medical Debt Lawsuits

Recent legislation has sought to rein in medical debt collection. But the bills don’t stop lawsuits in the first place — and some patients decline care out of financial concern.

Churchill Ndonwie   ·   October 27, 2023
Exterior of a hospital with cars and motorcycles parked in front
Glens Falls Hospital, part of the Albany Med Health System. | JBC3 via Wikimedia Commons

In February 2017, Russell Gosselin was admitted to Glens Falls Hospital for oropharyngeal cancer, a throat cancer caused by HPV. He underwent one surgery to remove his tonsils, another to take a piece of his tongue, and numerous radiology treatments. Almost a year later, the hospital billed him over $17,500.

The hospital told him not to worry about the cost. Since Gosselin didn’t have insurance, he qualified for financial assistance, which brought his bill down to just shy of $5,000 — a sum higher than most Americans have in savings. Gosselin still couldn’t pay.

So in 2020, the hospital sued him through the medical debt collector agency Overton, Russell, Doerr, and Donovan, LLP, or ORDD. Gosselin said he repeatedly tried to set up a $20 monthly payment plan, but the agency declined. Instead, it began garnishing $100 a month from his paycheck.

“My boss told me, ‘I hate to do this to you. But I have to take $100 a week out of your check to pay this bill for Glens Falls Hospital,’” Gosselin told New York Focus.

The wage garnishing stopped when he changed jobs. Gosselin believes that was because of a bill Governor Kathy Hochul signed last year, which makes it illegal to garnish wages and place liens on people’s homes to cover medical debt. She has yet to indicate whether or not she’ll sign another bill, passed by the state legislature in June, to ban reporting medical debt to credit bureaus.

Despite these measures, many patients around New York remain wary that hospital fees could bankrupt them. Neither piece of legislation stops hospitals from suing patients to collect medical debt in the first place. And the state has not assigned an agency to enforce the ban on garnishing wages, leaving it up to the hospitals to honor the spirit of the law.

As a result, the decision not to seize assets from indebted patients looks more like “best practices” than an actual requirement, according to Elisabeth Benjamin, vice president of health initiatives at the Community Service Society. And it’s difficult to track compliance, she added, since the legislation doesn’t include reporting requirements.

Asked about the plan, the state Department of Health could not say how the ban would be enforced and referred New York Focus to the governor’s office, which did not respond to a request for comment.

“I’m currently under care still, but will not go back. Will leave in God’s hand.”

—Russell Gosselin

Ge Bai, a professor of accounting and health policy at Johns Hopkins University, said that for any business to survive, they must go after their debt. She said hospitals rely on the good faith of patients who can pay and insurance companies to continue functioning. But when a hospital cannot collect a debt from a patient who can pay, they can write it off as bad debt — which means the hospital gave up on collecting payment.

“The problem comes when the bill collection is against the people who would be eligible to charity care,” a free or discounted financial assistance program, she said.

Glens Falls Hospital, part of the Albany Med Health System, said it wrote off $6.7 million in 2022. The hospital has filed 559 lawsuits against patients who couldn’t cover their bills since 2018, for debts ranging from under $300 to over $51,000.

It sometimes sued the same patient multiple times in the same year. One patient was sued in June 2021 for failing to pay $7,700 a year prior, then twice more in August of that year. With interest and court administration fees piled on, the hospital said, the patient now owed $21,900.

“Like all hospitals, Glens Falls Hospital works closely with our patients to help them understand their financial responsibilities for services provided,” a spokesperson for the hospital told New York Focus. “Our billing practices, patient financial assistance, standard charges, and a machine-readable file of shoppable services — services a healthcare consumer can schedule in advance — are easily accessible on our website.” The spokesperson said they could not comment on specific instances of patient billing. ORDD, the collection agency, could not be reached for comment.

Gosselin ended up abandoning his chemotherapy appointments while fighting his lawsuit, knowing he couldn’t afford to miss another day of work.

“If my pay gets garnished, I will lose everything,” he wrote in a letter to the court. “I’m currently under care still, but will not go back. Will leave in God’s hand.”

When Gosselin’s wages stopped getting garnished, he felt some relief. But he won’t return to the hospital. The last time he got hit with medical bills, he had just bought a home with his girlfriend, who then left him. He could barely pay mortgage payments on his $700-a-week salary as a butcher.

“I’m afraid to go back there and have them charge me a million dollars to get taken care of,” he said. “Just can’t afford it.”

Russell Gosselin’s letters to the court.

Most of New York’s more than 200 nonprofit hospitals don’t sue patients who are unable to pay for care, or only do so rarely, a 2022 Community Service Society report found. Among major hospital systems the CSS report tracked, the Albany Med Health System was the median: It filed 1,838 lawsuits between 2015 and 2020.

“I am defenseless against these ruthless lawyers for the hospital. My family and I will never go there again for anything after this nightmare,” wrote Steve McIntosh, another patient, in his statement to the court after Glens Fall Hospital sued him.

McIntosh visited Glens Falls Hospital in 2018 for blood work and was charged over $1,800. According to court records, he repeatedly disputed the charges with the hospital, to no avail. The court ruled in favor of the hospital. After court fees and interest, McIntosh had to pay $2,950.

In cases where patients don’t show up or dispute debt charges, courts can issue default judgments against them. Ninety-eight percent of cases in New York are won by default, according to the 2022 CSS report on medical debt.

Berneta Haynes, a senior attorney at the National Consumer Law Center, said default judgments are even more common when the patients don’t physically attend court.

“Unfortunately, other than the patients themselves lawyering up and or going to the media, there’s not often a whole lot that they can do once it’s gotten to this stage,” she said, referring to when debt collections get to the point of a lawsuit.

Typical default judgment outcomes long included liens on homes and wage garnishment, now prevented by the 2022 law. But hospitals can still go after other assets, like bank accounts and tax refunds.

Russell Gosselin stands on grass with a paved road and a tree branch behind him
Russell Gosselin suspects he might still have cancer — but he says he can't afford to go back to the hospital. | Churchill Ndonwie

The federal Affordable Care Act requires nonprofit hospitals to have a financial assistance policy for patients who can’t pay and to make reasonable efforts to determine if a patient is eligible for financial assistance before engaging in extraordinary collections measures. But enforcement is weak.

“Right now, there’s no standard saying whether they are fulfilled or not. The IRS has a very weak language,” said Bai.

New York has additional requirements at the state level: It’s one of 20 states requiring hospitals to assist low-income residents financially regarding medical care. The state provides hospitals with funds to help cover losses when patients can’t pay, called the Indigent Care Pool (ICP).

Like the IRS rules, state law does not detail what hospitals’ financial policy and assistance applications should include. The program distributes $1 billion of ICP funding to hospitals each year. The 2022 CSS report found that roughly three-quarters of hospitals that sued patients between 2015 and 2020, including Glens Falls Hospital, ended up with excess ICP funds.

In its 2022–2024 community service plan, Glens Falls Hospital noted that the average household income of the region it serves is $74,555, more than $30,000 below the statewide average. The hospital emphasized its mission to serve patients of low socioeconomic standing. For patients like Gosselin, it felt like a different story.

During his visits from 2017 through 2019, Gosselin told the hospital numerous times he had “financial constraints,” according to his medical record.

“Patient was encouraged to establish with a [primary care physician], but he is limited by the cost and lack of insurance,” the doctor wrote in his clinic notes. The hospital still billed him enough to discourage him from pursuing care.

Ursula Rozum, a healthcare organizer for Citizen Action New York, said she worked with patients who did not know hospitals offered financial assistance programs or that they themselves qualified for such programs.

“What we’re finding is that people either aren’t aware that it’s even an option, or the application can be so complicated that people really get discouraged and don’t apply,” Rozum said.

Senator Gustavo Rivera, the chair of the chamber’s health committee, sponsors a bill to create a uniform financial assistance policy for hospitals receiving ICP funds and to require them to expand eligibility and protections. The uniform financial assistance form requirement was passed with this year’s state budget and will go into effect in 2024, but the rest is yet to be voted on.

Lawmakers have also worked to address the impact of debt on patients’ financial health, passing a bill this summer to prohibit hospitals from reporting medical debt to credit bureaus. According to the Urban Institute, roughly 740,000 New York residents have medical debt on their credit reports. A Consumer Financial Protection Bureau study showed patients experienced a 25-point increase in their credit score when medical debt fell off their credit reports.

“It is absurd that individuals have to endure severe financial burdens because they get sick.”

—State Senator Gustavo Rivera

Assemblymember Amy Paulin, chair of the chamber’s health committee and sponsor of the bill, said some credit agencies have pushed back on the legislation implementation timeline, asking for more time to adjust their processes for the changes.

“I don’t anticipate a veto” from Hochul, Paulin said, “but I do think there might be some tweaks to the bill she might look to accomplish.”

Federal policymaking may outpace state action: In September, the Biden administration announced plans to ban the practice through the Consumer Financial Protection Bureau.

Rivera believes medical debt should not exist. He introduced another bill to create a three-year pilot program in which the state would partner with nonprofits to purchase the medical debt of eligible residents from providers, modeled after RIP Medical Debt, which buys medical debt at a fraction of the cost through donor funding.

“I believe it is absurd that individuals have to endure severe financial burdens because they get sick,” Rivera said.

Gosselin said he wakes up every morning nauseated and vomiting. He has lost weight. He is not able to eat. He is grateful the hospital saved his life — but he still won’t return there, fearing the bill he might incur.

“I wonder every day about my health,” he said. “I just wonder if I still got cancer.”

Churchill Ndonwie is a reporter with Columbia Journalism Investigations, where he reports on immigration for the Global Migration Project. He covers immigration and healthcare.
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