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

“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.

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.”

“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.