Memphis Hospitals Suspend Debt Collection Suits, Including Suits Against Employees

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

Methodist Le Bonheur Healthcare, the largest hospital system in Memphis, Tenn., said it has suspended "court collection activities" over unpaid medical bills — just days after an investigation by MLK50 and ProPublica (which also appeared on NPR) detailed its relentless pursuit of debts held by poor people and even its own employees.

"We recognize that we serve a diverse community and we are always thinking about how we can do more and serve our community better," Methodist said in a written statement. "Over the next 30 days we will be reviewing our policies and procedures to ensure we are doing everything possible to provide the communities we serve with the care and assistance they need. Also, we will immediately suspend any further court collection activities during this period.

"As a learning organization that is committed to continuous quality improvement, we want to be absolutely sure that our practices continue to support our mission and vision of improving every life we touch regardless of ability to pay."

Methodist dropped more than two dozen cases that were set for initial hearings on Wednesday's morning docket at Shelby County General Sessions Court.

"Currently, Methodist is in the process of reviewing its collection processes," R. Alan Pritchard, one of Methodist's attorneys, told General Sessions Court Judge Deborah M. Henderson.

"You are free to leave," Henderson told one defendant, who looked puzzled, a purse on her shoulder and a folder full of papers in her hand.

Henderson called the names of other defendants whose cases were on the docket.

Again and again, Pritchard said: "Dropped, please, your honor."

One of the defendants whose case was dropped is Adrien Johnson, who works for the city of Memphis. Methodist sued him this year for an unpaid hospital bill of more than $900.

Reached by phone, Johnson said he believes the hospital bill was for X-rays he had taken while he was covered by his wife's insurance. Wednesday was his first court date, and after the hearing, he said he wasn't clear what the status of his debt was.

"I don't know what they're doing," he said. "I need to find out what's going on."

From 2014 through 2018, the hospital system affiliated with the United Methodist Church filed more than 8,300 lawsuits, according to an MLK50-ProPublica analysis of Shelby County General Sessions Court records. That's more than all but one creditor during that five-year period.

One story by the news organizations chronicled the struggle of Carrie Barrett, who makes $9.05 an hour at Kroger, to pay her 2007 hospital bill for $12,019. The bill has ballooned to more than $33,000 due to interest and attorney's fees.

Another story detailed how Methodist sues its own employees, some of whom make less than $13 an hour, for unpaid bills related to care delivered at its hospitals. Its health plan doesn't allow workers to seek care at hospitals with more generous financial assistance policies.

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 mounted.

With $2.1 billion in revenue and a health system that includes six hospitals, Methodist leads the market: In 2017, it had the most discharges per year and profits per patient, according to publicly available data analyzed by Definitive Healthcare, an analytics company.

Methodist says it has "a hospital in all four quadrants of the greater Memphis area, unparalleled by any other healthcare provider in our region," plus more than 150 outpatient centers, clinics and physician practices. The system also said it provides community benefits of more than $226 million annually.

The number of lawsuits Methodist files isn't out of proportion to its size, at least compared to competitor Baptist Memorial Health Care and Regional One Health, the county's public hospital. But Methodist stands out in other respects.

Its financial assistance policy, unlike those of many of its peers around the country, all but ignores patients with any form of health insurance, no matter their out-of-pocket costs. If they are unable to afford their bills, patients then face what experts say is rare: A licensed collection agency owned by the hospital.

Also, after the hospital sues and wins a judgment, it repeatedly tries to garnish patients' wages, which it does in a far higher share of cases than other nonprofit hospitals in Memphis. A court-ordered garnishment requires that the debtor's employer send to the court 25% of a worker's after-tax income, minus basic living expenses and a tiny deduction for children under age 15.

Methodist secured garnishment orders in 46% of cases filed from 2014 through 2018, compared with 36% at Regional One and 20% at Baptist, according to an analysis of court records by MLK50.

Methodist's announcement was welcomed by some local lawmakers.

"Methodist has been such a great community partner throughout Shelby County that I'm glad to hear they're reviewing their process over the next 30 days," said Shelby County Commissioner Mickell Lowery, whose district includes Methodist University Hospital.

U.S. Rep. Steve Cohen, D-Tenn., said: "I was surprised to read about Methodist Le Bonheur's billing practices, and I'm glad that the company is re-examining them. ... I will continue to monitor this situation and look forward to the company's assessment."

But the Rev. Anthony Anderson, a United Methodist elder at Faith United Methodist in Memphis, was more reserved.

"I am still heartbroken, and I say that spiritually," Anderson said. "It breaks my heart to know that a Methodist-related entity, a hospital, would have these types of practices."

He welcomed the policy review, but only if it leads to the complete erasure of all outstanding patient debt.

"This debt needs to be wiped away," Anderson said. "That will be the direction I will be pushing towards as a Methodist — that we don't burden families with these type of financial penalties."

New data obtained from Shelby County General Sessions Court shows that Methodist has filed more than 600 new lawsuits this year. Its most recent suits were filed on June 21, days before the MLK50-ProPublica stories were published. Its most recent garnishment order was filed on Tuesday.

Wendi C. Thomas is the editor of MLK50: Justice Through Journalism. Email her at wendicthomas@mlk50.com and follow her on Twitter at @wendicthomas.

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