Injured In A Crash? Some Hospitals Will Skip The Insurance And Go Right To Seizing Wages And Home (Updated)

Illustration for article titled Injured In A Crash? Some Hospitals Will Skip The Insurance And Go Right To Seizing Wages And Home (Updated)
Photo: Photo by Apu GOMES / AFP (Getty Images)

Have you had any fury with your coffee this morning? If not, here’s a story to angry up the blood: Wealthy hospitals are using a century-old law to skip billing legitimate insurers and instead are going directly after the poorest victims of car accidents. No surprise, it’s to maximize profit.

(Correction Monday February 8, 2021 11:50 a.m.: this article incorrectly referenced ‘Medicare’ instead of ‘Medicaid.’ We regret the error.

Parkview issued us the following statement:

In limited cases, Parkview puts a lien on an accident victim’s settlement, in order to properly collect reimbursement from the liable third-party insurance company, in accordance with state law. It does not seek wage garnishments or foreclosures.

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Parkview wishes to note Medicaid was expressly carved out of Indiana’s Hospital Lien Act in 2013, which is why Parkview understood that Medicaid should not be billed before the auto insurer. The court changed its interpretation of this law in 2020, and Parkview has fully complied with this change. The same court had expressly told us a year prior to bill Medicaid second and has always followed the court’s interpretation.)

Hospitals have been skipping their billing of Medicaid and even veterans’ insurance, instead putting liens on patients’ assets, usually their homes — and it’s all perfectly legal. The New York Times investigated one of the most egregious abuser, Parkview Hospital system, a nonprofit in Fort Wayne, Indiana, which is already known for having the second-highest healthcare prices in the U.S.:

By using liens — a claim on an asset, such as a home or a settlement payment, to make sure someone repays a debt — hospitals can collect on money that otherwise would have gone to the patient to compensate for pain and suffering.

They can also ignore the steep discounts they are contractually required to offer to health insurers, and instead pursue their full charges.

The difference between the two prices can be staggering. In Ms. Smith’s case, the bills that Medicaid would have paid, $2,500, ballooned to $12,856 when the hospital pursued a lien.

“It’s astounding to think Medicaid patients would be charged the full-billed price,” said Christopher Whaley, a health economist at the RAND Corporation who studies hospital pricing. “It’s absolutely unbelievable.”

Parkview argued in a legal brief last June that Medicaid is not health insurance, but rather government assistance. That claim allowed — at least in the minds of Parkview’s lawyers — the hospital to go after struggling people for literally everything they’re worth, just because they committed the grave sin of being involved in an auto accident:

The hospital contended that patients should be held accountable for their medical bills rather than relying on the government. “By forcing hospitals like Parkview to submit its charges to the state-administered Medicaid program, the court will ignore the public policy goals of holding individuals responsible for their actions,” Parkview argued.

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Yeah! Pull yourself up by your bootstraps already, severely injured poor person. It’s not like you need your house or those wages that the hospital will eventually garnish.

Parkview is a particularly bad actor (and its claim that Medicaid isn’t health insurance was roundly rejected by a judge) but it’s not alone. One hospital gave a woman a form to bypass her insurance when she was suffering from a head injury after a crash. In Tennessee, a hospital that’s part of the Community Health Systems network refused to charge a veteran’s health insurance after a former service member was injured in a car crash. Instead, the hospital filed liens against a vet’s home for the full price of his care:

“I could cut off a finger and the V.A. would cover it,” Mr. Greenbaum said, adding “the insurance is just that good.” The worst part, Mr. Greenbaum said, was the nearly constant collection calls that made him feel like a “real deadbeat.” Mr. Greenbaum is now part of a lawsuit against the hospital, Tennova Healthcare Clarksville, that accuses it of predatory lien practices.

Ann Metz, a spokeswoman for Tennova, said that “Tennessee state law allows hospitals to file provider liens as a way to ensure that health care providers can be paid for treatment.”

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And here’s the worst part: It’s all fairly legal, based on laws states enacted over a century ago when only 10 percent of Americans had health insurance. And while hospitals like Parkview take things to the extreme, these predatory practices happen in hospitals every day, especially if the hospital system is particularly wealthy, the Times found. Many of these predatory hospitals received huge bailouts from taxpayers. Without fail, when the Times reached out to these hospitals, representatives told reporters that the hospitals were acting within well-established state laws.

These shady health insurance practices around car crash victims don’t just stop at the individual, however. My home state of Michigan has cripplingly expensive car insurance — the highest in the nation — in part because the state’s no-fault, unlimited-liability law lets hospitals charge whatever they want for treating car crash victims. From Crain’s Detroit Business:

With no statutory limits on how much money Michigan hospitals and doctors can charge in a system that’s beset by nearly constant litigation, the average cost per auto accident injury claim topped $75,600 in 2013. That’s more than five times the next highest state, New Jersey, which recorded a $13,630 average in medical costs for each injured motorist.

“I don’t know of anything that has a claim severity that remotely approaches $75,000 per claim,” said Jim Lynch, chief actuary at the Insurance Information Institute, a Washington, D.C.-based industry group. “I think that’s up there with flood insurance.”

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The tripling of costs per injured driver and passenger between 2000 and 2013 outpaced medical inflation for that period by nearly 90 percent, a Crain’s analysis show.

“Medical costs are going up anyway, but when you have a blank check it is not surprising that people are taking advantage of that,” said state Rep. Lana Theis, chair of the House Insurance Committee.

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I don’t know about you, but when I hear about older people, veterans and poor people being squeezed for all they are worth by powerful and rich hospitals for getting treatment after what is often a life-changing and violent experience, I start to feel like we don’t actually have the greatest health system in the world or something.

Managing Editor of Jalopnik.

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DISCUSSION

mikaelvroom
MikaelVroom

This happened to us. Wife was feeling faint at work, co-worker called an ambulance after wife specifically asked her not to. Ambulance took her to the hospital, she’s just fine and she finally got a hold of a friend to pick her up.

Two years later we get a notice that our state tax refund is being garnished to pay off outstanding medical debt due to a specific policy in Iowa.

https://tax.iowa.gov/expanded-instructions/refunds-may-be-used-pay-debt-2014

Turns out the ambulance company tried to contact/bill my wife at her parents’ old address, one where she hadn’t lived for a decade, and an address that her current employer and insurer never had. They made no other attempts to contact us or collect from our insurance.

Of course, by now it was too late to manually submit to our insurance, so we’re now on the hook for a full $800 charge for a two block ride to the hospital instead of the couple hundred dollar “negotiated” rate the ambulance company would have collected from our insurance company.

So weird that they couldn’t for the life of them find us when they were trying to bill our insurance, but had no problem at all locating us when it was time to garnish our tax refund.

We took the ambulance company to small claims court where the judge determined that the ambulance company was not legally obligated to bill our insurance, so they did nothing wrong and we were fully responsible for the entire bill out of pocket.

👌👌👌

The whole system is beyond broken.