Grassley Calls on Nonprofit Hospitals to Stop Suing Poor Patients

Sen. Chuck Grassley (R-IA) has issued a warning to a nonprofit hospital in Missouri that it could be breaking the law when it sues poor patients over unpaid bills, ProPublica and National Public Radio report.

Citing an earlier ProPublica/NPR report which found that Heartland Regional Medical Center, a nonprofit hospital in St. Joseph, Missouri, had garnished the wages of thousands of low-income patients who were unable to pay their medical bills, Grassley sent the hospital — which recently was rebranded as Mosaic Life Care — a letter last week warning that it "may not be meeting the requirements to be a nonprofit, tax-exempt hospital." The letter included a series of questions about the hospital's treatment of low-income patients, its debt collection practices, and its financial assistance program.

According to ProPublica/NPR, the hospital's for-profit debt collection subsidiary, Northwest Financial Services, filed thousands of lawsuits a year over unpaid bills, garnished the wages of about six thousand people, and seized at least $12 million between 2009 and 2013. In response to the article, the hospital announced a review of its debt collection practices.

The issue of nonprofit hospitals dodging their charitable responsibilities under the law is not a new one, according to Grassley, who, as chair of the Senate Finance Committee a decade ago, launched an investigation into the issue. Now chair of the Judiciary Committee, Grassley said he was "astounded" that some hospitals continued to aggressively pursue the debts of poor patients who should have qualified for financial assistance. Moreover, said Grassley, it didn't appear that Mosaic had made "reasonable efforts" to determine whether patients qualify for financial assistance before taking aggressive action such as filing a lawsuit — as required by a provision in the 2010 Affordable Care Act he co-authored. While the Internal Revenue Service recently issued new rules requiring nonprofit hospitals to make information about their financial assistance policies more accessible and to communicate directly with patients before taking legal action, the agency gave the hospitals wide latitude to interpret the rules as they saw fit.

Grassley acknowledged that fact, but told ProPublica/NPR that he hoped his focus on the Missouri hospital's debt collection practices would serve to remind other hospitals of "their humanitarian responsibilities" and "the responsibilities they have as a nonprofit." "If they don't get the message now," he added, "we'll have to work towards getting the ideal language in the legislation."

Paul Kiel, Chris Arnold. "Senator to Hospitals: Stop Suing Poor Patients." ProPublica and National Public Radio 01/22/2015. Paul Kiel, Chris Arnold. "Senator 'Astounded' That Nonprofit Hospitals Sue Poorest Patients." National Public Radio and ProPublica 01/22/2015.