It is 9:30 a.m. on July 24, another Carilion day in small claims court.
A computer printout tacked to a bulletin board outside Roanoke General District Court lists 123 cases in which Carilion Clinic is suing its former patients for unpaid medical bills. The docket runs nine pages long, from Agee to Yopp.
Princess Moyer shows up pushing a baby stroller. Moyer’s name is on the list. She takes a seat in courtroom No. 4.
The caseload on this day represents just a tiny fraction of Carilion’s debt collection practice, which is so extensive that court officials usually set aside one day a week just for the health care system.
Over the past 5 1/2 years, Carilion Clinic and its affiliates have obtained about 33,000 judgments in Roanoke’s small claims court, according to a computer analysis of court records. While the total amount of those judgments was not available, Carilion’s figures show it was awarded $61.6 million in Roanoke and surrounding jurisdictions over the past three years.
Carilion says it has an obligation to collect from nonpaying patients to avoid higher costs for those who do pay. The health care system has a charity care program and says it takes legal action only against those it believes are able to pay their bills.
Still, Carilion accounted for 40 percent of the total judgments since 2003 in Roanoke General District Court — putting the health care system far ahead of any landlord, bank, or other business that sues for unpaid bills.
And unlike most of the other plaintiffs, Carilion is a nonprofit organization.
In exchange for its nonprofit status and the tax breaks worth tens of millions of dollars that come with it, Carilion has a charitable mission that includes providing health care to more than 1 million residents of Western Virginia, whether they can afford it or not.
Moyer says she cannot.
A single mother of two, Moyer is in court to contest Carilion’s claim that she owes them $420.25. The bill dates to November 2005, when Moyer took her then 1-year-old son, Jayden, to the emergency room at Carilion Roanoke Community Hospital with an earache.
When her case is called, Moyer pushes the stroller holding her 5-month-old daughter, Mikayla, up to the judge’s bench. Mikayla sleeps quietly through a brief conference with Judge Fred King and a Carilion representative.
Moyer says Jayden was covered by Medicaid. That might be true, the hospital counters, but Moyer did not present her Medicaid card at the time of his treatment, and then she failed to respond to inquiries about the bill. So she owes Carilion the money.
Moyer insists she gave hospital officials the card. The judge postpones the hearing to give her more time to prepare.
“I didn’t bring a camera [to the emergency room] to show me handing them the Medicaid card,” Moyer says later, outside the courtroom. “I didn’t think that was necessary. So I’m not sure how I can prove it.”
She also wonders why Carilion — which has annual revenues of about $1 billion — is so determined to collect a bill for $420.25 from a single mother looking for a job.
“It seems like a hassle to me, all these years later,” Moyer says.
But case No. GV08007717 remains pending. Moyer is told to return to court for another hearing Sept. 4.
Treating the poor
Although thousands of patients have found themselves in Moyer’s predicament, there is a way for the poor to get treated at a Carilion facility without being sued for nonpayment.
Carilion’s charity care program provided about $42 million in free treatment in fiscal year 2007 at its eight hospitals across Western Virginia, said Eric Earnhart, spokesman for the health care system.
Under the policy, anyone who earns twice the federal poverty guideline amount or less is eligible. That means a single person earning $20,800 or less can receive free treatment; so can a family of four with an income of up to $42,400.
Discounts are also available to individuals and families with incomes of up to four times the federal poverty guideline. To qualify for charity care, patients must complete a questionnaire listing their wages, real estate holdings and other sources of income, such as public assistance or disability.
But even when there’s a plan to treat the poor, some people still get treated poorly.
Many hospitals don’t do enough to inform their patients of their charity care policies, according to an investigation of medical collection practices conducted in 2005 by a coalition of legal aid attorneys in Virginia.
“It is one thing to have financial aid and charity care policies in place; it is quite another to make them accessible to the public,” the advocacy team concluded in its report. “It is in this latter area that a majority of hospitals have failed.”
Carilion says it places a high priority on educating the public about charity care, spending $1.5 million a year to employ more than 100 case managers, social workers and other staffers to work with patients.
But it also admits that some people will fall through the cracks — especially those who don’t provide their financial information to hospital officials.
“That’s probably the biggest challenge we face: just getting the information to make an informed decision,” said Don Lorton, Carilion’s chief financial officer. “People don’t come in with it tattooed across their forehead that ‘I’m charity care.’ So we don’t know.”
Critics say Carilion should do more to help its low-income patients.
“We have some big-time problems with Carilion,” said Pat Palmer of Salem. Palmer is the president of Medical Recovery Services, a company that assists patients in debt collection disputes, and the founder of Medical Billing Advocates of America.
“When they send the bill for full-bore charges knowing there’s a possibility the patient qualifies for charity care, in my opinion, Carilion is deliberately taking money from patients when they know the patient does not have to pay, according to their own policies,” Palmer said.
Deciding who to sue
The only people it sues for unpaid medical bills, Carilion says, are the ones it believes have the means to pay them.
Don’t tell that to David Crimmins.
Last November, Crimmins showed up at the emergency room at Roanoke Memorial Hospital after he aggravated the herniated disc in his back when he fell off a ladder while painting.
A house painter who made $15,000 last year, Crimmins qualified for charity care and was not billed. But just two months later, Carilion filed court papers to have his wages garnished for a bill from nearly 10 years ago.
Like most of the people who get sued by Carilion in small claims court, Crimmins didn’t bother to show up and fight.
“It wasn’t worth me losing a day’s pay,” said Crimmins, who based his decision on lost battles he and other family members have waged with Carilion in the past. “They’re going to get what they want.”
“I pretty much told them, ‘Do what you want to do,’ ” Crimmins said during a July interview in the modest rental house where he and his girlfriend, Melissa Hicks, live. They struggle to raise 6-month-old Patrick and 2-year-old David on an income so meager they can’t afford a telephone or a car. The family scrapes by from paycheck to paycheck, food stamp to food stamp.
“You can’t get blood out of a turnip,” Crimmins said of the hospital’s efforts to garnish his wages. “But I guess they proved me wrong.”
Earlier this year, at the direction of a General District Court judge, Crimmins’ employer began withholding money from his paycheck — at least $97 a week, more if he pulled overtime — to satisfy a $1,939.01 judgment against him by Carilion that dated to 1999.
While Crimmins does odd jobs on weekends to make up the difference, he sees Carilion spending millions on a new medical school and complex along Reserve Avenue. “They’re making it all pretty and nice and forgetting about the poor man who is out there working,” he said.
When asked by The Roanoke Times recently about Crimmins’ case, Carilion acknowledged it should not have brought legal action against him. The health care system has since canceled the garnishment proceedings and says it likely will refund his money.
Earnhart, the Carilion spokesman, said the case shows what can happen when patients don’t communicate with the hospital, either by not providing their financial information at the time of treatment or by failing to respond to the legal proceedings that can follow.
As with Crimmins, “when you have multiple accounts, covering several years, and limited communication with the patient, things become very fragmented and difficult to coordinate — and it makes it difficult for us to walk that fine line between making a good faith effort to collect from those who can pay, and excluding those who can’t,” Earnhart wrote in an e-mail.
When a patient provides no information, “we have to assume they don’t qualify” for charity care, he said.
Admitting that the system is far from perfect, Carilion is developing a financial database that will help identify the needy among its list of delinquent accounts. The system could be implemented as early as this fall.
Carilion officials said it’s not uncommon to stop the collection process once they learn that someone is too poor to pay. They also acknowledged there’s no way to tell how many patients may have slipped through the cracks that exist between charity care and legal action.
“It falls into the category of ‘we don’t know what we don’t know,’ ” Lorton said.
Crunching the numbers
More than 33,000 judgments over the past five years sounds like a lot. And that doesn’t count the legal actions in other jurisdictions where Carilion has hospitals, such as Bedford, Franklin and Montgomery counties.
But Earnhart says it’s a relatively small number when compared with the 2 million patient visits every year to Carilion facilities, which include eight hospitals and dozens of doctor’s offices throughout Western Virginia.
Carilion says it has little choice but to sue — not just to prevent higher health care costs to its paying patients, but also to meet requirements by Medicare to make good-faith collection efforts.
And going to court doesn’t guarantee that the health care system gets its money. Of the $61 million awarded in judgments over the past three fiscal years, Carilion said it collected just $25 million. Additional debt is covered by thousands of liens placed on the homes of patients. Carilion does not foreclose on the homes, it said, but tries to collect its money when the properties are sold.
According to Carilion’s figures, the average amount for the 9,888 judgments it obtained systemwide last year was $2,465.
Hospitals suing over unpaid medical bills is a common practice across the country, said Rick Wade, senior vice president of the American Hospital Association.
“It is a practice that many hospitals have had to resort to,” Wade said. “They do it reluctantly.”
Lewis-Gale Medical Center, which is owned by for-profit HCA Inc., had significantly fewer court judgments than Carilion — about 1,800 over the past 5 years, according to a database of court records obtained by The Roanoke Times.
Mark Foust, vice president of communications for HCA’s Virginia division, declined to comment on why Lewis-Gale had so many fewer judgments than Carilion. “It is our preference and practice to work with patients to help create a way for them to meet their financial obligations to us,” he said.
But Lewis-Gale also spends less on charity care. Virginia Health Information, an independent group that tracks financial data on hospitals, reported that the Salem hospital provided $8.6 million in charity care in 2006. That’s about one-fifth of what Carilion spent in a year.
“I’d put Carilion in the good guy column,” said Jill Hanken, a Virginia Poverty Law Center staff attorney who specializes in health care. “They provide a lot of charity care.”
“They were wrong”
It is 2:30 p.m. on Sept. 4, and Princess Moyer is back in court on her warrant in debt from Carilion.
No one at Carilion has told Moyer what they told the newspaper the day before: Based on questions raised about her ability to pay, the case will be dropped.
Like Crimmins, Moyer failed to respond to Carilion’s inquiries about a bill that eventually led to legal action, Earnhart said.
“That said, it may have been possible for us to research the account and make a judgment call about charity care,” he said in an e-mail response to the newspaper’s questions. “But our manpower is limited, and much of it is spent working with the people who chose to communicate with us.”
“It appears that after almost two years in attempting to contact Ms. Moyer, this one ‘fell through the cracks,’ as it were, and went on to collections.”
Moyer, for her part, says she did talk with Carilion officials at the time and was under the impression that Medicaid would cover her son’s bill. She said she moved to Hampton for a year, came back to Roanoke, and didn’t hear anything more from Carilion until she took Mikayla to the emergency room with thrush. And in the process, she gave Carilion her current address.
A few days later, she said, a process server was knocking on her door with a warrant for the 2005 bill.
As far as communication goes, “somebody could have called me” to say the case would be dropped, Moyer said as she waited outside the courtroom for her case to be heard. By the time she found out, Moyer had already picked up Jayden from preschool early, arriving at the courthouse with the 4-year-old and a niece she was baby-sitting.
After requesting a dismissal order to save for her records, Moyer left the courthouse relieved that she wouldn’t have to pay $420.25 — a lot of money to her, less than a pittance to Carilion.
“They were wrong,” Moyer said.
“And I just hope they haven’t gotten anyone else like this. I hope people will come to court and fight it.”
Data delivery editor Matt Chittum contributed to this report.
CRITICS QUESTION IF HOSPITALS’ CHARITY CARE IS ENOUGH
Carilion is one of many hospitals that gets tax breaks in exchange for charity care.
By Laurence Hammack
As a Roanoke citizens group raises questions about Carilion Clinic’s tax-exempt status, similar concerns about nonprofit hospitals have been getting national attention.
In exchange for not having to pay taxes, nonprofit hospitals are required by the Internal Revenue Service to have a charitable mission to benefit the communities they serve.
How the hospitals fulfill that mission is the subject of recent and ongoing studies by the U.S. Senate Finance Committee, the Government Accountability Office, the Congressional Budget Office and the IRS.
A report by the GAO, the investigative arm of Congress, was recently completed and sent Friday to Sen. Chuck Grassley, R-Iowa, who requested the study more than a year ago. Grassley has 30 days to release the report; it was not clear last week when that will happen.
Grassley has questioned whether nonprofit hospitals are providing enough charity care, and whether heavy-handed debt collection practices are being applied to low-income patients.
“Some non-profit hospitals seem to forget that generous tax breaks subsidize their operations and that they’re obligated to fulfill their charitable mission of serving patients,” Grassley said in a statement last summer at a finance committee meeting.
In Roanoke, members of the Citizens Coalition for Responsible Healthcare contend that Carilion’s dominance of the local health care market has driven prices up. At a meeting last week, the group also heard complaints about Carilion’s practice of suing patients for unpaid bills.
“What we’re hearing is that the collection practices of Carilion are predatory,” coalition president Ken King said. Those concerns are heightened by Carilion’s nonprofit status.
Nationwide, hospitals avoid paying up to $20 billion in federal, state and local taxes because of their nonprofit status, according to a draft report from the finance committee, of which Grassley is the ranking member.
Carilion officials said that in 2006, its tax break amounted to about $52 million.
In what has become known in the health care industry as the “Grassley 5 percent,” the senator has proposed that nonprofit hospitals devote at least 5 percent of annual revenues to charity care in order to maintain their tax-exempt status.
By spending $42 million on charity care in fiscal year 2007, Carilion exceeded the 5 percent benchmark by $1 million, according to spokesman Eric Earnhart. The $42 million represents actual costs, not charges, and does not include $25 million in bad debt written off by Carilion and shortfalls in Medicare and Medicaid reimbursements, Earnhart said.
Some critics say putting 5 percent of revenue toward charity care is not enough. “That sounds like a penny in the bucket,” said Pat Palmer, a Salem resident and founder of Medical Billing Advocates of America, which works with patients who dispute their bills.
To Palmer, it’s hard to fathom that tax breaks intended for charities can be extended to Carilion, a huge corporation with net assets approaching $1 billion, more than 10,000 employees and ambitious plans to create a medical school and research park on a sprawling campus along Reserve Avenue.
“They are a nonprofit organization, but I have a problem with that when they own half of Roanoke,” Palmer said.
Being nonprofit doesn’t mean Carilion shouldn’t be making money, though. The tax-exempt designation simply requires the company to put all proceeds back into its health care mission, not into the pockets of owners or investors.
“Not-for-profit is somewhat of a misnomer,” Carilion chief financial officer Don Lorton said. “You have to make a profit to exist.”