Memorial Hermann is Still Suing Uninsured Patients

Lawyers for Memorial Hermann Health System are still suing patients to collect medical bills. After years of suing uninsured patients in Harris County District Court, as the Houston Press reported in July 2013, Memorial Hermann, the largest nonprofit hospital system in Texas, stopped filing these lawsuits for bill payment in district court shortly after the Press article was published.

However, it turns out that Memorial Hermann has still been pursuing patient debts that were either not covered by insurance or were incurred by patients without insurance, those often least able to pay their full-price medical bills. Apparently the hospital lawyers were simply suing in the county civil courts at law instead of the state district civil courts. A Press audit of Harris County Clerk records shows that Memorial Hermann has actually sued more than 500 patients over the past 15 years in county civil court. Memorial Hermann is the plaintiff in 22 lawsuits to collect debts from uninsured patients in 2015 alone, with the most recent lawsuits filed on April 29.

According to the court records, the early lawsuits filed in county civil court back in 1999 were mostly focused on suing insurance companies for payment, but over time the focus shifted toward uninsured patients, reflected in the lawsuit filings. These patients were often being billed and then sued for the full "list price" of medical services since they didn't have a representative from either an insurance company or Medicaid to negotiate the price down, Houston medical malpractice lawyer Robert Painter says. Painter represented Ignacio Alaniz in in district court against Memorial Hermann in the case we wrote about in 2013. Alaniz and Memorial Hermann representatives ultimately agreed to a private settlement.

When the Press was reporting on the Alaniz case, Memorial Hermann spokesman James Campbell told us he couldn't comment on the case because it was then pending litigation. However, Campbell said that Memorial Hermann sees more uninsured patients in the community than any other hospital system in the area, including the Harris County Health System. Memorial Hermann donated just under $400 million in uncompensated care the previous year, he pointed out.

Now Memorial Hermann spokeswoman Alex Loessin describes these lawsuits to collect debts from patients as “very rare incidents” for Memorial Hermann, "a recourse of last resort" representing only a tiny percentage of the more than 1.8 million patients treated at the Memorial Hermann Health System within the last fiscal year. "We only take such legal action after reasonable efforts have been exhausted," she says. She also pointed to the charity programs the hospital provides and the large amount of uncompensated care the hospital system gives needy patients each year, more than $450 million in uncompensated care, including the dental vans that travel to certain Houston-area schools to provide free dental care to kids. 

Still, despite the good works, there's no getting around more than 500 cases filed to collect debt from patients since 1999. By comparison Houston Methodist Hospital System, another large nonprofit hospital system, only has about 50 lawsuits filed in county civil court to collect debt from patients — and that's counting the earliest suits filed in the 1960s to the most recent filed in 2012. The 2012 Methodist suit states that the patient in question agreed to pay a reduced cost for surgery before the surgery and then stopped payment on her check for the $17,000 surgery after it was completed. Methodist was seeking $50,000 or less in payment of the debt, according to court documents. A search for M.D. Anderson yielded no cases. The 29 cases linked to St. Luke's Episcopal Hospital go from the 1960s to 2009, with most of the suits filed against insurance companies. Texas Children's Hospital has only had a handful of cases over the past five decades.

In short, Memorial Hermann appears to be unique in its steady task of litigating patients. 

Loessin shared the Memorial Hermann take on why they use this approach with patients. She says:

"As a safety net hospital in the region, we have a significant responsibility to be good stewards of the revenue that patient care generates to continue to provide care to the indigent, uninsured and under-insured in our community. That means billing for services rendered and collecting payment on such services from those who have resources to pay for their care."
They run their charity arm based off the framework of the Federal and State law governing non-profit healthcare facilities providing that anyone under 200% of the Federal Poverty Level is eligible for financial assistance. In addition to meeting that requirement, Memorial Hermann offers a discount for those that are 201 percent to 400 percent of the FPL. (This does however mean that anyone above the 400 percent mark doesn't qualify for discounted care.) However, there are currently 30 active cases filed by Memorial Hermann, Loessin says.

Most of the cases play out the way Jacqueline Zackery's did. Zackery was admitted to Memorial Hermann on March 8, 2011 and then from May 22 to May 26, 2011, Memorial Hermann lawyers filed a suit for payment in April 2013 for $34,143.85 in unpaid hospital bills after the insurance rejected the claim, according to court records. Zackery was eventually successfully served but she never responded to the lawsuit or hired a lawyer and she didn't appear in court, according to the records. The judge on the case thus gave a default summary judgment in favor of the hospital leaving Zackery owing her full uninsured hospital bill with an additional 6 percent added for each year the debt has gone unpaid, plus $2,500 in lawyers fees.

Another patient, Eric Cummins initially paid $255 of a medical bill for more than $24,000, none of which was covered by insurance (many of the details of the medical bills including insurance status and the actual items and services being charged are blacked out in the court records due to medical privacy laws.) He was subsequently sued by Memorial Hermann lawyers in 2014 and received a default judgment. Each bill is blacked out so that it only shows the name and address of the patient, the date of admittance and discharge and each dollar-amount charge on the bill. The actual procedures and items the patient is paying for are also blacked out. Most of these bills showed that – whether because they are uninsured or because insurance perhaps didn't cover their hospital stay – that insurance paid nothing. In many cases the medical bills will show a small payment of $50 to $200 put down by the patient.

Sullins, Johnston, Rohrbach and Magers is the law firm that has represented Memorial Hermann in most, if not all, of the cases in recent years. The plaintiffs' original petitions only vary by name and the amount owed in medical bills. In each case filed by the law firm, the law suit lists off what they're asking the court to order the patient to pay, including the original medical bill, the “reasonable and necessary attorneys fees” (almost always $2,500), a “pre-judgment interest at the rate of six percent per anum” on the medical bill, all court costs, a “post-judgment interest on all of the above at the highest legal rate,” and any “such other and further relief, general or special, legal or equitable, to which the [p]laintiff may show itself entitled.”

Despite that intimidating-sounding list there's still a limit on how far a plaintiff can go in civil county court. Plaintiffs seeking monetary relief can file in county court if the amount including “damages of any kind, penalties, costs, expenses, prejudgment interest and attorneys fees” is less than $100,000, according to county court documents. There's also a great deal of range in the amounts that Memorial Hermann is trying to collect in these cases, from about $3,000 to more than $30,000, based on court records.

In some cases, these lawsuits are simply to collect debts. But in the case filed against Chante Woodard in 2013, it was actually over hospital bills that Woodard had already paid. In 2011, Woodard and her son were in a bad car accident and brought in to Memorial Hermann for treatment without health insurance. Woodard says she was awarded money for the accident and she used the funds to pay her outstanding medical bills both from the accident and from other visits to to Memorial Hermann from 2010 to 2012. “They didn't get paid until I got paid, but I had already paid them when I got that lawsuit. We had documentation,” she says. "It surprised me." In 2013 she was served with papers informing her she was being sued for lack of payment. Woodard says she contacted Memorial Hermann about the suit and showed hospital officials paperwork documenting that the bills for more than $12,000 had already been paid. She also answered the lawsuit with a general denial on the case and the case was dropped in October 2013.

In one recent case, Franky Nguyen was hit by a vehicle and brought to Memorial Hermann. Nguyen supports himself working part-time at a local Walmart, according to his lawyer, Painter. Painter agreed to take on Nguyen's case after Memorial Hermann lawyers filed a lawsuit against him in county civil court in March. The suit contended that Nguyen owed Memorial Hermann his full medical bills, more than $5,000. “These amounts they are seeking to collect are amounts ordinary patients would never be asked to pay because insurance or Medicare would negotiate the price down,” Painter says. “But Memorial Hermann is continuing its practice of suing patients that lack the resources to pay. For the life of me I have not been able to figure out why they are doing this, considering the charitable purpose for which this nonprofit was created.” Painter answered the lawsuit on behalf of Nguyen and the law firm representing the hospital withdrew the case. Nguyen is attempting to get insurance money from the insurance company of the person that hit him, Painter says. Painter says that Nguyen and Memorial Hermann representatives have agreed that Nguyen will pay the bill if he does get the insurance money.

Painter has long been puzzled by these cases brought by Memorial Hermann. He says – and court records reflect – that Nguyen's case is unusual. Most people don't answer the case or get a lawyer to represent them so Memorial Hermann lawyers arrive swiftly at the final legal conclusion. “Within days the lawyers are getting default judgments and once that default judgment is issued they're taking people who are already down and saddling them with the full weight of their medical bills, plus interest and legal fees.”
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Dianna Wray is a nationally award-winning journalist. Born and raised in Houston, she writes about everything from NASA to oil to horse races.
Contact: Dianna Wray