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Hospital Debt Collection Practices Come Under Scrutiny


Medical debt is the single greatest cause of bankruptcy filings in the United States and poses an especially crushing burden on low-income individuals. According to a study conducted by Harvard Medical School, the percentage of bankruptcies attributable to medical issues rose by 49.6% between 2001 and 2007. The bullying practices of debt collection from low-income patients as conducted by hospitals, however, is coming under scrutiny by federal officials, and may be against the law.

Federal law mandates that hospitals claiming tax-exempt status must provide care free of charge to certain low-income patients who would otherwise be forced to forego treatment, essentially in exchange for the tax subsidization these institutions receive. Some hospitals have attempted to avoid this responsibility, however. One non-profit hospital has become so notoriously abusive of its debtor patients that it was called out publicly by a US Senator. Mosaic Life Care—formerly Heartland Regional Medical Center before rebranding itself as Mosaic—collected approximately $12 million by garnishing the wages of some 6,000 low-income patients between 2009 and 2013. As a result of reporting done on this hospital, Sen. Charles Grassley sent a letter to the institution pointing out that its failure to properly care for its poor patients may mean that it is in violation of federal law and its obligation to reduce costs for qualifying patients. Grassley described the results of studies of Mosaic which found that the hospital regularly failed to identify the patients in its care who are eligible for financial aid, subsequently forcing low-income individuals without the ability to pay into collections and garnishment. Mosaic has gone so far as to create a subsidiary for-profit debt collection organization called Northwest Financial Services. Mosaic had a financial aid system in place but did not guide low-income patients toward this system. If the patient didn’t already know to apply for the available assistance, they didn’t get it.

All hospitals now have a duty to determine which of their patients might qualify for financial aid. The 2010 Affordable Care Act includes a provision requiring hospitals to make “reasonable efforts” to find out if the patient qualifies for financial aid prior to sending the patient into collections or suing for the unpaid balance. Additionally, the IRS has issued a set of rules to clarify the requirements imposed on hospitals to investigate patients’ ability to pay prior to sending those patients to collections.

If you are struggling with medical bills and aren’t sure where to turn for help, seek the knowledgeable counsel of Bowling Green attorney Lanna Martin Kilgore. Ms. Kilgore is experienced with the issues of bankruptcy and debt collection, and knows how to help you get back on your feet. Call 270-781-3833 for help with your debt issues in Warren, Simpson, Butler, Allen, and Logan counties, as well as throughout Southern Central Kentucky.

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