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How Rich Hospitals Profit From Patients in Car Crashes

As part of its check-in process, a Catholic hospital in Oklahoma offers some accident victims a waiver to sign stating they do not want their health plan billed for care. One patient received the waiver shortly after a car accident in which her head hit the windshield. She said she had no recollection of signing the document, but faced a $34,106 lien as a result.

“The way they are spinning it is, you don’t want to use your health insurance because someone else caused this,” said Loren Toombs, an Oklahoma trial lawyer who represented the patient. “It’s clearly a business tactic and a huge issue, but it’s not always illegal.”

Hospitals have come under scrutiny in recent years for increasingly turning to the courts to recover patients’ unpaid bills, even in the midst of the coronavirus pandemic. Hospitals, many of which received significant bailouts last year, have used these court rulings to garnish patients’ wages and take their homes.

But less attention has been paid to hospital lien laws, which many states passed in the early 20th century, when fewer than 10 percent of Americans had health coverage. The laws were meant to protect hospitals from the burden of caring for uninsured patients, and to give them an incentive to treat those who could not pay upfront.

A century later, hospital liens are most commonly used to pursue debts from car accident victims. The practice can be so lucrative, documents and interviews show, that some hospitals use outside debt collection companies to scour police records for recent accidents to make sure they identify which of their patients might have been in a wreck, so that they can pursue them with liens.

Some laws limit what share of a patient settlement a hospital can lay claim to, and others allow only nonprofit hospitals to collect debts this way. Certain states require hospitals to bill accident victims’ health plans rather than using a lien. This approach is seen as more consumer-friendly because patients benefit from the discounts that health plans have negotiated on their behalf.

“If there is a patient that has viable coverage from multiple sources, it would be a reasonable position to seek payment from whoever is going to pay more,” said Joe Fifer, chief executive of the Healthcare Financial Management Association, a trade group of hospital financial officers.

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