Not-For-Profit Hospitals Class Action Litigation Press Release

Not-For-Profit Hospitals Class Action Litigation Press Release

Date: Thursday, June 17, 2004 at 7:00 AM CDT
Contact: Richard Scruggs
Scruggs Law Firm, P.A.
(662) 281-1212

Uninsureds Bring Class Actions Against Nonprofit Hospitals
For Failing to Provide Government Required Charity Care
Litigation is Focused on Assuring that the Nonprofit Hospitals
Properly Fulfill Their Missions and Obligations of Providing Charity Care to Those Who Need it Most
For Immediate Release

Oxford, Mississippi (June 17, 2004)– Class actions have been filed against some of the largest nonprofit hospitals in the U.S. by uninsured patients of said hospitals.  The litigation seeks to stop nonprofit hospitals from intentionally failing to fulfill their agreements with the United States Government, states, and local counties to provide charitable medical care to their uninsured patients in return for substantial tax exemptions.  Named as a conspirator in the litigation is the American Hospital Association (“AHA”), the national trade association for nonprofit hospitals, who advise and provide substantial assistance to the defendants on all manners of hospital operation, including billing and collection practices concerning the uninsured.

Uninsured patients allege that the named hospitals retain hundreds of millions of dollars annually as a result of their tax-exempt status, in exchange for which the hospitals should be providing charity care.  Instead, the hospitals charge the uninsured “sticker” prices for healthcare, an amount higher than any other patient group, and then, when the uninsured can’t pay, harass the uninsured through, among other tactics, aggressive collection efforts such as garnishment of wages and bank accounts, seizures of homes, and personal bankruptcies.

In addition to saving and amassing millions via unpaid taxes, the cases allege that the named hospitals benefit from income from their “for profit” operations.  These benefits often result in hospitals holding millions of dollars in offshore bank accounts located in havens which are known for secrecy, and where no taxes on these funds can be levied.   Notably, none of these excesses are used for the reason the tax exempt status was allowed by the government: providing charitable care for the uninsured. 

The litigations that have been filed are as follows:

• In Illinois: Defendant: Advocate Health Care Network and Advocate Health and Hospitals Corporation– Civil Action No.#04C 4062; United States District Court for the Northern District of Illinois, Eastern Division; litigation filed by Clifford Law Offices, P.C. and Scruggs Law Firm, P.A.
• Defendant: Provena Health and Provena Hospitals — Civil Action No.#04C 4063; United States District Court for the Northern District of Illinois, Eastern Division; litigation filed by Clifford Law Offices, P.C. and Scruggs Law Firm, P.A.
• In Minnesota: Defendant: Fairview Health Systems — filed in the United States District Court District, District of Minnesota; litigation filed by Zimmerman Reed LLP and Scruggs Law Firm, P.A.
• Defendant: Allina Health System — filed In The United States District Court District, District of Minnesota; litigation filed by Zimmerman Reed LLP and Scruggs Law Firm, P.A.
• In Ohio:  Defendant: Catholic Healthcare Partners, Community Health Partners, Community Health Partners Hospital and Surgical Center — Case No: 1:04CV1151; United States District Court for the Northern District of Ohio, Eastern Division; litigation filed by Weisman, Kennedy & Berris Co., L.P.A. and Miraldi & Barrett Co., L.P.A.
• In Texas:  Defendants: East Texas Medical Center Regional Healthcare System East Texas Medical Center – Jacksonville, East Texas Medical Center, and American Hospital Association — filed in The United States District Court for the Eastern District of Texas, Marshall Division; litigation filed by Scruggs Law Firm, P.A. and The Richards Law Firm.
• In Georgia: Defendant: Phoebe Putney Health Systems, Inc.; Phoebe Putney Memorial Hospital, Inc. — filed in The United States District Court in the Middle District of Georgia; litigation filed by Vroon & Crongeyer, LLP and Barrett Law Office.
• Defendant: Wellstar Health Systems, Inc.; Douglas Hospital, Inc.; Kennestone Hospital, Inc.; Cobb Hospital, Inc. — filed in The United States District Court in the Middle District of Georgia; litigation filed by Vroon & Crongeyer, LLP and Barrett Law Office.
• Defendant: DeKalb Medical Center, Inc.; Dekalb Regional Healthcare Systems, Inc. — filed in The United States District Court in the Middle District of Georgia; litigation filed by Vroon & Crongeyer, LLP and Barrett Law Office.
• Defendant: Medical Center of Central Georgia, Inc., Central Georgia Health Systems, Inc., Medcen Community Health Foundation, Inc.; filed in The United States District Court in the Middle District of Georgia; litigation filed by Vroon & Crongeyer, LLP and Barrett Law Office.
• In Alabama: Defendant: Baptist Health Systems, Inc.; filed in The United States District Court Northern District of Alabama Southern Division; litigation filed by Law Offices of Archie Lamb, LLC and The Langston Law Firm.
• In Florida: Defendants: Baptist Hospital of Miami, Inc.; Baptist Health South Florida, Inc.; Civil Action No.#04-21437; filed In The United States District Court for the Southern District of Florida; litigation filed by De La O & Marko, Scruggs Law Firm, P.A. and Vroon & Crongeyer, LLP.
• In Tennessee: Defendant: St. Thomas Hospital, Inc.; filed In The United States District Court for the Middle District of Tennessee; litigation filed by Barrett Law Office.

Cases of a similar nature are expected to be filed in the near future against additional major hospitals in other states.

In the cases filed, the defendant nonprofit hospitals are charged with breaches of contract; breaches of good faith and fair dealing; breaches of charitable trust; consumer fraud and deceptive business practices; violations of the Emergency Medical Treatment and Active Labor Act; unjust enrichment; civil conspiracy; conspiring with the AHA, and aiding and abetting with respect to the breaching of their tax exempt agreements.

The cases highlight that the defendants have operated free from federal and state taxes because they promised the government to operate as a charity provider of healthcare for the uninsured and that they would not engage in business “directly or indirectly, for the benefit of private interests.”  In reality, the defendants do just the opposite.  The defendants violate the federal and state prohibition against profiteering by “private interests” through either board members and/or physicians whose for-profit businesses are favored and subsidized by the “tax-free” organization.

Private insurance companies and governmental third party payors also benefit from the tax-exempt hospitals’ operations, each receiving large discounts off of the “sticker” price that only uninsured patients pay.  Thus, only the uninsured, those who should be receiving charity care, pay the hospitals’ highly inflated rates that bear no connection to the actual cost of providing the service.

The cases further assert that the defendants use “creative” accounting practices to grossly distort the small amount of charity care they provide to their uninsured patients, typically reporting the amount of charity care as the amount of gross charges – which are significantly inflated – rather than the cost of actually providing the service.

The cases allege violations of the Emergency Medical Treatment and Active Labor Act (EMTALA) in that before the defendants admit uninsured patients, they require their patients to sign a form contract promising to pay the defendants in full for unspecified and undocumented charges for medical care that are set by the defendant nonprofit hospital at its sole discretion.  The defendants will not admit a patient into their emergency rooms for emergency medical care unless and until that patient agrees to pay in full for such unspecified and undiscounted charges, a practice that clearly violates EMTALA.

The cases seek monetary damages for the cost of medical care charged, injunctive relief and the imposition of constructive trusts to be imposed on the defendants and from these trusts medical care will be paid for to the plaintiffs and class in each case.

A telephone press conference will be held today, Thursday, June 17, 2004 at 1:30 p.m. ET / 12:30 p.m. CT / 11:30 a.m. MT; 10:30 a.m. PT. You can access the press conference by calling telephone number (719) 457-2634.  A webcast and corresponding slide presentation will be available at www.nfplitigation.com or www.cliffordlaw.com/notforprofit/disclaimer.aspx; To help ensure the conference begins in a timely manner, all participants should dial in 5 to 10 minutes prior to the scheduled start time.

There will be a replay of the conference call from 5:30 p.m. ET through midnight Thursday, July 1st.  The replay telephone number is (719) 457-0820. The access code for the replay is #245342.

Additional information, including the lawsuit, can be accessed at www.nfplitigation.com or www.cliffordlaw.com/notforprofit/disclaimer.aspx