Not-For-Profit Hospitals Class Action Litigation Press Release
Date: Wednesday, August 04, 2004 at 11:30 AM CDT
Contact: Richard Scruggs
Scruggs Law Firm, P.A.
(662) 281-1212Largest Rural Nonprofit Hospital in America Becomes First to Reach Settlement with Uninsureds– North Mississippi Health Services System Agrees To Provide Charity Care To Uninsured Patients And Reinforce Policies Related to Collection Practices, Corporate Governance and Conflicts Of Interest –
– NMHS Leads the Way in Crafting a Model For Nonprofit Hospital Systems To Fulfill Their Mission and Obligations –
– Settlement Could Relieve Poor Patients from Stress of More than $150 million in Debt –
For Immediate Release
Oxford, Mississippi (August 5, 2004)– North Mississippi Medical System (“NMHS”), the largest rural hospital system in the United States, has agreed to provide unparalleled benefits to uninsureds in a class action settlement announced today. The settlement, the first of its kind since class action lawsuits were launched in June against nonprofit hospitals for shirking their government-mandated obligation to provide charity care to uninsured patients, will provide substantial benefits to uninsured patients; namely, free care, discounted care and repayment of charges paid in the past three years by uninsureds. The settlement is a model for nonprofit hospital systems to fulfill their mission to provide charitable healthcare to uninsured patients.
The settlement includes North Mississippi Health Services’ affiliated system of six hospitals, multiple clinics, and two outpatient surgery centers. Collectively, the system has 650 beds, more than 4,000 employees and over $1 billion in annual billings.
NMHS, which is not a defendant, agreed to this landmark settlement amid controversy, Congressional hearings and lawsuits related to non-profit hospitals’ treatment of uninsured patients. Since June 17, 2004, 40 class action lawsuits have been brought against hospital systems and hospitals and the American Hospital Association (“AHA”) for breaching their obligation to provide government-mandated charity care to uninsured patients in return for substantial tax exemptions from which they have reaped millions upon millions of dollars. As described in the lawsuits, the defendants have formulated and implemented the practice of overcharging uninsured patients more than any other patient group and deploying abusive collection techniques, such as placing liens on homes and causing freezes on credit card accounts, to collect on the inflated bills that the patient cannot afford to pay. By failing to meet their obligations to uninsured patients and yet continuing to benefit from tax exemptions, the defendants are also victimizing the taxpayer who in effect is paying the “insurance premium” for the nonprofit hospital to provide charitable healthcare to uninsured patients.
Richard Scruggs, a lead attorney on behalf of the plaintiffs in the class action litigation, stated, “This is a win-win for uninsured patients and the hospital. For the uninsured patients, it enables the hospital to make financially whole those who may have been overcharged and puts criteria in place to ensure that hospitals will not overcharge patients in the future. It also reaffirms NMHS’s commitment to the guidelines for the nonprofit hospital with respect to transparency, financial reporting, conflicts of interest and inurement. Significantly, we have achieved a consensual solution that fulfills the rights and needs of the uninsured patient and at the same time does not impair the financial well being of the hospital. We are pleased that this accord was reached even without a lawsuit being filed against NMHS.
In the settlement, NMHS and its nine provider affiliates have agreed to implement a new policy for providing discounted or free care to uninsured patients, which will commence on October 1, 2004. Specifically, the settlement financially protects uninsured patients by stipulating that NMHS and its affiliates will never attempt to collect more than 10% of an individual patient’s annual income in a given year. NMHS will provide free medical care to uninsured patients with household income at or below 200% of the federal poverty level (FPL). The hospitals will also base the financial liability of the class of uninsured patients with household income below 400% of the FPL by substantially discounting the uninsured patient’s inpatient services to no more than the Medicare rate and discounting all other procedures to 51% of billed charges where there is no Medicare rate.
The hospitals will then further discount services to individuals according to the following calculation:
Uninsured Patient Financial Assistance Guidelines Income level (of FPL) Discount off of discounted rate 0 – 200% 100% 201% - 250% 50% 251% - 300% 40% 301%- 350% 25% 351%- 400% 15% Moreover, class members who have received medical treatment from NMHS or its affiliates in the past three years will be entitled to have their hospital bills recalculated in accordance with the above formula and will be refunded all or a portion of the amount paid and/or a reduction of their outstanding bill as if this discount policy had been in effect when they received treatment.
Under the settlement agreement, NMHS also agreed to a set of policies that will modify its charges to uninsured patients in the future. NMHS has formalized its existing policy against engaging in aggressive collection techniques such as placing liens against real estate or personal property or reporting the patient’s inability to pay medical bills to credit reporting agencies. In addition, the hospital system has consented to it and its collectors’ complying with The Fair Debt Collection Practices Act.
NMHS has reaffirmed its commitment to treat uninsured patients with dignity, respect and compassion and to provide emergency healthcare services to uninsured patients in accordance with the law. According to the settlement, NMHS will also provide expanded notice of its charity care policy and will provide financial counseling to uninsured patients regarding their medical bills.
NMHS will comply with applicable provisions of the Sarbanes-Oxley Act of 2002 and has developed a comprehensive conflict of interest policy to identify and address any possible conflicts of interest. These actions are intended to ensure sound financial, business and accounting procedures and to ensure the proper allocation of resources so that the hospital system’s revenues are reinvested into the community healthcare system.
All current and future affiliates of NMHS have agreed to the settlement, including North Mississippi Medical Center, Clay County Medical Corporation, Marion Regional Medical Center Inc., Pontotoc Health Services, Inc., Tishomingo Health Services, Inc., Webster Health Services, Inc., North Mississippi Medical Clinics, Inc., North Mississippi Pain Management Center, LLC and North Mississippi Ambulatory Surgery Center, LLC.
All members of the uninsured class seeking a refund of their past bills must file claims with the claims administrator within a claims period that will be determined by the court. For Information regarding filing a claim, please go to www.nfplitigation.com.
A telephone press conference will be held today, Thursday, August 5, 2004 at 3:00pm Eastern Time. You can access the press conference by calling (800) 474-8920. A webcast of the press conference and a copy of the MOU will also be available at www.nfplitigation.com.
There will be a replay of the conference call available beginning at approximately 6:00pm (Eastern Time) at (888) 203-1112. The access code is 66589.