Tax-Exempt Hospitals’ Practices Challenged | WP | 1.29.05
TUPELO, Miss. — When Tim Gardner was born at the hospital here 53 years ago, it was just “one little building on the hill” in a town best known as Elvis Presley’s birthplace.
From those humble beginnings, North Mississippi Medical Center has grown into the largest non-metropolitan hospital in the country, a booming enterprise with a complex of glass and marble buildings and 40 satellite clinics stretching into Alabama and Tennessee. The company, incorporated in Delaware, has nearly $300 million in the bank and “exceptional profitability,” according to one Wall Street rating agency.
And it pays no taxes. As one of 4,800 nonprofit U.S. hospitals, North Mississippi Medical Center is exempt from federal, state and local taxes in return for providing care to “charity patients.”
But when Gardner, who is uninsured and suffers from heart trouble, asked for more time to pay off a $4,500 bill, the response came in the form of a summons. The hospital sued him for the balance plus $1,100 in legal fees. …
“Their goal is to discourage these uninsured patients from returning,” said Richard F. Scruggs, the lead attorney. “If they paid taxes, I couldn’t complain. But these hospitals are given freedom from taxation for doing something.” …
“Mr. Scruggs is seeking to use the courts to reform the health care system,” said AHA executive vice president Rick Pollack. “We don’t think lawsuits are the answer to the problem of the uninsured.” …
Gardner, the cook who is a plaintiff in the North Mississippi suit, was surprised to learn that the hospital where he was born pays no taxes, charges uninsured patients higher rates and then picks on people such as him, “a guppy in the overall picture,” as he put it.
“Why do they take somebody who is visibly not having an easy time paying but is trying, and kick them when they’re down?” he asked. “It’s just wrong.”
Chronology is here