State Treasurer and researchers highlight plight of NC residents with medical debt

Duke University Law professor Sara Sternberg Greene and state Treasurer Dale Folwell – Photo: Lynn Bonne

Each month, Donna Lindabury pays $35 on a hospital bill for her husband, Gary’s, 2009 quadruple bypass surgery. 

The Lindaburys knew Gary was gravely ill when he was airlifted from a hospital in Boone to Charlotte 14 years ago. They also knew they could not afford a big medical bill. Gary wasn’t working and Donna was making about $27,000 a year.  

They wanted to wait a bit before assenting to any costly treatment. Gary was about six months shy of his 65th birthday, when he would be eligible for Medicare, Donna said in a telephone interview.  

The hospital assured them there were programs that could help with the cost. But when the bills started coming, there was no help to be had. 

The Lindaburys have hospital debt they cannot pay off that includes a $100,627 interest payment that is bigger than the original debt, according to the North Carolina Treasurer’s office. 

Donna, 70, still works and has no hope of retiring. The Lindaburys are glad to still be living in their home of 20 years, but know eventually Atrium Health will eventually have possession of the mountain property.

“We pay the mortgage, taxes, insurance,” Donna said. “Whenever both of us die, they’re going to have a house we fully paid for.”

From January 2017 through June 2022, North Carolina hospitals sued about 7,500 patients and family members to collect medical debts,according to Duke University Law School researchers and the state Treasurer’s office. The 5,922 lawsuits resulted in 3,449 judgments against patients and family members. With fees and interest, the total came to $57.3 million. 

Lawsuits alone do not show the full scope of medical debt burdens in the state. The lawsuit total does not include bills turned over to debt collectors or payments financed with special medical credit cards. 

“It doesn’t capture third-party collections. It doesn’t capture other kinds of aggressive collections,” said Barak Richman, a Duke University Law School professor and one of the report’s coauthors. 

“This is just the tip of the iceberg for all collection efforts by hospitals,” he said.

The researchers found suits filed in small claims court, district court, and superior court. 

When hospitals sue, they have the upper hand. 

Nearly 60% of the district court judgments were default judgments, meaning the hospitals automatically won because patients did not come to court, according to the report. 

Some patients may not know they’re being sued, said Sara Sternberg Greene, a Duke Law professor and report co-author. They may also be still dealing with a serious illness, be unable to afford a lawyer or lack transportation to the courthouse, she said.

“Once patients lose or have a default judgment entered against them, the impacts can be colossal,” she said. A judgment against the patient acts as an automatic lien against their home.

“It’s another way large corporations are extracting wealth from patients,” Greene said. 

State law allows hospitals to charge 8% annual interest on medical debt. More than a third of the total medical debt described in the report is accumulated interest. In one in 10 judgments, hospitals charged patients more than $10,000 in interest, according to the report. 

Nonprofit hospitals sue most often, filing more than 90% of suits against patients. 

State Treasurer Dale Folwell is a critic of hospital billing and collection practices. A 2021 report from his office found that nonprofit hospitals do not provide charity care equal to the value of their federal, state and local tax exemptions.  

Though 26 hospital systems sued patients at some time during the study period, five hospital systems were responsible for more than 96% of suits, according to the study. 

Atrium Health filed 2,482 patient lawsuits, more than any other hospital system, the study said. Caromont was second with 1,783 lawsuits. 

In an email, Atrium Health said that under its current practice, it no longer sues patients or forecloses on property. Charlotte-based Atrium has a network of medical offices and hospitals in North Carolina, South Carolina, Georgia,and Alabama. The study released last week included North Carolina lawsuits only. 

Information provided by Folwell’s office shows that Atrium filed 101 lawsuits in North Carolina in the first six months of 2022.

Caromont Health said in an email that it files lawsuits in small claims court as a last resort, and those suits represent less than 1% of accounts. Caromont Health is based in Gaston County and has medical facilities in surrounding counties. 

Hospitals sue in small claims court if they’re trying to collect less than $10,000. 

“This action is taken only in situations where individuals do not meet the requirements for charity care, have chosen not to participate in other financial assistance programs and have not responded to multiple collection attempts,” the Caromont Health email said. 

The email added that the hospital provided $464 million in charity care over the time period covered in the report. 

Folwell used the study to push for passage of the “Medical Debt De-Weaponization Act.” The bill passed the Senate in May but is still sitting in the House Rules Committee. 

The bill would require medical facilities with at least $20 million in annual revenue to present patients with written financial assistance policies and screen them for programs that help with bills before seeking payment for emergency or medically necessary care.