An Arm and a Leg: ‘An Arm and a Leg’: When Hospitals Sue Patients (Part 2)

Some hospitals sue patients who can’t afford to pay their medical bills. Such lawsuits don’t tend to bring in much money for the hospital but can really harm patients already experiencing financial hardships.

In this episode of “An Arm and a Leg,” Dan Weissmann goes toe-to-toe with Scott Purcell, CEO of ACA International, a trade association for the collection industry, on the effects these lawsuits have on patients.

With help from The Baltimore Banner and Scripps News, Weissmann pulls back the curtain on hospital bill lawsuits in three states — Maryland, Wisconsin, and New York — and discovers some good news for a change.

Dan Weissmann @danweissmann Host and producer of “An Arm and a Leg.” Previously, Dan was a staff reporter for Marketplace and Chicago’s WBEZ. His work also appears on All Things Considered, Marketplace, the BBC, 99 Percent Invisible, and Reveal, from the Center for Investigative Reporting. Credits Emily Pisacreta Producer Adam Raymonda Audio wizard Ellen Weiss Editor Click to open the Transcript Transcript: ‘An Arm and a Leg’: When Hospitals Sue Patients (Part 2)

Note: “An Arm and a Leg” uses speech-recognition software to generate transcripts, which may contain errors. Please use the transcript as a tool but check the corresponding audio before quoting the podcast.

Dan: Hey there – So, this is part two of a two-part story. If you missed part one, or just want a refresher, here’s three quick things: 

First: Some hospitals – definitely not all – sue a LOT of patients over unpaid bills. Hundreds or even thousands every year. 

Second: There’s very little money in it for these hospitals. When reporters and researchers add up the total amounts they’re suing for, it looks tiny compared to, say, their annual surplus. Or what they pay executives. Tiny.

Third: There’s data showing a LOT of the people being sued are … pretty hard up already. 

That a lot of them would qualify for charity care under the hospitals’ own financial-assistance policies.

In fact, as we reported last time, a guy named Nick McLaughlin, who spent a decade working for a medical-bill collections agency… now runs a business telling hospitals they’d be better off – financially – writing these bills off through charity care or financial assistance programs. 

And I should point out: Nick’s not a do-good crusader. He has started a business, to help hospitals do this. And he’s staked his family’s financial future on it.

Nick: I had a good but challenging conversation with my wife. And she said, hey, so is the reason we’re not doing this full time because we’re scared the money’s not gonna come in? And I said, well as the sole provider of a family of five that’s kind of a big deal. She said, yeah, I think we should do it.

Dan: And at the end of our last episode, I asked Nick: So, why would some hospitals make the decision to sue people, if there’s no money in it? What’s behind that decision:

Nick: It’s really, I would say, philosophically based.

Dan: So, in this episode, we’ll do two things: One, we’ll try to get a peek at that philosophy – inside the heads of the people who might hold it.

And TWO: We’re gonna share some hard data about what’s going on with these lawsuits in three states. We partnered with two awesome news organizations to get this data. 

And I’m gonna tell you: we found what really looks like some good news.

And the whole inquiry really drove home ways we can help ourselves, and each other. 

Here we go.

With Scripps News and the Baltimore Banner, this is An Arm and a Leg – a show about why health care costs so freaking much, and what we can may be do about it. 

I’m Dan Weissmann. I’m a reporter, and I like a challenge. So our job on this show is to take one of the most enraging, terrifying, depressing parts of American life and bring you something entertaining, empowering, and useful.

So, let’s talk about that philosophy. You could call it a form of… not thinking too hard. Let’s start with a witness. 

These days, Ruth Lande works for a nonprofit you may have heard of – RIP Medical Debt – to get hospital bills forgiven.

But WE talked with her because she spent more than 25 years working in hospital billing, most of it at Memorial Sloan-Kettering Cancer Center. And by the way, she loved it.

Ruth Landé: In general, I think it’s good if a job has three things. It’s for a good mission. Two, it should be hard. It should be complicated so it engages your brain every day. And third, it should be with really good colleagues. And I got to tell you, working revenue cycle satisfied all three of those for me. 

Dan: And of course, during her quarter-century in the business, the question of whether or not to file lawsuits over hospital bills did come up. 

When she got a promotion. 

In her earlier role, she’d run one part of the billing department, where they never sued. Now she was taking over another part of the billing department, a bigger one, where sometimes they did. 

She says her new colleagues were aware that in her earlier position, she’d taken a no-lawsuits approach.

Ruth Landé: There was an assumption, oh yeah, Ruth won’t allow that. 

Dan: But, she told me, she didn’t want to be in conflict with her new colleagues from Day One. 

Ruth Landé: And so I said, well, I’m not going to just ban it, but you know, bring me cases. If you believe that we should be suing a person, then just bring me the case so I can review it. And they never brought a case to me ever. 

Dan: Never ever. She thinks those colleagues maybe hadn’t stopped to look at who they were suing.

Ruth Landé: When you really examine closely you see the harm. I They would have probably imagined that they’re only suing some really rich people sitting up in a mansion somewhere, not bothering to pay their bills.

You might imagine: It would be interesting to talk with someone who thinks this way – really talk with them, push them on their point of view.

And that did happen. Kind of. 

It was honestly one of the most confusing conversations I’ve ever had. It was with this guy. 

Scott Purcell: My name is Scott Purcell. I’m the CEO of ACA International.

Dan: That’s the industry association for folks in the bill-collection business. Scott was super-accommodating – got on Zoom with me within a day of my first email to him. So quickly that it wasn’t till we got on that I realized we hadn’t set a length. 

Dan: How long do I actually have you for?

Scott Purcell: How long do you need us for?

Dan: Uh, I like to talk to people for a long time, but we start with a half an hour and maybe…

Scott Purcell: um, bum bum bum. I just need to change one meeting. 

Dan: We talked for more than an hour. 

The first half-hour was one kind of frustrating. 

I’d describe our findings and findings from other people’s reports — for instance, how little money hospitals seem to gain from these lawsuits — and ask if he had data to help understand what we’re seeing, and he kept saying, effectively: 

Hey, let’s not jump to policy conclusions. How would a new policy on debt collection affect a medical office with just three doctors? 

Scott Purcell: And I would say that three person doctor office is different from one of the top 10 nonprofit health care system. Their economics are completely different. And yet we’re talking about policy positions. that impact both

Dan: And then, in retrospect I’ve figured out a spot where we really, really lost each other. I was talking about one observer’s take on why these lawsuits don’t bring in much money:

Dan: A lot of the people that end up as your defendants are effectively indigent. Um, you know, they don’t have a lot of income. They may not have W2 employment that you could garnish. They don’t have other assets you can take. So, the amount that you get is not, not what you might expect from looking at the number of cases and the number of judgments. So that was another…

Scott Purcell: If I could stop you there, I’d love to see that data. Do you know that it takes a lot of money to file a lawsuit? I can’t think. And so my lived experience, I cannot think of one instance where either the hospital or the collection agency or the attorney would choose to sue an indigent person because if they are going to have a low probability of being able to repay that that over time, why would you invest? 

Dan: What I didn’t realize then, was: when I said some people were “effectively indigent,” Scott Purcell had latched onto the word “indigent” and had a very specific image in his mind, of absolute destitution. From that point forward, anything I would say about people being sued who were hard up, who qualified for charity care, who really couldn’t pay – was gonna run through this filter. 

And: Any example I’d bring up of someone being sued who got put in an extremely tough position… was just gonna sound to him like a novel anecdote.

A half-hour in, I got pretty direct with Scott, so I asked:

Dan: How did this happen? How did it happen that we, like, got to the point where so many people are being sued over debts they can’t pay? What do you know about that?

And this is where things got really confusing to me. Because here’s how Scott responded:

Scott Purcell: Well, if you just sued somebody who can’t pay, they’re not going to pay you. So, they’re not out any money. So you made a bad business decision, but truly Dan, what is the harm they’re experiencing? The fact that they got sued and they can’t pay?

Dan: I didn’t see that coming – the idea that being sued could be “harmless”?. Here’s what I said:

My gosh. Well, I can tell you that, you know, people, by the time they’ve been sued, they’ve been getting tons of collections calls, their credit may have suffered, and they have a judgment against them that says like any money that shows up in their bank account can be seized or that, you know, the next time they get a job, their wages can be garnished. That’s pretty significant harm. 

I described to Scott the story of Liz Jurado, a woman on Long Island who says she found out, years after the fact, that she had been sued over a bill relating to the birth of one of her kids. A bill she says she thought insurance had paid. Her husband was the main breadwinner, until he got laid off. Liz took a job working for DoorDash to support the family – her first W2 paycheck – and she says that’s how she found out about the lawsuit. Because once she starts the job, she starts getting letters, saying her wages are going to be garnished. And she’s like:

Liz Jurado: What is this? Where did it come from? How could they not tell me about it until now?  I get a job and three months later, you’re coming after me. I mean, this is my family’s bread and butter.  This is horrible.

Dan: I said to Scott: That seems bad, right?

Dan: So I’m, I’m, I’m trying to give you the opportunity to respond to that point that lots of people make that. If you get sued over a debt you can’t pay, there’s harm. That’s, that’s a lot of people’s positions, and I find it fairly persuasive. How do you respond to that? 

Scott Purcell: You and I were using a hypothetical. You said somebody got sued who’s indigent. Has no money.

Dan: Do you think that doesn’t happen?

Scott Purcell: I don’t understand the business case as to why that would. 

Dan: But, like, do you think it doesn’t happen because, like, do you think the reports that show that it happens a lot are wrong? I mean, I talked to a couple, a couple months ago who got sued over a debt. I mean, their story was like, they got hit with a bunch of medical problems.

I described to him the story of Casey and Ron Gasior, who we met in our last episode. The bills for those medical adventures threw their finances completely out of whack.

Casey: We would dig little bit out of our hole, and then we’d go right back down. 

Dan: … until they were in danger of losing their house. They filed for chapter 13 bankruptcy – wrapping everything they owed into a five year payment plan. They’d just about made it through, when they got a letter from a law firm earlier this year: They were being sued over a medical bill, that had arrived just after their bankruptcy started. I was getting a little worked up. 

Dan: So, these are not hypothetical, and these are not, like, you know, these stories are just entirely consistent with the data that, that gets collected. So, when you ask me, like, what’s the harm? I want to give you this opportunity to say, like, you sure that’s your position?

Scott Purcell: So, first of all, that was on a different, that was a different question. I made an assumption of that story that they were indigent now and would be indigent – I was saying, I don’t know why that decision got made if indeed that person, um, is indigent, why a particular, um, provider has whatever parameters they’ve set for their lawsuit program. I can’t speak to the business decisions they’re making. I can speak to, societally, what do we expect people to pay and not pay? 

Dan: With the case of the couple in Wisconsin, if they couldn’t pay ever, if their chapter 13 hadn’t worked out, and they’d lost their house, and they’d lost their jobs, and they couldn’t pay ever, are you saying they wouldn’t be harmed?

Scott Purcell: I’m saying the answer lies in taking those stories to the table. And let’s take a look at what are the other policy changes that should be made in order to get better outcomes. So, in the situation you did outline, I am sure that individual actually went through emotional stress. But there’re safeguards throughout. 

Dan: So you’re saying you view this as a kind of exceptional case and that generally there are, from what you know, guidelines and guardrails, as you say, to prevent this sort of thing from happening.

Scott Purcell: It’s the thing I don’t have data to answer it. 

Dan: Yeah, it’s — I mean, I just need to say: It’s striking, um, that you asked — you’re, yeah, like: Where’s, where’s the harm?

Scott Purcell: I made an assumption of that story that they were indigent now and would be indigent–

Dan: Well, I guess I just don’t understand, I, I don’t really quite understand the difference. Can you explain the distinction between someone being indigent right now, being indigent forever, I don’t really get the distinction at all. And I don’t know in which case, in which case there is harm, in which case there isn’t in your view.

Scott Purcell: So, um, I wasn’t being flippant. I was taking a very extreme… um, I’m in D.C. I see homeless people now. So when I heard you say indigent, I’m thinking somebody who’s living under a bridge. They deserve to be treated with dignity and respect. I was thinking that level of indigency. You’re talking about, I think, the, the working class, and people beyond that. And up to the higher end scale is your question. And for that, my question or my answer is back to there are safeguards that should be occurring. And if those safeguards don’t occur, harm does happen. And we collectively need to look at why there are gaps in those safeguards.

Dan: So in retrospect – knowing how Scott Purcell took that word indigent – I’m a little less mystified. But the conversation still seems really… striking to me.

For one thing, there’s the idea — even if it’s not a conscious philosophy  — that some people are beyond hope, so they’re beyond harm. So morally, it wouldn’t matter if, say, you sued them.

But the other thing that strikes me is the difficulty Scott Purcell had understanding – believing – that people being really harmed is something that happens at scale. That last thing he said: “There are safeguards that should be occurring, and IF those safeguards don’t occur, harm does happen.”

That word “IF” seems to be doing a lot of work there. 

Beyond the mountains of data that folks have compiled – showing that people get sued who qualify for charity care, and that people who get sued over medical bills tend to live in neighborhoods where poverty is high – there’s the finding that’s practically a cliche: 

About four out of ten Americans don’t have enough money on hand to cover a 400 hundred dollar emergency expense. Maybe I should have explained that to Scott Purcell. 

But I just didn’t think I’d need to. He’s sitting atop a whole industry that NEEDS to know, basically, how much money people have. Since we talked, I’ve seen a report for folks in his industry – third-party collections – that goes into a lot of detail on that topic. 

Of course, third-party collections agencies are for-profit businesses. And at least for some of them, lawsuits like these are part of the business. 

So, I guess I’m starting to understand – maybe belatedly – how hard it is to get some people to reconsider business as usual. Is business as usual a philosophy?

But sometimes business as usual does change. In fact, I’m about to share some much more cheerful news with you. It’s what our partners found when we went looking for details on these hospital bill lawsuits in three states. 

Because the big surprise was in what we DIDN’T find.

That’s coming right up. 

This episode is produced in partnership with KFF Health News. That’s a nonprofit newsroom covering health care in America. Their incredible journalists win all kinds of awards every year. I’m so glad to get to work with them. 

This investigation builds directly on reporting by KFF reporters like Jay Hancock, Noam Levey and Jordan Rau. Respect. 

OK, so this whole inquiry — into why some hospitals sue so many patients who could just get charity care — started a couple of years ago. 

That’s when I spotted what looked like a clue – in a big report done by National Nurses United. It looked at 145 thousand hospital lawsuits against patients in Maryland over a ten-year period.

And in addition to documenting how little money hospitals were getting from these suits — compared to the million-dollar salaries they paid a lot of executives — 

This report also noted– just kind of by-the-way, on page 18 of a 68-page report – that a relatively small number of attorneys were filing most of these lawsuits.

Just five attorneys filed almost two-thirds of the cases.

And just one attorney filed more than 40,000 cases. 

I was like, huh! Maybe that’s a clue. 

It seems like hospitals don’t get a lot of benefit from these lawsuits. But maybe we’re looking at someone who does. We should find out more. 

Starting with the names of those lawyers, which weren’t in the report.

And I was gonna want a big update on Maryland.

That report was part of a big advocacy campaign – which really worked. 

In 2021, Maryland enacted a new law saying hospitals couldn’t sue anybody without checking to see if they qualified for free care.

Which in retrospect, may seem like an obvious requirement. Here’s Malcolm Heflin, one of the organizers who worked on the campaign.

Malcolm Heflin: It’s like reading the postscript in a Dickens novel almost. It’d be like, “Oh yeah. Hey, look, now we can’t chain children to factory machines.” Like what? Wait, what? That was legal before? 

Dan: Anyway, if that report was the “before” picture, what would “after” look like? I was gonna need help. And I got some.

Ryan Little: my name is Ryan Little and I am the data editor at the Baltimore Banner.

Dan: The Banner is a new nonprofit daily newspaper – without the paper. Data reporting is a big specialty, and Ryan is the big specialist. Pulling a LOT of Maryland courts data was already on his to-do list.

Ryan Little: And so I said, maybe there’s a way that we can make a partnership happen. And then many months later, you’ve probably regretted that, but we’ve had a good time doing it. Anyways…

Dan: No way. Are you kidding me?

Ryan’s amazing. I am so lucky to get to work with him. 

But I wanted to know about more than just Maryland. And I got lucky there too. 

Maryland’s not the only state where advocates compiled a bunch of court data to push for change. You might remember Elisabeth Benjamin in New York from our last episode. 

She’s the one who pointed out how little money is involved in these suits – for hospitals she has looked at.

Elisabeth Benjamin: They’re suing people for pennies. right. The average law suits maybe 1900 bucks. So they’re suing them for chump change, but that $1,900 is like life ruining for the patient.

Dan: She knew that because she had pulled more than 50 thousand hospital-bill lawsuits from across the state. She used that data in a series of reports that got new laws passed – like one banning wage garnishment to pay medical debts. 

And she shared a giant spreadsheet with me, which included the names of attorneys in 40 thousand cases.

And guess what? Just three law firms handled the majority of those cases. So now we knew: This wasn’t just a Maryland thing.

But we were gonna want to look somewhere else too. Someplace where no new laws had been passed. Someplace that was still a “before” picture. Someplace like Wisconsin.

I’d been getting reports from a public-interest lawyer there named Bobby Peterson. He’d been publishing some data about lawsuits, but hadn’t gotten laws passed. And he also wasn’t able to share data. I was gonna need MORE help. 

Rosie Cima: My name is Rosie Cima and I manage a data reporting team at Scripps News. I also report for them. 

Dan: YES! More data help. Scripps News came aboard as a partner, and Rosie started looking for the data we’d need in Wisconsin.

And at this point, it may be getting clearer why it has taken us more than a year to bring this story to you. Let’s just recap for a second all the moving parts we’ve got in play here:

We’ve got Ryan, pulling cases in Maryland, Rosie doing the same in Wisconsin, and me with some New York cases.

We’re looking to see what the “after” picture looks like in Maryland and New York, and we’re looking at the role of a few..