- The Washington Times - Thursday, August 26, 2004

A Northern Virginia hospital chain is facing a federal lawsuit that accuses the health system of violating its tax-exempt status by overcharging uninsured patients.

Inova Health Care Services charges uninsured patients rates higher than those set for insured patients for the same procedures, according to the lawsuit filed in U.S. District Court in Alexandria.

The suit charges that the hospital chain uses “aggressive and humiliating collection techniques” to collect payment from uninsured patients, while it accumulates millions of dollars in assets that should be used for their care.

The lawsuit is the latest in a series of class-action lawsuits filed against nonprofit health care organizations nationwide since June. The lawsuits accuse the hospitals of charging uninsured patients higher rates for services, despite receiving state and federal tax breaks to provide charity care.

Richard Scruggs, a Mississippi lawyer who led a multibillion dollar litigation against the tobacco industry in the 1990s, is spearheading the hospital lawsuits.

The lawsuit against Inova was filed Aug. 6 on behalf of Paul Shipman, 43, an uninsured furniture salesman from Herndon who underwent a cardiac procedure at Inova Fairfax Hospital in Falls Church last year, lawyers said.

“The suit against Inova was brought because uninsured patients have been charged significantly more from a hospital that is supposed to be operating as a nonprofit charity hospital compared to what people with insurance pay,” said Bryan Vroon, an Atlanta-based lawyer who is representing uninsured patients in the Inova case.

Inova is the only health care organization in the Washington area to be sued. Inova operates five hospitals in Northern Virginia: Inova Mount Vernon Hospital, Inova Fair Oaks Hospital, Inova Alexandria Hospital, Inova Fairfax Hospital for Children and Inova Fairfax Hospital, which ranks among the nation’s top hospitals. Potomac Hospital in Woodbridge, Va., is an affiliate of the Inova Health System, according to Inova’s Web site.

The complaint indicates that Inova, “one of the profitable hospital systems in Virginia,” has operated “free from federal and state taxes because they promised the government they would operate as a charity provider of health care for the uninsured …”

“In reality,” the complaint continues, “Inova does the opposite: they charge the uninsured patients significantly more than those who have insurance …”

Inova officials did not issue a comment about the case by press time yesterday.

Richard Davidson, president of the American Hospital Association, which also has been named as a defendant in the case, has called the class-action lawsuits against the nonprofit organizations an “assault on community hospitals.”

“When the facts are known, the reality of what’s happening … will be found far different from the charges outlined in these lawsuits,” he said last month. “We are confident the cases will be easily defeated and the resources of these hospitals will again be freed up to address the important mission each has in contributing to its community.”

Mr. Davidson also sent a memo to hospitals advising administrators about the lawsuits.

He told hospital officials that they should be prepared to respond to questions in the community because the lawsuits “come at the same time as some in Congress are scrutinizing hospitals’ billing and collection practices, and the tax-exempt status of not just hospitals but other organizations as well.”

“Whether your organization has been named as a defendant or not, the fact is that this class-action lawsuit has broad implications for all hospitals in the country,” he said.

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