Monday, October 11, 2004

The Washington Hospital Center faces a lawsuit accusing it of overcharging uninsured patients and profiting through unfair billing practices — the latest in a recent wave of class-action litigation attacking nonprofit health systems nationwide.

Supporters of such lawsuits say that despite their tax-exempt status, nonprofit hospitals have become big moneymaking businesses that often overpay executives, reap profits and use harassing collection techniques.

But critics argue that the lawsuits only will harm patient care because most hospitals are either losing money or are barely breaking even. They say the litigation is headed by opportunistic lawyers trying to cash in on the industry’s woes.

Mississippi lawyer Richard F. Scruggs, who successfully sued the tobacco industry in the 1990s, headed the effort to file against nonprofit health systems earlier this year. So far, Mr. Scruggs’ team of lawyers has filed 49 lawsuits affecting more than 300 hospitals across the country.

However, a spokesman for Mr. Scruggs’ legal team said last week that the team has not sued Washington Hospital Center. Scruggs spokesman Robert Siegfried called the Washington Hospital Center case a “copycat lawsuit” filed after the Scruggs team announced its litigation in June.

The string of lawsuits filed by Mr. Scruggs and other lawyers say nonprofit hospitals keep hundreds of millions of dollars in profits and savings earned through tax exemptions and aggressive collection practices when they should be spending the money to treat uninsured patients.

Locally, the only other lawsuit affecting the nonprofit-hospital industry was filed against Inova Health System in Northern Virginia in August. The Scruggs team withdrew the case last month, but Mr. Siegfried said last week that the team plans to refile the lawsuit later.

District-based lawyer Kathy Krieger, who filed the lawsuit against Washington Hospital Center in U.S. District Court in Washington on Sept. 24, declined to comment on the case last week.

The lawsuit accuses Washington Hospital Center, the District’s largest nonprofit hospital, of charging higher rates for services for uninsured patients, compared with the rates that the hospital charges insured patients.

The lawsuit also says the 907-bed hospital at 110 Irving Street NW has been “unjustly enriched” because it has charged “excessive and discriminatory prices” despite receiving millions of dollars in tax exemptions.

Hospital officials did not comment on the case last week. However, officials at the American Hospital Association blasted the lawsuit as “totally without merit.”

Alicia Mitchell, a spokeswoman for the association, said the trade group has seen a few “copycat lawsuits” filed against nonprofit health systems by lawyers other than the litigation team headed by Mr. Scruggs. She called all the lawsuits “misdirected and baseless.”

AHA President Richard Davidson has called the nationwide trend of lawsuits against nonprofit health systems an “assault on community hospitals.”

“When the facts are known, the reality of what’s happening in the communities hospitals serve will be found to be far different than the charges outlined in these lawsuits,” Mr. Davidson said in a written statement.

According to statistics compiled by the D.C. Hospital Association, Washington Hospital Center operated at a deficit in 2001 and 2002, the most-recent years for which hospital financial reports were available yesterday.

The hospital operated at an estimated 3 percent deficit in 2001 and 2002, after operating at a 3 percent profit in 2000, statistics show.

In 2002, Washington Hospital Center spent $43 million on charity care — services for which the hospital did not receive payment, according to the D.C. Hospital Association.

The lawsuit against the hospital was filed on behalf of Kisha Wright, of Seat Pleasant. The lawsuit claims she was sued by the hospital over a $12,556.78 bill for a Caesarean section in 2001, even though she earned $18,000 a year and did not have health coverage.

A second plaintiff in the case, Paul Peterkin, received a $8,265.61 bill after he was kept overnight after a procedure in which he received stitches on his nose, the lawsuit shows. He also was sued for nonpayment.

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