Patients sue UK president, state officials for collecting medical debt without courts
Danny Metts thought he wouldn’t owe anything for the costly University of Kentucky Healthcare treatment that he needed after he was repeatedly assured by hospital staff that he was covered by Medicare.
Months later, he got a phone call from the hospital. There was a mistake. Metts — who has lived with a serious illness for more than 20 years — said he suddenly owed thousands that he couldn’t afford to pay.
Now, Metts is one of five plaintiffs in a new federal lawsuit filed late Thursday in Frankfort against UK President Eli Capilouto, UK treasurer Penny Cox, Department of Revenue Commissioner Thomas Miller and Tammy Watts, the executive director of the department’s office of processing and enforcement. The suit argues that UK HealthCare and the state Department of Revenue are violating the 14th Amendment and the due process rights of former patients struggling to pay off hospital debts by demanding payments and garnishing their wages without going to court first.
The suit seeks class action status to represent all UK HealthCare patients who have had to repay debts through the Department of Revenue.
The suit also seeks a temporary injunction on collections, while another lawsuit, filed by Lexington attorney Doug Richards, challenges the legality of UK using a state agency to collect debt in the first place. Former patient Amelia Long and four others are the plaintiffs in that class-action lawsuit against Cox and Allison Ball, the state treasurer. According to that suit, UK HealthCare is the only hospital in the state which collects debts via the Revenue Department. That suit is currently in federal district court.
UK spokesperson Jay Blanton said the university does not comment on individual cases to protect patient privacy.
He added that before the university “would even refer a debt to the Department of Revenue our policies mandate that a patient be contacted several times before a bill is forwarded to the state, a practice established by law. Moreover, in addition to multiple attempts to reach a patient, we provide counseling, and mediation with a third party if an agreement about a debt cannot be reached.”
Since 2019, Metts said he’s has been forced into a payment plan with the Revenue Department, after he said he was told that his bank accounts would be cleared if he didn’t set the payment plan. UK HealthCare told Metts he owed $4,524.30 for his treatment. When the department began collecting, it added a 20 percent collection fee plus 25 percent interest.
“I’m doing this under duress, I’m doing this to keep you from just totally harassing me for the rest of my life,” Metts said he told a Department of Revenue employee who demanded he set up a payment plan.
Avoiding court — which would include a judge and potentially a jury — allows UK HealthCare to gets its money via the revenue department’s power to garnish wages, clear out bank accounts and repossess assets from its in-debt patients with limited notice, the suit states.
Under the order of Gov. Andy Beshear, the Department of Revenue is not collecting during the COVID-19 pandemic. But according to a press release announcing the suit, the department is still sending threatening letters to debtors. When collections resume, people who may have lost jobs and health insurance because of the pandemic could be affected.
Ben Carter, one of the Lexington attorneys who filed the suit, said that debt collectors typically have to sue before collecting payment, and those who are in debt get a chance to defend themselves. That doesn’t happen in UK HealthCare cases, he said.
“That never happens in any of these cases,” Carter said. “There’s no incentive for UK HealthCare to get these bills right, to negotiate in good faith with our clients and their customers. They get to refer it to a debt collection agency — that’s like debt collection on steroids.”
Blanton said that “we should all want medical debts — obligations generated because complex and often life-saving care was provided — to be paid. That’s how we spread the cost of care and ensure affordable access to more people who need such care the most.”
“The Department of Revenue does not comment on pending litigation,” department spokesperson Jill Midkiff said while pointing out that the debt collection was suspended during the pandemic.
According to the suit, none of the five plaintiffs were notified of any internal UK HealthCare appeals system. Invoices patients received notifying them of the debt only said to call the billing department if they had questions.
The four other plaintiffs have stories similar to Metts. Lucy Alexander, another plaintiff in the case who underwent a hernia surgery at UK in 2012, was told that the hospital had received prior approval from her insurance provider before her surgery. According to the suit, Alexander later found out that the hospital had “miscoded” the claim they had sent to her insurance provider, and the provider did not cover the cost of the surgery.
UK billed Alexander about $25,000 for the surgery, the suit stated. She didn’t find out that the Department of Revenue was collecting the debt until the department began seizing her bi-weekly paychecks in 2015. The first week her paycheck was garnished, she couldn’t afford groceries for her family, according to the lawsuit. After going to the department, she set up a payment plan that she is still paying.
Robert Moody received HIV treatment at UK HealthCare since 2001, the suit stated. He qualified for financial assistance from the hospital until 2007, but the suit states that UK failed to provide him with renewal applications in early 2008.
He began to be charged for treatments in 2008 and 2009. The suit states that the Department of Revenue told him they would publish his name on a list of delinquent debtors and take some of his federal income tax refund — a power which the suit says the department does not have. The only way for Moody to avoid penalties was to enroll in a payment plan, the suit stated.
Mary Baughman and Randall Roach were both uninsured when they received treatment at UK HealthCare facilities. They were told they qualified for the hospital’s financial aid program and owed nothing.
According to the suit, Roach was told by multiple UK employees that he owed nothing. Then in March he received a notice from the Department of Revenue stating that he owed them almost $74,000 — with interest.
If they had known of any way to appeal the charge, Roach and the other plaintiffs would have done so, the suit said.
This story was originally published June 5, 2020 at 4:47 PM.