Reed Kathrein | 2004 Plaintiffs Bar Checks into Hospitals

2004 Plaintiffs Bar Checks into Hospitals

Plaintiffs Bar Checks Into Hospitals
Brenda Sandburg
The Recorder
07-06-2004

The plaintiffs bar has found a new target: nonprofit hospitals.

In the past two weeks, plaintiffs firms have filed 19 class actions against not-for-profit hospitals, claiming they are charging uninsured patients as much as 300 percent more than they charge their insured patients.

[Two law frims] filed the most recent suit Wednesday against Sutter Health. The complaint, filed in the Northern District of California, alleges that Sutter is breaching its obligation to provide charitable health care to uninsured patients in return for substantial tax exemptions.

"While Sutter gives private insurance companies and governmental third-party payors like Medicare and Medicaid significant discounts from the gross or 'sticker' price ... it charges its uninsured patients 100 percent of the full sticker price," the suit states.

[A partner in one of the firms] said the pricing discrepancy came to the forefront when uninsured patients being pursued for unpaid legal bills sought legal counsel.

"Lawyers looking at the bills were shocked to discover" how much uninsured patients were paying for medical services, [one lawyer] said.

The suit also found fuel in two reports issued in April and May by Health Access California and Service Employees International Union Local 250. The reports found that uninsured patients at Sutter's California Pacific Medical Center were charged prices 300 percent higher than those charged to insured patients. At Sutter's Roseville Medical Center, the complaint says, uninsured patients paid 150 percent more than those with insurance.

The lead plaintiff in [one suit] slipped at a local grocery store in May and went by ambulance to Oakland, Calif.'s Alta Bates Summit Medical Center. He received blood tests, a hip X-ray, an EKG and drug treatment, and was billed $4,599.

The complaint, Darr v. Sutter Health, 04-2624, says there are at least tens of thousands of people in the proposed class who have been subjected to predatory and discriminatory pricing and collection.

Sutter Health contends that the claims in the suit are baseless.

"Sutter Health has been working on a solution to these issues for more than a year," said spokesman Bill Gleeson.

He said that in February the hospital initiated a policy to provide full charity care to low-income uninsured patients earning less than 200 percent of the federal poverty income level, and instituted other discounts as well. Sutter operates more than 20 hospitals throughout Northern California.

In addition to the Sutter class action, the Scruggs firm, based in Pascagoula, Miss., has filed similar suits against Baptist Hospital of Miami Inc. and Advocate Health Care Network, based in Oak Brook, Ill. Scruggs was one of the pioneers in tobacco litigation, which brought the firm more than a billion dollars.

[A San Francisco firm] is one of several plaintiffs firms involved in the suit that put hospitals on notice on the billing question, a class action against for-profit hospital Tenet Healthcare Corp. The consolidated action, on behalf of uninsured, underinsured and Medicaid patients, Tenet Healthcare Cases II, is pending in Los Angeles County Superior Court.

"It looks to me like they are taking our suit and applying it to nonprofits," said Reed Kathrein, a partner at Lerach Coughlin Stoia & Robbins, and one of the lawyers in the Tenet suit.

In the Tenet case, plaintiffs argue that Tenet tried to get more money from Medicare and Medicaid by artificially increasing the price of hospital services to uninsured patients. In an amended complaint filed in August 2003, plaintiffs say that for drugs sold to patients in recent years Tenet has charged a gross price "at least as high as 1,037 percent above actual costs." One plaintiff was allegedly charged $48,374.78 for treatment of an infection during a two-hour hospital visit.

Kathrein said it was the first such case against a for-profit.

"We were able to tether [the complaint] to illegal actions against Medicare," he said. Whereas the suits against the nonprofits allege they have "violated an explicit or implicit agreement with the government's giving them tax exempt status because they provide charitable care."