by Marty Makary
Luz made only about $500 a week and had a high-deductible insurance plan. She called the Carlsbad billing department and was told she had to come in person to talk about a payment plan. By the time she could get a day off from Rent-a-Center, the hospital had already sued her for $3,000. She got served the papers by the local sheriff’s department.
The next time Luz needed treatment, she drove to a hospital in the next town over. They charged her $600 for the same treatment. Carlsbad Medical Center was not only overcharging her, they were suing her when she couldn’t pay the bill.
These inflated medical bills cause incredible hardships. Luz is a single mom with a five-year-old son. She also needed money to repair her 1995 Mercury Cougar, but Carlsbad Medical Center had garnished her near minimum wage income pay by 50%. The car mechanic wanted $800, but Luz didn’t have the money. He kept the car for the six weeks it took her to round up the money. She walked to work.
“It’s hard for a single mom,” she told me, showing me a photo of her son. He was adorable and reminded me of my nephew. They were roughly the same age. But sitting on that couch in the Rent-a-Center, I realized how different my life was from hers. I recently had a $1,100 car repair bill and didn’t flinch. Admittedly, if I received a $3,000 hospital bill, I would probably just pay it rather than fight it. It wouldn’t impact my quality of life. But for Luz, the bill was devastating.
There are two Americas—the one I live in and the one I was now observing. Research shows that six out of every ten Americans have less than $1,000 in savings3 and about half of them have no savings.4 As I stood there in the Rent-a-Center, I was grateful for the opportunities I’ve had in life. Also, I was reminded that the health insurance deductibles so often discussed in our health policy circles may seem inconsequential to wealthy people and to decision makers in the policy world, but they are crushing many Americans.
Luz’s story made me want to do something. I called Cori Cook, a lawyer who specializes in medical billing practices. I’ve partnered with Cori on other projects. I asked her how much a hospital could garnish from a minimum wage worker. She said it varied by state but is limited to 25% in New Mexico.5 Luz told me that when she was promoted to sales manager she got a raise to about $600 a week, which was garnished down to $350. Others told me their paychecks were docked by 70%. It’s easy for the people who garnish wages to break the law, Cori said. Cori was so disturbed by what we had discovered that she offered to provide free legal help to the people we met.
Soon after her lawsuit and wage garnishment, Luz received a surprise bill from the hospital for $68. She didn’t know what it was for, especially after her most recent garnishment. But the bill said if she didn’t pay it in ten days it would increase from $68 to $389. In my opinion, this was a clear example of bullying. In what business does the interest rate on a bill go up by 20% per day? Was medicine ever intended to be like this, where a patient comes to a doctor for medical care and the hospital turns around and sues them, garnishes their wages, ruins their credit history, and even gets the town’s sheriff’s deputy to serve them papers at their home? The people I met in Carlsbad were not criminals or fugitives from the law. They were hardworking Americans with health insurance. They got sick and went to a doctor, were treated, and a few hours later went home. Their problem was that they lived in a town with a hospital that forgot the Hippocratic Oath to do no harm.
The Cop and the Teacher
It’s sobering to be on the ground and see how our health care system treats patients. In Carlsbad, it felt like no one was safe from the hospital’s predatory practices—not even a police officer and his wife, a fifth grade teacher.
Will and I sat in the living room of Officer Mike Shott and his wife, Meghan, listening to their story as their two kids rummaged through toys and their two-year-old explored the art of walking. In October 2016, with a jabbing pain in his side and worried he might have appendicitis, Mike had gone to the Carlsbad Medical Center’s emergency room. The doctors ordered a CT scan. It’s debatable whether he needed it in the first place, but when they did it, the technicians didn’t inject the dye that made it possible to see the appendicitis, so they had to do another CT scan, this time with dye.
Although it was their mistake, Carlsbad Medical Center charged Mike for both CT scans. And it gets worse. At Johns Hopkins, the scan would cost $487. Mike got charged $13,000 for each scan. It turned out Mike didn’t have appendicitis. The doctor said the pain could have been from his heavy police belt. Before Mike and Meghan could even sort out the bills, the hospital sued him. This created a unique problem for Mike. As a police officer, he has to appear before the judges in the same court where he was being sued. The lawsuit could ruin his professional reputation, so the couple tapped their savings to pay the full hospital bill.
Mike is not the only cop who’s been at the mercy of the hospital. He said the same thing has happened to at least three of his colleagues. All of them are insured by the city.
Mike and Meghan pay their bills on time. Their home reminded me of the one I grew up in. Together they make more than $100,000 a year. But their plight with Carlsbad Medical Center got even worse when Meghan delivered their youngest baby. As they told me the rest of the story I kept thinking, You can’t make this stuff up.
Meghan had maxed out their deductible that year, and she delivered her child before the end of that policy year. But the hospital submitted the bill late, so it didn’t get applied to the year in which she had met her deductible. The insurance company stuck Meghan with the full cost.
Meghan made dozens of calls to the hospital and insurance company to correct this simple, obvious mistake. But she kept getting the fog-of-war business model. “This is non-negotiable,” one billing representative told her. Then, being the Carlsbad Medical Center, they sued her. At this point, I had come to expect it, even though this isn’t how most hospitals treat their patients. The bill collectors told Meghan there was no need for her to show up in court. But she’s married to a cop. She knew that if she didn’t show up, the judge would find for the plaintiff by default. Overall, Meghan estimates that she spent 100 hours disputing her bills, all the while taking care of her young children and working as a teacher. They paid the bill to avoid garnishment. But they had to max out their credit cards to stay afloat.
On that trip to Carlsbad, we spoke with seven patients who had had their wages garnished. All were hardworking and insured. Several didn’t understand the legal system well enough to know that they had even been sued until they noticed their paycheck had been garnished. I talked to a few doctors at the hospital and they had no idea their patients were being sued. When I showed the doctors what I had learned about the predatory billing practices, they said they detested what was happening. I realized that if this practice is to change, it will require doctors and everyday Americans to ask their local hospitals to end the practice of suing low-income patients and garnishing their wages. And the next time you hear health care experts say that no one is expected to pay the full price of an inflated medical bill in America, you can tell them to take a trip to Carlsbad, New Mexico, and talk to Luz, Meghan and Mike, Jennifer, Hannah, and the countless others there that I didn’t get a chance to meet.
The Judge
I wondered what the judges at the Carlsbad courthouse thought about this problem. Their dockets are stuffed with cases in which Carlsbad Medical Center has sued patients. Surely, they notice the trend. I reached out to the judges while we were visiting and by phone in the weeks after our trip. I tried through intermediaries but heard nothing. Then I left a voicemail for one, telling her I was a researcher at Johns Hopkins University trying to understand the practice of hospitals suing patients. The next day, Judge Lisa Riley called me back. “You’re from Johns Hopkins? How did you find out about Carlsbad?” she asked in bewilderment.
I explained how our investigation had led to this point and told her about talking to the many good people of Carlsbad who were getting sued. I asked if it was true that 95%
of the civil cases in her courthouse had been filed by the hospital going after patients.
“Well yeah, it’s a lot of work.” Judge Riley’s voice had a soft tone, as if she appreciated my interest in the lawsuit epidemic. “My focus is criminal cases, but the lawsuits from the hospital are a burden on our limited administrative capacity.”
“The employees in your courthouse said they and their family members have also been sued,” I said. “Are you aware of that?”
Yes, she knew. And that’s when the judge said something that shocked me, even after all I’d heard from other Carlsbad residents: “My husband and I have both been sued by the hospital.”
I almost dropped the phone. “You’re the judge and you’ve been sued by the hospital in your own court?”
“Yes, and my husband, on separate occasions, for different medical bills. I always thought it was well known in our town that the hospital sues everybody.”
Clearly, the Carlsbad Medical Center had a shoot-first-and-look-second approach. I talked to Judge Riley for half an hour and learned how helpless patients were when the hospital sued them. In the legal cases, judges can see a reference to the services provided but the itemized details are redacted. They just see a total amount owed that’s called “bad debt.” That’s not a fair term when it’s an inflated bill that may be in dispute. It also makes it hard to spot price gouging. She said she didn’t know the prices were marked up so high, although the judges suspected that a quick checkup in the emergency room should be closer to $500 than $5,000.
I told the judge the stories of the patients we had interviewed. She seemed impressed that our team had taken an interest. But I didn’t see what else I could do. As a doctor, I was outraged. I thought back to my conversations with hospital CEOs about how they mark up bills with outrageously high charges. “Marty, nobody pays those high prices,” they would tell me. Insurance companies get them good rates, they claimed. But by going out to the front lines I learned that many people pay a heavy price for the high prices they are charged.
On the last day I was in Carlsbad, I was having dinner at Yellow Brix, a well-known restaurant in town. Will and I were sitting down with a nurse named Misti and her husband, learning how Misti had been bombarded with bills and sued by the hospital. She stopped short when she noticed someone in the corner of her eye. The hospital’s head surgeon had just entered the restaurant. A good doctor, he was well liked in the community, she whispered. He also happened to be on the board of the hospital—the group of clinicians and community leaders who oversee the facility’s finances and quality.
I wanted to get his thoughts on his hospital filing these lawsuits. I asked Misti if it would be okay for me to introduce myself to him. “I suppose,” she said.
Dr. Murugan Athigaman passed our table and I introduced myself. I mentioned that I had heard good things about him from a patient. He smiled and thanked me for the compliment. I told him I’m also a surgeon. He asked me where, and I told him Johns Hopkins. He wondered what I was doing in town, and I explained that I was researching hospital billing and had heard that Carlsbad hospital has a track record of suing patients who couldn’t pay their bills. I asked him whether he was aware of the hospital’s suing anyone. He said “no” and seemed shocked. I told him how many cases I had found at the courthouse and asked him to please ask his hospital to stop suing patients.
I contacted Carlsbad hospital and asked them about the thousands of lawsuits they filed against patients. They replied with an email saying that they work closely with patients on payment arrangements but “may take action to collect payment from those patients who seem to have the means to pay for the care received. This is always the last resort, after numerous other attempts to resolve the bill, and each case is individually evaluated.” It was classic corporate speak, disconnected from what I saw on the ground. I also reached out multiple times to the hospital’s parent company, Community Health Systems. I wanted to talk to them about the lawsuits and respectfully ask them to have mercy on their patients. They did not respond to my requests.
My team’s discoveries in New Mexico motivated me to launch a national study of predatory billing and wage garnishment to see just how common it was. Carlsbad Medical Center violated everything doctors consider sacred about making hospitals a safe haven for the sick. But that was not the case in Roswell, the next town over, about an hour away. The Roswell hospital seemed to represent what’s honest and fair about medicine. So were there more hospitals like Carlsbad out there? I took that question to my team at Hopkins, and we applied the same scientific research methodology to hospital lawsuits that we would use to study cancer. Our findings were surprising. They also validated our concerns. We discovered that Carlsbad Medical Center was not alone.
CHAPTER 4
Two Americas
After returning from New Mexico, I called a special meeting of my Hopkins research team in my office. My team is a bunch of young guns, a diverse group of 24- to 35-year-olds from all over the country, representing a wide range of medical specialties, but all with a passion for studying health care costs, public health, and vulnerable populations. With all ten of them seated around the meeting table, Will and I began to tell them the dramatic stories of the people we met in Carlsbad. We showed the group the picture of Hannah crying in her classroom with a stack of medical bills and lawsuits. We showed them a picture of Jennifer’s small home with random cinder blocks in the front yard. Heidi Overton, a surgeon working on her PhD with me, was particularly distressed by the stories. She was from New Mexico and had lived in Carlsbad. Will and I continued to talk about the people we met in Carlsbad. We explained how their hometown hospital harassed them with predatory billing and aggressive lawyers.
The team couldn’t believe it. Some peppered me with questions, wanting more details. I have asked my team to tackle a lot of big issues in the past, but I don’t remember anything that has gotten them more fired up than this.
I presented to them my fundamental research question: “How many hospitals in America are like Carlsbad, and how many are like Roswell?” In other words, how many sue people and garnish wages and how many don’t? The entire plane ride home from Carlsbad, the question had echoed in my mind.
The PhDs on my team proposed a series of studies to nail down the magnitude of the problem. Some of the millennials were talking activism. For Heidi, it was personal. She even had plans to move back to New Mexico after completing her surgical residency and PhD. She couldn’t believe this was happening in her home state and told the team she would do anything to stop these lawsuits against well-meaning, hardworking Americans. “I went into medicine to help people, not ruin their lives financially,” Heidi said with a stern expression.
We started by checking to see who owned Carlsbad Medical Center. Was it part of a larger system of hospitals that sued patients elsewhere, too? Indeed, Carlsbad Medical Center was owned by Community Health Systems. According to its website, this enterprise owned 119 hospitals in 20 states. We looked at online court records to see whether any of their other hospitals were suing its patients with such vigor. We started with Missouri, where the chain has three facilities. Sure enough, the facilities are plaintiffs in hundreds of lawsuits against individuals, and the cases appeared to be related to their medical care.
We broadened the search, checking out the chain’s hospitals in all the states where Community Health Systems operated. Online court records showed the company’s hospitals were filing thousands of lawsuits against patients in many of the states.
One of the difficulties of doing this type of research is that these lawsuits are filed in state courts, and they are divided by county. Lucky for us, Virginia court data can be found online for the entire state. That means it’s consolidated and easier to search. We were able to pull up every civil case filed for each year going back several years.
Some of the research questions were obvious: How many hospitals sue patients, and how many lawsuits were filed? But we also wanted to kn
ow the characteristics of the hospitals. Are they all for-profit hospitals, like Community Health Systems? Or do nonprofits also sue patients and garnish wages?
The results of our analysis were alarming. At the top of the list of hospitals that sue was Mary Washington Hospital in Fredericksburg, an hour south of my home. In 2017 alone the hospital sued more than 4,300 patients and garnished the wages of 1,756, the court records showed.1 In some cases the court required the patient to provide their personal bank information—routing number and account number—so that the hospital could pull money directly from a checking or savings account. Sometimes the hospital had filed more than a dozen lawsuits per day. I couldn’t believe it! There was a Carlsbad Medical Center in my own backyard. I wanted to go to Fredericksburg to learn more. Will, Heidi, and Tina insisted on joining me.
Driving into Fredericksburg, it’s easy to see why “timeless” is the city’s tagline. Colonial-era mansions line the streets. The historic downtown, which boasts more than 350 buildings from the 18th and 19th centuries, looked gorgeous that beautiful summer morning. The small courthouse was a few miles from George Washington’s boyhood home at Ferry Farm. As we walked into the renovated courthouse building, we noticed a flat-screen TV right outside the courtroom that was scrolling through the 100-plus names of people being sued by the hospital that day. We stepped into the courtroom and saw roughly 50 people sitting anxiously, waiting to be called forward by the judge. A Hispanic man in worn clothing by the name of Mr. Ortiz was at the stand when we walked in.