Are Some Hospitals Attempting to Profit from Victims of Accidents?

A common healthcare practice of filing liens on patients who have been treated following accidents has come under fire.

Filing liens on patients who have been victims of accidents has long been a common practice in the healthcare industry. When the patient wins a personal injury settlement from an insurer as a result of the accident, the provider also recovers for the medicare care it provided. But if a story in the Kansas City Star is to be believed, a local hospital has come under scrutiny for manipulating the system to not only recover costs, but allegedly maximize profits.

According to the Star, Research Medical Center has come under criticism after treating Jonathon Layden from injuries he received in an automobile accident for billing Layden for the full amount of treatment, $10,896. When Layden did not pay, the hospital turned over the debt to its collection partner, which negotiated a final payment of $5,400.

What has generated outrage in the case is that Layden was covered by medical insurance. However, because Layden had been in an accident, the Star reported that the provider declined to file a claim with the insurer (which would have paid a discounted rate of $3,281). Nor did the hospital file a lien on Layden to collect from a future insurance settlement. Instead it went directly after Layden.

Research Medical Center declined to comment on the story, citing litigation. The story implies, but does not say explicitly whether Layden is suing the hospital. But other patients are currently suing and seeking to convert their cases into a class action, the Star reports.

Missouri law apparently allows providers the ability to ignore a patient’s health insurance and instead charge non-discounted fees to patients. Other states have similar provisions, but at least one state has banned the practice, the Star reports.

According to Star, the motive for the practice is increasing revenue. ”When hospitals turn down your health insurance, they are then able to avoid the discounted charges they have agreed to with health insurers,” writes the Star. “In Layden’s case, the hospital went directly to him for the full bill, but the usual practice around the country is to go after whatever money a person injured in an vehicle accident might get from an auto insurance settlement.”