Date Posted: Monday, September 13, 2004 at 12:30 PM CST

Contact: Richard Scruggs
The Scruggs Law Firm, P.A.
(662) 281-1212

CLASS ACTION LAWSUIT FILED AGAINST YALE NEW HAVEN HOSPITAL, INC, YALE-NEW HAVEN HEALTH SERVICES CORP. AND THE  AMERICAN HOSPITAL ASSOCIATION BY UNINSURED PATIENTS

FOR IMMEDIATE RELEASE

Oxford, Mississippi, September 13, 2004 - A class action lawsuit by uninsured patients has been brought today against Yale New Haven Hospital, Inc., (“YNHH”); Yale-New Haven Hospital Services Corp., d/b/a Yale-New Haven Health System (“YNHHS”) and the American Hospital Association (“AHA”) in the United States District Court, District of Connecticut.  The suit charges the defendants YNHH and YNHHS (collectively “Yale-New Haven Defendants”) with failing to provide healthcare services to all Connecticut residents regardless of ability to pay.   This failure violates, among other things, the basis of Yale-New Haven’s federal and state tax exempt status as a non-profit.  The AHA is charged as a co-defendant for aiding and abetting Yale-New Haven in its wrongful practices with respect to uninsured patients.

This class action lawsuit against Yale-New Haven Defendants and the AHA marks the 47th lawsuit in the nationwide nonprofit class action litigations which commenced on June 17, 2004.  The defendant nonprofit hospital systems and hospitals advised by the AHA in these litigations control well in excess of over 350 hospitals in aggregate.  Yale-New Haven is a comprehensive health care delivery system in Connecticut.  Its Corporate Members are Yale-New Haven Network, Bridgeport Network, and Greenwich Network.  Yale-New Haven is partner with Yale University School of Medicine, in a specialty network, the Yale Cardiology network.

According to the class action lawsuit filed against the Yale-New Haven Defendants and the AHA: “YNHH and YNHHS enjoy enormous Federal and State tax benefits as supposedly ‘charitable’ organizations.  In order to operate their hospitals free from tax, the Yale-New Haven Defendants promise the government – and, by extension, the patient population in Connecticut – that they do and will operate their hospitals on a non-profit basis and provide health care services to all Connecticut residents regardless of ability to pay.”  

“In addition to enjoying the benefits of federal, state and local tax exempt status, the Yale-New Haven Defendants have also received charity care subsidies from the State of Connecticut’s Uncompensated Care Pool as compensation for unpaid medical bills.  In its 2001 Form 990 for fiscal year 2002 ended September 30, 2002, YNHHS represents that its “Corporate Members provided $101.7 million . . . in free or under-compensated care.”

“Moreover, Defendant YNNH represents to the public on its website that it will ‘provide sensitive, high quality, cost effective health care services to all patients, regardless of ability to pay’.”    

“In fact, the Yale-New Haven Defendants do not provide the promised care to Connecticut’s uninsured, but actually discriminate against the very uninsured Connecticut residents who are supposed to benefit most from the Yale-New Haven Defendants’ ‘charity,’ by engaging in a pattern and practice of charging inordinately inflated rates for medical care to patients who are uninsured such as Plaintiff and the Class he seeks to represent.”

“The Yale-New Haven Defendants, although enjoying the full tax advantages of a non-profit hospital system, are actually quite ‘profitable.’  For fiscal year 2002, for example, YNHHS reported net assets totaling approximately $534.0 million among 4 of its 5 tax-exempt hospitals, of which $394.6 million, or 74%, was unrestricted.  This profit was realized because the Yale-New Haven Defendants avoided taxation while charging their patients anything but charitable rates.  Additionally, the Yale-New Haven Defendants employed aggressive collection agents to collect on outstanding and inflated bills.”

“The Yale-New Haven Defendants charge Plaintiff and the Class substantially more for medical services than they charge their insured patients for the same services.  The Yale-New Haven Defendants also employ aggressive, abusive, and humiliating practices, including lawsuits, liens, and garnishments, to recover this inflated medical debt from Plaintiff and the Class.  The abusive billing and collection practices violate the Yale-New Haven Defendants’ tax exemption agreements with the United States Government, the State of Connecticut, and the Cities of New Haven and Bridgeport and the Town of Greenwich.”

The lawsuit points out: “Additionally, Bernard W. Lane, Jr., Director, Patient Accounts at Yale-New Haven Hospital (“YNH Hospital”), is quoted on CFS’ website as follows:

‘Accounts Receivable Management

As a result of Century Financial Services’ expertise in Accounts Receivable, Collections, Pending Medicaid, and Workers’ Compensation, Yale New Haven Hospital has been able to maintain an outstanding accounts receivable despite the many changes taking place in the healthcare industry.  [Emphasis added.’]”

“Defendant AHA, through internal memos called “white papers” and other publications it sponsors, provides substantial assistance and guidance to YNHHS and the nonprofit hospital industry on their billing and collection practices for uninsured patients…the AHA encourages YNHHS and its nonprofit hospital members to inflate their chargemaster prices, which only YNHHS’ insured patients are charged.  These inflated chargemaster prices have the intended effect of increasing YNHHS’ outlier payment reimbursements under the DSH and Medicare reimbursement programs.”

“The Yale-New Haven Defendants set their charges for medical services at highly inflated rates that bear no connection to the actual cost of providing the service (i.e., its “cost-to-charge ratio”).  While the Yale-New Haven Defendants give private insurance companies and governmental third party payers like Medicare and Medicaid large discounts off this gross or “sticker price,” these large discounts are not provided to their uninsured patients.  As a result, the Yale-New Haven Defendants’ uninsured patients can be charged as much as twice the amount charged to the insured for the same service. The Yale-new Haven Defendants have thus realized substantial revenues from this discriminatory charging practice.”

“For example, according to a June 2003 report by the Institute for Health and Socio-Economic Policy (the “IHSP Report”), Defendant YNHHS had an average charge-to-cost ratio of 192.41%, exceeding the State average of 185.05%.”  

“The Yale-New Haven Defendants employ abusive collection practices, directly and through collection agencies, often hounding patients for payments on patently inflated bills…In January 2003, the Connecticut Center for a New Economy issued a report/study entitled Uncharitable Care, Yale-New Haven Hospital’s Charity Care and Collections Practices, by Grace Rollins (the “Uncharitable Care Report”).  According to its Executive Summary:  
‘Yale-New Haven, a non-profit, charitable teaching hospital, classifies most of its uncompensated service to the uninsured and underinsured as “bad debt.”  Even in instances where patients are unable to pay and would have qualified for the Hospital’s free care programs, Yale-New Haven’s “bad debt” accounts become subject to extremely aggressive collection tactics, including lawsuits, wage garnishments, back executions, liens and foreclosures.  [Emphasis added.]….’

“…Further, according to the Uncharitable Care Report:
‘Yale-New Haven does not simply write off and abandon what it reports as “bad debts.”  After a maximum of 120 days, any unpaid amount that the Hospital has billed to an individual (a “self pay”) balance, is turned over to either a collections agency or collections attorneys, with few exceptions.  Once turned over, the unpaid balance is tallied in the Hospital’s “bad debt” account for that fiscal year.  However, Yale-New Haven’s professional collectors may continue to pursue “bad debt” patients and their families for years, even decades’.”

Richard F. Scruggs, a lead attorney in the nationwide litigation, stated, “The harm the defendant nonprofit hospital systems and hospitals have created with their so called charity care policies is more insidious in some ways than what the tobacco and asbestos industries have caused with their products.  These hospital policies discourage patients who need medical care from seeking treatment at the price of aggressive collection practices.  They've erected a bar to hospital beds. Patients will delay and delay treatment until they can no longer wait and the problem becomes most acute and far more expensive.  In many instances, the boards and administrations of these nonprofits appear to have lost their moral compass.”

The law firms representing the plaintiff are: Hurwitz, Sagarin & Slossberg, LLC; Bernstein Liebhard & Lifshitz, LLP; and Vroon & Crongeyer, LLP.

To learn more about that the class action lawsuits by uninsured patients against nonprofit hospital systems and nonprofit hospitals, please visit www.nfplitigation.com

# # #