Uptick in Lawsuits by Hospitals to Recoup Unpaid Medical Bills

Hospitals across the country are suing patients for unpaid bills. Insured patients are the primary target for these lawsuits. Hospitals are making bold assumptions about their patient’s ability to pay. They are of the belief that if the patient has insurance, then they are able to pay the outstanding balance. The patient’s perspective is quite different. They do have insurance but cannot pay their deductible or copayment. High costs and low wages are the main reasons why patients cannot pay their medical bills on time.


Deductibles Have Tripped in the Last Decade

According to the Kaiser Family Foundation, today 82% of employer health plans have a deductible. In 2006, only half of employer health plans had a deductible. That is up 32% since 2006. The average deductible has also increased from $584 in 2006 to $1,655 today.


Consumer Debt Lawsuits

Hospitals are suing patients for unpaid medical bills in civil or small claims court, depending on the overall balance due. Once a judgment is obtained, the original medical bill tends to skyrocket. In addition to the unpaid medical bill balance which can include labs, emergency room visit, and physician fees, the patient may get slapped with court costs, interest, and attorneys’ fees. To collect the judgment, the hospitals are obtaining wage garnishments, which is a court order to deduct money directly from the patient’s paycheck to pay off the medical debt.


One of the largest hospital networks in New York is New York Presbyterian. In 2007, the hospital sued 729 patients. Again, they claim they are going after patients who can pay the bill but refuse to do so.


New York State Legislature’s Response

Lawmakers are concerned about the rise in lawsuits for the collection of unpaid medical bills. A bill was introduced in the New York State Assembly last month to address this rising trend and nip it in the bud before these lawsuits start bankrupting people. First, the New York Legislature seeks to cap interest hospitals can charge on medical debt to 3%. Currently, hospitals can add up to 9% interest on unpaid medical bills. Second, the bill pending before the New York Assembly seeks to shorten the statute of limitations to 2 years. The statute of limitations is the time a creditor, or hospital in these types of cases, has to file a lawsuit for unpaid medical bills. Currently, the statute of limitations for unpaid medical bills is 6 years.  


Bill Number: S6757 is currently in committee. To become law it has to be placed on the floor calendar and passed in both the Assembly and Senate. Once passed, the bill is delivered to the Governor and is either signed by the Governor to become law or vetoed.

Contact Information