Christopher Todd
Morrison, P.C.

Christopher Todd Morrison, P.C.

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Non-profit hospitals, low-income households and medical lawsuits

The public debate about the broken healthcare and medical insurance system rages on, and will likely continue into the foreseeable future. 

And now, people who are already struggling to survive under the burden of hospital bills are facing an ironic crisis: lawsuits from medical institutions that claim non-profit status. The Oklahoman reported records of over 22,000 lawsuits filed by dozens of hospitals in that state, with the highest number coming from a religious non-profit healthcare organization. 

Are Texas non-profit hospitals charitable organizations? 

The Texas Medical Board recognizes two separate designations for non-profit healthcare organizations. The first license is for a charitable health center for the communities, migrants or homeless individuals who need medical care. The second, and far more common, is a non-profit health organization that furthers public health, medical education or research, but is not a charity. 

The IRS requires non-profit hospitals to provide financial assistance to low-income families and individuals. Yet, there is no federal mandate that declares a minimum amount of benefits to give. Non-profits may not aggressively collect overdue medical debts unless they have determined the debtor does not qualify for aid. However, with no clear definition of “aggressive collections,” some healthcare organizations might test their limits. 

Who are the victims of medical debt lawsuits by non-profit hospitals? 

In June 2019, NPR published a story about a low-income individual that was sued by a non-profit hospital, even though the person was eligible for the 100% financial assistance program offered by that healthcare establishment. The patient claimed there was no communication regarding the overdue bill or an offer of assistance. Unfortunately, many across the nation share a similar story. 

It is true that non-profit hospitals need cash flow to keep themselves in operation so that they can continue serving the public interest. NPR quoted a law professor who stated, “There has to be a balance between getting their bills paid but also being a reasonable community member.”