Uninsured patients say they were gouged by John Muir Medical Center

0 Comments | Oakland Tribune, Sep 25, 2008 | by Sandy Kleffman

A tentative settlement in a class-action lawsuit against John Muir Health will bring refunds or discounts to thousands of uninsured patients who say they were hit with greatly inflated medical bills.

The suit accuses John Muir of charging people who lack insurance high prices and then using overly aggressive collection practices when they fail to pay.

Under the settlement, which still must be finalized by a judge, nearly 53,000 uninsured patients who received care at John Muir's Walnut Creek or Concord hospitals from March 1, 2002, to May 21, 2008, will be eligible for a refund or discounted bill, said attorney Kelly Dermody of Lieff, Cabraser, Heimann & Bernstein in San Francisco, who represented the patients.

The reductions would equal 40 percent of charges at the Walnut Creek hospital and 50 percent at the Concord hospital.

Only uninsured people with household incomes of less than $250,000 a year will qualify.

Dermody estimated the value of the bill adjustments at $113 million. Much of that will represent a paper loss for John Muir, however. Since many uninsured people do not pay their bills, it will be a discount on money owed.

But for those who did pay their bills, refunds will automatically arrive once the agreement is finalized, probably sometime next spring.

"While John Muir has been gouging the uninsured, it has reported substantial profits," the suit claims, including profits of $96 million in 2004 and $113.6 million in 2005.

Similar lawsuits alleging excessive charges for the uninsured have been filed against Sutter Health, Catholic Healthcare West and other hospital chains.

In an e-mail, John Muir spokeswoman Patty Hefner said the hospital "chose to settle this lawsuit to avoid costly litigation and concentrate our efforts and resources on what we do best -- providing health care to the communities we serve."

"This settlement is consistent with our charity care policies and other intensified efforts we have made over the years to further assist those who are economically disadvantaged, including the uninsured, underinsured and working poor members of our community," John Muir president and CEO J. Kendall Anderson said in a written statement.

John Muir has agreed to revise its pricing policies and limit and monitor its collection agencies, Dermody said.

"To John Muir's extreme credit, they took this very seriously," Dermody said. "John Muir has really stepped up and demonstrated its intent to be a good citizen in the community."

For years, consumer groups have sought to make gouging of the uninsured a major issue.

Hospitals typically have "list prices" for procedures that can be as much as five times higher than what most people pay. Insurance companies and government programs such as Medicare and Medi-Cal negotiate lower rates for their members.

But because the uninsured have no one to negotiate on their behalf, they often get hit with the full sticker price, even though they frequently have the least ability to pay.

The lawsuit was filed on behalf of three uninsured John Muir patients.

Concord resident Joyce Kraus went to the emergency room at the Walnut Creek hospital in February 2003 for treatment for an undisclosed condition. She was billed $1,792.50, an amount the lawsuit claims was excessive.

Concord resident John Redding arrived at the emergency room at the Concord hospital in May 2004 with severe abdominal pain. After sitting in the waiting room for an hour, he was seen by a few emergency room doctors "who each examined him briefly," according to the suit.

Redding received pain relief injections and a CT scan and was admitted to the hospital for observation. He was discharged four days later "without a specific diagnosis or instructions for further medical care," the suit says. His bill: $44,678.58.

The third patient, Walnut Creek resident Pamela Hope Cincotta, went to the emergency room at the Walnut Creek hospital in June 2004 for treatment of an undisclosed condition. She was billed $6,500.87.

"These weren't just phantom charges that no one cared about," Dermody said. John Muir later sued Redding and Cincotta in an attempt to collect.

As part of the settlement, John Muir has agreed to establish policies so that uninsured patients pay rates comparable to those with private insurance, Dermody said. It also will seek to ensure that patients are better informed about charity care and discount policies.

Late Thursday, the hospital issued a news release stating that its board of directors recently made a commitment to increase John Muir's contributions to "vulnerable populations" from $4 million in 2007 to an estimated $13 million by 2012.

A Contra Costa Times investigation last year found that John Muir provided substantially less in charity care than several other nonprofit hospitals in the East Bay, even though it is among the most profitable. Charity care is free or discounted care given to patients who qualify.

The Times' review also found that many hospitals do not do a good job of informing patients about the availability of financial assistance.