Study: Wisconsin hospitals sued more patients, garnished more wages in recent years

Wisconsin hospitals filed 37% more medical debt lawsuits in 2018 than in 2001, and the targets were disproportionately Black patients and those living in rural areas, a new Health Affairs study found.

Wisconsin hospitals sued patients at a rate of 1.53 per 1,000 residents in 2018, a year they filed about 8,900 lawsuits, according to the findings released Monday. That’s up from 1.12 per 1,000 residents in 2001, when they filed just under 5,900 lawsuits. The share of cases that resulted in wage garnishment jumped 27% during that time. Just over half of cases filed in 2018 culminated in wage garnishment.

“Even before we get to the increase, the actual incidence of it is way higher than I would have guessed,” said Zack Cooper, an author of the study and associate professor of health policy and management and economics at Yale University. “We’re seeing 1 in 1,000 residents, thereabout of 1% to 2% of discharges have a lawsuit. That’s concerningly high.”

The average lawsuit size was stable across the time period studied, ranging between $2,522 and $3,939.

Cooper said he and his team chose to study Wisconsin because it’s among the dozen states that did not expand Medicaid. They assumed lawsuits would be more common in states that did not expand the low-income healthcare program, because more residents will be uninsured or underinsured. Wisconsin’s court record system was also particularly conducive for the research because documents are accessible online.

The study noted that a small set of hospitals is more likely to sue than others. The 10% of hospitals that sued the most were responsible for almost 41% of the lawsuits. That squares with previous research on the subject.

SSM Health’s St. Agnes Hospital in Fond du Lac filed the most lawsuits of any hospital in Wisconsin, having filed 2,632 between 2014 and 2018. That hospital saw almost 7.8% of the state’s admissions during that time period and 0.4% of its total net patient revenue.

That hospital joined SSM in 2018, so most of the lawsuits were filed under its previous ownership, SSM spokesperson Patrick Kampert wrote in an email.

Second on the list was Mile Bluff Medical Center, an independent hospital in Mauston, which filed almost 1,800 lawsuits. Mile Bluff handled 27% of the state’s admissions during that time period and drew 1% of net patient revenue statewide. Mile Bluff CEO Dara Bartels said in a statement that the system restructured its billing process in recent years to identify payment issues faster and connect patients with financial help.

Several Advocate Aurora Health hospitals were on the list, including Aurora St. Luke’s Medical Center in Milwaukee in fourth place, having filed about 1,600 lawsuits. Advocate Aurora’s hospitals in Oshkosh, West Allis, Kenosha, Green Bay, Milwaukee, Marinette, Grafton, Sheboygan, Elkhorn, Burlington and Hartford were in the top 50. Advocate Aurora maintains headquarters in Milwaukee, Wisconsin and Downers Grove, Illinois. The not-for-profit health system drew north of $13 billion in revenue in 2020, although its operating margin was a slim 1.6%.

Advocate Aurora stopped pursuing litigation over unpaid bills in February 2020, spokesperson LeeAnn Betz wrote in an email. Any active cases as of that date were dropped and no new cases filed since then, she said.

“Even before then, any litigation related to an individual’s bill was a last resort following months of many attempts to connect with the patient and offer payment options including interest-free payment plans,” Betz said.

Ascension Health was another frequent name on the study’s list of litigants. The health system’s St. Elizabeth campus in Appleton came in sixth place, having filed about 1,500 lawsuits between 2014 and 2018 with 3.7% of the state’s admissions. Ascension’s hospitals in Stevens Point, Weston, Merrill, Chilton, Stanley, Milwaukee, Racine, Eagle River, Mequon, Franklin, Tomahawk and Oshkosh.

St. Louis-based Ascension has more than 140 hospitals and $25 billion in annual revenue, although it posted a 2.5% loss margin in its fiscal 2020. Ascension did not respond to a request for comment.

Aspirus Health recently acquired seven of Ascension’s Wisconsin hospitals, including those in Eagle River, Merrill, Stanley, Tomahawk and Stevens Point. Several Aspirus hospitals made the study’s list, including its Divine Savior Hospital in Portage, which filed almost 1,600 lawsuits between 2014 and 2018. Aspirus did not share a comment as of press time.

Gundersen Health, whose La Crosse hospital was number seven on the study’s list, said in a statement that it only sues after all efforts to provide financial assistance have been exhausted. The system said most cases are resolved before any court proceedings.

The fact that large systems comprise a significant share of the lawsuits makes the issue more addressable, said Neale Mahoney, another study author and economics professor at Stanford University.

“In some sense, it makes the problem easier to solve if you can actually get through to the C-suite in these organizations,” he said.

Critical-access hospitals were more likely to sue patients than any other type of hospital, and not-for-profit hospitals were more likely to sue than for-profits, the study found. Hospitals with higher shares of Medicare discharges and lower shares of commercial discharges were also more likely to sue patients.

Cooper said there’s probably two things happening there. One: The for-profits likely are preventing patients who can’t pay from getting in the door. Two: Hospitals that are more financially distressed are using lawsuits as another lever for recouping payment.

Despite receiving government subsidies, critical access hospitals face shrinking local populations, high regional unemployment rates and challenges finding enough staff. More than 110 rural hospitals closed between 2013 and 2020.

But Cooper said the lawsuits might also be designed to send a message to poor residents who don’t pay their bills. “Look at the way we’re treating your neighbors. We’ll sue you.”

On a per capita basis, the study found Black residents and poor patients in rural areas were more likely to be sued during the stud period. A separate study found Wisconsin has one of the country’s highest household income gaps between Black and white residents.

“Like so many things in society, this disproportionately impacts minority communities,” Mahoney said. “I’ve seen enough evidence where that is not surprising, but still I think deeply worrying at the same time.”