A Little Rock firefighter recently scored a legal victory against the state’s largest hospital system over how it bills patients injured by the actions of others.
Chief U.S. District Judge D.P. Marshall Jr. ruled that the suit, filed by Brian Whitley against Baptist Health of Little Rock, will proceed as a class action.
Baptist’s billing strategy, plaintiffs say, can delay and reduce financial settlements to which victims are entitled.
Whitley’s suit stems from a car accident in November 2013, in which he was severely injured by a driver going the wrong way on Interstate 440. The firefighter, a North Little Rock resident with health insurance through QualChoice of Little Rock, was taken to Baptist Health Medical Center-Little Rock.
But instead of billing QualChoice for the medical care, Baptist Health filed a medical lien against Whitley. Here’s why: QualChoice would have paid a discounted rate negotiated with Baptist for its insurance customers. The medical lien against Whitley directly could result in a much higher list-price payment from the proceeds of any settlement Whitley would get from the at-fault driver’s insurance.
Whitley sued Baptist Health in 2016 and sought class-action status, alleging that Baptist interfered with a contractual relationship and accusing the hospital of violating the Arkansas Deceptive Trade Practices Act. Judge Marshall said the class members will be patients who had health insurance through one of six major providers and from whom Baptist sought to recover the full amount of the bill through other sources, such as the at-fault driver or his liability carrier.
In Whitley’s case, Baptist left a $64,000 lien in place against Whitley, even though it billed QualChoice for his treatment, and QualChoice paid a portion of the bill. The lien prevented Whitley from receiving a $50,000 settlement from the at-fault driver’s insurance carrier. The lien was eventually released, and Whitley received the settlement.
“It’s unclear exactly how many of these patients Baptist treated like Whitley,” Marshall wrote in his 22-page opinion and order filed Sept. 13 in U.S. District Court in Little Rock. More than 6,000 people are estimated to be in the class.
Baptist Health said in its court filings that first seeking payment from liability insurance carriers rather than a patient’s health insurance company is standard procedure for hospitals, and it did nothing wrong. In 2016, a Baptist Health spokesman told Arkansas Business that the practices of the health care system, which now features 10 hospitals, are consistent with Arkansas law and are widely used by most hospitals.
Whitley’s case was one of several similar suits in recent years that challenged the practice of hospitals refusing to accept the health insurance of patients who were injured in accidents.
Hospitals, however, have been notching legal victories in those cases. In 2017, a federal judge dismissed a case filed against the injury claims company RevClaims LLC of Jackson, Mississippi, and St. Bernards Hospital of Jonesboro.
Sue Garrison of Craighead County had sought class-action status in that case, in which, she said, the hospital sought to collect the full amount of her hospital bill from the at-fault driver who injured her rather than her health insurance company. Garrison also named as defendants Baptist Health, Lawrence Memorial Hospital of Walnut Ridge and White River Health System Inc. of Batesville. The hospitals argued that Garrison was not injured by any conduct traceable to them and the judge agreed.
The billing strategy has caught the attention of legislators in other states. Indiana, for example, outlawed the billing model in 2013.
A case similar to Whitley’s is pending against Conway Regional Medical Center in Faulkner County Circuit Court. An attorney for Conway Regional, Gordon Rather Jr. of the Little Rock firm Wright Lindsey & Jennings, declined to comment on the case.
Baptist Health declined to comment on Whitley’s case last week.
Still, the depositions filed in Whitley’s case provide a behind-the-scenes look into hospital billing.
Seeking Outside Help
Billing an at-fault party’s liability insurance for a patient’s health care has been going on for decades, Julie Carpenter, Baptist’s vice president of revenue cycle service, said in a February deposition filed in Whitley’s case. “Everybody that I’ve ever known, that was their policy,” she said.
In fact, a lot of health insurance companies will get their money back from a hospital when they learn that the patient was involved in an auto accident, Carpenter said. By that time, however, the at-fault driver’s auto insurance company would have already paid the patient, who probably spent the money, she said.
“And so the patient gets the money,” Carpenter said. “The hospital gets zero. And that has been the case for 20-something years, probably longer than that. … That’s how the payers operate.”
To get part of the insurance settlements, Baptist started filing medical liens against the patient. But the hospital was having trouble handling the liens, Carpenter said.
“We did it internally and we did a terrible job because we … had $8-an-hour employees that were trying to work with the attorneys on … either the patient’s behalf or the people that were at fault with the accident,” she said. “We couldn’t go up against those attorneys, and so we needed some help.”
So in 2012 Baptist Health hired RevClaims. RevClaims files a lien for the full amount of a hospital bill on “accident claims,” Brad Williams, CEO of RevClaims, said in an April deposition for Whitley’s suit.
Williams said such liens are “a security interest device that the law authorizes for these type claims, so we use it.”
RevClaims’ work for Baptist Health — handling patient claims related to injury and workers’ compensation claims — seemed to be successful. RevClaims said in a case study on its website that within the first year Baptist Health “saw a hefty increase of $600,000 each month in injury claims recovery.”
Williams said “a lot” of the money recovered stemmed from workers’ comp claims. Workers’ comp claims are not part of the class-action case.
Baptist paid RevClaims $2.1 million for “claim assistance” in 2014 and $1.9 million in 2015, according to the nonprofit hospital system’s 990 forms filed with the IRS. (For 2016, the latest tax form available, RevClaims was not listed in the hospital system’s five highest-paid independent contractors.) RevClaims was paid a 15% commission at the time, suggesting it collected $14 million for Baptist Health in 2014 and $12.6 million in 2015. The commission was later reduced to 14%, according to Carpenter’s deposition.
Baptist Health sends to RevClaims the hospital bills of patients who are suspected of being in an auto accident, Donna Crutchfield, Baptist’s director of patient financial services, said in her February deposition. Baptist doesn’t know who caused the accident; that’s for RevClaims to figure out, she said.
“We don’t even know what [insurance] plan they have,” Crutchfield said. “If they’re in a motor vehicle accident, they’re going to RevClaims.”
One of Whitley’s attorneys, Jeffrey Leonard of Birmingham, Alabama, quizzed Crutchfield about what would be better financially for the patient — paying a health insurance copay for the treatment or the hospital’s full list amount of the price.
“We bill … the same way every single time, whether the patient is going to owe more or less,” Crutchfield said. “We don’t pay any attention to what’s best for the patient financially.”
Whitley’s case also caused problems for Baptist Health. After Whitley received about $18,000 worth of medical care related to the accident in November 2013, Baptist filed a medical lien against him for the amount.
Whitley returned to Baptist in January 2014 for a knee surgery also related to the accident, a surgery that has a list price of about $46,000, and the lien was increased to about $64,000.
Baptist did file a claim with QualChoice. But it missed the deadline to file for Whitley’s first treatment, and QualChoice declined to pay it. (Missing the claim deadline meant the hospital also couldn’t seek payment from the insured patient.) QualChoice paid Baptist about $7,000 for Whitley’s knee surgery, about $39,000 less than the list price.
Nevertheless, Baptist kept the $64,000 lien in place until late 2015. At the end of 2015, Baptist reduced the lien amount to about $20,000, which included the first bill plus a copay for the January 2014 care, according to Marshall’s filing.
Baptist eventually released the lien. Only then did Whitley accept the $50,000 settlement, more than two years after it was offered. Had he accepted it while the lien was in force, Baptist could have claimed the remaining lien amount.
Marshall said in his memorandum opinion and order that “Whitley’s strongest claim … is that Baptist persisted in its approximately $64,000 lien for more than a year after getting paid by QualChoice for the second round of treatment.”
He said that a jury could find that Baptist’s strategy — tying up Whitley’s settlement funds by keeping a lien for the full bill after accepting payment for most of it — was deceptive under the Arkansas Deceptive Trade Practices Act.
“Considering the thousands of Baptist liens, and that Baptist maintained its lien against Whitley for more than a year after accepting payment from QualChoice, it is likely that Baptist held on to other liens for too long,” he wrote.
After Marshall’s ruling, Baptist Health asked the 8th U.S. Circuit Court of Appeals for permission to appeal it. The appeals court denied the request last week.