Jessica Mounce of Lowell had health insurance, but Northwest Medical Center-Springdale wouldn’t accept it when she came to its emergency room in late 2013 after being rear-ended in an auto accident.
Instead, the hospital filed a medical lien against the 24-year-old elementary school teacher in hopes of collecting $6,100 from the at-fault driver’s insurance rather than a fraction of that amount that Mounce’s insurance would have paid.
Mounce, represented by Fayetteville attorney Shawn Daniels, sued the hospital in federal court last year. It turned out to be the first of at least four complaints in Arkansas challenging the growing and controversial practice of hospitals refusing to accept the health insurance of patients who have been injured by the actions of others.
Plaintiffs’ attorneys say the hospitals are creating financial nightmares for injured patients in hopes of being paid higher list prices for services out of the patients’ settlements with the at-fault party rather than the discounted prices that health insurance companies have negotiated for policyholders.
Mounce is seeking class-action certification for her complaint, which also names as defendants Northwest Arkansas Hospitals LLC and its collection company, Professional Account Services Inc. Her allegations include violations of the Arkansas Deceptive Trade Practices Act and interfering with the contractual relationship between Mounce and her insurer, Arkansas Blue Cross & Blue Shield.
A decision for class certification is expected this month.
Attorneys for Northwest Medical Center said the case should be thrown out.
“Mounce cannot prove that defendants did anything wrongful or improper in asserting and collecting a hospital medical lien,” attorney Gary Marts Jr. of Little Rock said in a Sept. 1 motion to dismiss the case. That motion is pending.
Other plaintiffs are seeking class-action status in three separate suits against Baptist Health of Little Rock, St. Bernard’s Hospital Inc. of Jonesboro and Lawrence Memorial Hospital in Walnut Ridge.
“The assertions contained in these lawsuits are wrong,” a Baptist Health spokesman said in an email to Arkansas Business. “Baptist Health’s practices are consistent with Arkansas law and are widely practiced by most hospitals.”
Baptist Health spokesman Mark Lowman would not comment further, but the Mississippi “injury claims expert” that Baptist contracted in 2012 has bragged about its success.
RevClaims, of Jackson, 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.”
In 2014, Baptist paid RevClaims $2.1 million for “claim assistance,” according to the nonprofit hospital systems’ most recent 990 form filed with the IRS.
The billing strategy has piqued the interest of legislators in other states. Indiana, for example, outlawed the billing model in 2013.
“There’s been several other states that have taken legislative action to stop this process going on that’s being used by these hospitals,” Daniels said. But he said he knew of no legislation to curb the practice being considered in Arkansas.
Elisa White, vice president and general counsel for the Arkansas Hospital Association, said that she wasn’t familiar with the lawsuits and couldn’t comment on the allegations.
“It’s well-established law that practitioners, including hospitals … can have a lien against a third-party recovery when there has been an injury to someone,” White said. “It’s pretty clear under the law that that’s allowable.”
White said the law wasn’t intended to boost revenue for providers. “It’s a law set up to say you can provide this treatment which is often very serious and very expensive and you don’t have to worry about whether you’re going to get paid.”
Patients’ Cases
Northwest Medical Center “represents to patients” that it will file bills with their health insurance companies, according to Mounce’s lawsuit.
Mounce said in a Jan. 28 deposition taken for the case that every time she went to the Springdale hospital the admissions procedure seemed simple.
“I give them my insurance card. They run it through, and my insurance pays,” Mounce said. “Every time except for this time.”
She said she went to the hospital because “the pain in my back started getting pretty unbearable.”
At the hospital, the admissions officer quizzed Mounce about the auto accident and asked whether it was her fault, Mounce said.
“I told her no, and she asked me if the other … people had insurance,” Mounce said. At the time, she didn’t know whether the other driver had insurance.
The hospital took her insurance card, and Mounce was treated on Nov. 30, 2013. She said she expected the hospital to file the claim with Arkansas Blue Cross & Blue Shield.
But it didn’t.
Instead, Northwest Medical notified Mounce on Jan. 9, 2014, that it would be filing a lien for $6,105. The lien was filed in Washington County in February 2014, the lawsuit said.
Mounce and the attorney handling her accident claim, Jeff Slaton of Springdale, urged Northwest to file Mounce’s claim with ABCBS. The hospital never billed Mounce’s insurance, and eventually its collection agency, Professional Account Services Inc. of Brentwood, Tennessee, began dunning Mounce, the suit said.
“They’re calling her at work, sending her collection letters,” attorney Daniels told Arkansas Business. “They’re treating her just like the deadbeat debtor.”
Meanwhile, 180 days had passed since Mounce was treated, meaning she missed the deadline to file her claim with ABCBS.
A year after filing the lien, the collection agency agreed to take 50 percent of the bill to settle Mounce’s claim. That deal didn’t make Slaton happy.
“PASI agreed to reduce this wrongful lien to an amount that was still, in my belief, wrongful, as it was still a substantial amount larger than what I believed would have been owed by a Blue Cross member after adjustments and any co-insurance amounts that would have been owed,” Slaton said in a deposition taken March 31.
Daniels said he will attempt to prove that the hospital’s collection practice is unlawful. “They’re taking advantage of the lien law and using it in a manner it was never intended,” he said.
What’s more, the hospitals are contractually obligated to bill insurance companies when they treat their policyholders.
“Really it’s a shame, because in those circumstances an injured patient is worse off than somebody who’s uninsured,” Daniels said. “Because essentially they’re paying a premium for nothing if their injuries were caused by a third party in a car wreck.”
ABCBS spokeswoman Max Greenwood said in a statement to Arkansas Business that the insurance company is not involved in the conflict.
“We really don’t have any idea what transpires between hospitals and third parties. We simply process claims when they are submitted to us,” she wrote.
Turning to RevClaims
In 2012, Baptist Health was looking for a way to increase revenue while improving collections, according to RevClaims’ case study.
“In the past, the lack of internal legal knowledge prevented Baptist from maximizing recovery for these complicated claims and ultimately, led to lost revenue,” the study said.
But that changed when it hired RevClaims.
“According to Baptist staff, it was RevClaims’ expertise that leveled the playing field when dealing with personal injury attorneys and ultimately expedited the cumbersome payment process relating to injury and workers’ compensation claims,” the study said.
RevClaims didn’t return a call seeking comment, but it’s fair to say that Brian Whitley of North Little Rock is not impressed.
Whitley was severely injured when he collided with a car being driven the wrong way on Interstate 440 in November 2013.
Whitley went to Baptist Health Medical Center-Little Rock; the other driver died in the accident.
Whitley, now a captain with the Little Rock Fire Department, was treated at Baptist until July 2014 and the medical bills totaled nearly $64,000, which exceeded the $50,000 limit of liability coverage of the driver who caused the accident, according to the lawsuit Whitley filed against Baptist Health and its liability carriers.
At the time of the accident, Whitley informed Baptist that he was insured by QualChoice of Little Rock, according to the complaint filed by attorneys Donald Campbell III and Kendel Grooms of Little Rock and Sach Oliver of Rogers.
Only later did Whitley learn that Baptist wouldn’t file his claim with QualChoice and would refuse to give him a sufficiently detailed bill that he could file the claim himself, the lawsuit said.
Instead, a medical lien was filed against Whitley to collect the nearly $64,000.
Whitley said in the lawsuit that RevClaims began “harassing” collection efforts through phone calls and letters “seeking to collect a ‘debt’ that was never owed because the Baptist Defendants refused to bill” QualChoice.
In November 2015, two years after the accident, Baptist and RevClaims reduced the amount of the lien to about $19,500, which is what QualChoice would have paid had it been presented the claim in the first place, the lawsuit said.
Whitley is seeking class-action status for his lawsuit, which is in U.S. District Court in Little Rock.
Although RevClaims wasn’t named as a defendant in Whitley’s class-action complaint, it has been named in two similar lawsuits that Jonesboro attorney Brandon Lacy has filed in federal court in Jonesboro for patients treated at St. Bernard’s in Jonesboro and Lawrence Memorial Hospital in Walnut Ridge.
Lacy said the issue came on his radar because he represents a number of people who have been in auto accidents. The complaint about the liens being filed has been going on for years, he said, but he was waiting for the right set of circumstances before he could file a lawsuit seeking class-action status.
Hospitals “are doing this statewide,” Lacy said. “Once we recognized they were doing it systematically, that was when we decided enough is enough.”
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