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Patients Sue UK HealthCare, State Over Debt Collection Practices

UK HealthCare is the only hospital system in Kentucky tapping the Department of Revenue to collect its debts.
UK HealthCare is the only hospital system in Kentucky tapping the Department of Revenue to collect its debts.

Five patients are suing the University of Kentucky health care system and the Kentucky Department of Revenue over medical debt collection practices.

The plaintiffs, represented by the Kentucky Equal Justice Center and the National Center for Law and Economic Justice, allege UK HealthCare and the DOR violate patients rights to due process by collecting debts without giving patients adequate notice or opportunity to contest the debts. The class action lawsuit is seeking declaratory and injunctive relief, meaning the plaintiffs and their lawyers are asking the DOR and UK HealthCare to stop collecting debts until patients are given adequate notice and the chance to challenge debts.

UK HealthCare is the only hospital system in the state that can utilize the DOR for collection. This means, unlike other health care providers who would have to take debtors to court, UK HealthCare can avail itself of the state’s powerful collection tools including wage garnishments, withholding tax returns and liens on property, all without a court order.

Lawyers for the plaintiffs say that bypassing the established legal system for debt collection robs patients the chance to properly challenge their debts.

“Sometimes hospitals make billing mistakes. Without a process for challenging those mistakes, UK HealthCare patients are left paying whatever UK HealthCare and the Department of Revenue decide to charge,” Betsy Davis Stone, an attorney at Kentucky Equal Justice Center, said in a press release. “The Constitution gives these patients the right to stand up and challenge debts before the government takes their paychecks, their savings, their homes, and their livelihoods.”

As the Kentucky Center for Investigative Reporting reported in March, over $76 million in health care debt has been collected by the Kentucky Department of Revenue on behalf of UK HealthCare since 2009. When it collects, the DOR adds a 25 percent collection fee and interest, currently 7 percent. Those are the highest such fees in the country.

The DOR has hit the pause button on such collection methods during the coronavirus crisis, but patients are still receiving threatening letters and some have had their wages garnished even after the governor ordered the practice halted.

Danny Metts received treatment at UK HealthCare in Lexington starting in late 2016. UK gathered information on Metts’s income before treatment started and, throughout the process, he was told he wouldn’t owe a thing.

A few months later, Metts says a representative from UK HealthCare called him to say the hospital had made a mistake. Metts says the representative told him to make a substantial payment, set up a payment plan of $300 a month, or risk going into collections.

Metts is on Social Security, so when he told the representative he didn’t have that kind of money, he says he was told to use credit cards or borrow the money to make a payment. When he said he wouldn’t be taking either of those steps, he was given an ominous warning. Metts says the UK HealthCare billing department told him “you don’t understand who you are dealing with… We’re UK, our collection is the Kentucky Department of Revenue, they can seize your assets. This has to be done.”

When his debt was transferred to the Department of Revenue, Metts owed $4,524 to UK HealthCare, according to billing documents. The Kentucky DOR had added over $1,131 in fees and interest. Metts currently pays $25 a month towards the debt, which continues to accrue interest.

UK HealthCare spokesman Jay Blanton told KyCIR that he couldn’t comment on pending litigation, but that in general, UK only refers debt to the state for collections after multiple attempts have been made to reach the patient and other collection methods have been exhausted.

The Kentucky DOR has not also not responded to a request for comment. But Kentucky Finance and Administration Cabinet Director of Communications Jill Midkiff previously told KyCIR in March that it collects debts for a variety of state agencies only when as a collections method of last resort. The debt is supposed to have gone through any appeals or verification processes by the time it reaches the DOR.

Metts joined the lawsuit, filed in the U.S. District Court for the Eastern District of Kentucky in Frankfort, because he wants people to know that if they owe money to UK HealthCare and the Department of Revenue, they won’t be on a level playing field. “UK has a good basketball team, but its hospital just doesn’t play well,” Metts said.

Jared Bennett is an investigative reporter and deputy editor for LPM. Email Jared at jbennett@lpm.org.

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