Hospitals Sued 7,517 Patients, Family Members Over Medical Debt

Study by Duke University School of Law researchers and the North Carolina Office of State Treasurer finds that North Carolina’s hospitals obtained legal judgments, including interest charges, from patients with medical debt

(Raleigh, N.C.) – North Carolina’s hospitals sued 7,517 patients and their family members to collect medical debt from January 2017 through June 2022, according to a new study jointly authored by Duke Law School faculty and the Office of State Treasurer (OST). Many of these legal actions resulted in default judgments in state district courts and included awards of 8% interest charges on patients’ medical debt. In total, interest charges and other added fees accounted for 35.4% of the $57.3 million in total judgments owed by patients. Nonprofit hospitals were responsible for 90.6% of the 5,922 lawsuits against patients.

North Carolina State Treasurer Dale R. Folwell, CPA, is calling on the North Carolina House of Representatives to pass Senate Bill 321, the Medical Debt De-Weaponization Act. The bill would protect patients and their families by capping interest in medical debt collection, requiring more transparency in medical bills and providing patients with additional consumer protections. The Senate unanimously passed the bill despite opposition from hospital lobbyists.

The report by Duke University and OST researchers found that five systems — Atrium Health, Caromont Health, Sampson Regional Medical Center, Community Health Systems and Mission Health — were responsible for filing 96.5% of the 5,922 lawsuits against patients, and that the state was home to eight “litigious” hospital systems, defined by the authors as systems that brought more than 40 lawsuits during the 4.5-year sample.

OST also independently conducted a series of patient interviews (see attached). These interviews revealed that having health insurance was not enough to protect families from lawsuits, and some patients did not even know they had been sued. One 80-year-old couple did not know about a $90,000 lien against their house until contacted by OST researchers. Another 70-year-old couple cannot retire because Atrium Health has a $192,000 lien against their house, despite earlier assurances of help with the bills.

In North Carolina, medical debt judgments can last up to 20 years, and judgments can automatically act as liens against patients’ homes. The study revealed that hospitals won default judgments across a majority of the cases filed in district court. Patients reported that even when they did try to fight the lawsuits, they lacked the information needed to understand the hospital bills.