Five hospital systems in North Carolina were responsible for 96% of the lawsuits filed in the state between January 2017 and June 2022 to collect on unpaid medical debts, according to a recently released report, leading a state regulator who has been championing legislation to reform medical debt collection in the state to renew his calls for change.
The report identified nearly 6,000 collection lawsuits that were filed during the five-and-a-half year period, which generated more than $57 million in judgments for the hospitals. Under existing law in North Carolina, creditors are allowed to charge 8% interest annually on outstanding debts, which added “tens of thousands of dollars” to the amounts owed by some families. Interest accounted for $20 million, or 35% of the total judgments that were awarded, according to the report.
In some cases, spouses were targeted for collection after their partners had passed away, and in others, patients were surprised to learn that liens had been placed on their properties because of unpaid healthcare debts.
“The people of North Carolina don’t consume healthcare. It consumes them,” said state Treasurer Dale Folwell, a Republican, during a press conference Aug. 16, according to a published report. “What this report will show you is that citizens are under siege regarding what’s happening with medical billing.”
Folwell has been one of the leaders in North Carolina that have been attempting to get the Medical Debt De-Weaponization Act to become law. The law would lower the judgment interest rate to 5%, require collectors to wait a year before reporting a medical debt to a credit reporting agency, and allow collectors to only engage in collection activities that are part of the healthcare facility’s billing and collection policy, among other provisions.
“It’s just another example of hospitals putting profits ahead of patients. It’s like an onion. The more you peel it back, the more you cry,” Folwell said. “They should stop breaking people’s kneecaps to collect these debts.”
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