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MS hospital system reaches agreement with Scruggs for charity care practices

Compliance Monitor, August 11, 2004

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In order to steer clear of a class-action lawsuit, North Mississippi Health Services, a six-hospital health system in Tupelo, MS, reached an agreement with attorney Richard Scruggs and his firm to settle for $150 million, the Associated Press (AP) reported August 6.

The lawsuits, lead by Scruggs, target 40 not-for-profit hospitals and systems covering more than 300 hospitals in 21 states. The suits allege the named hospitals overcharge uninsured patients and use aggressive collection practices.

John Heer, CEO of North Mississippi Health Services, said in a statement that the system needed to address its charity care practices, and it settled because "getting tangled up in a lawsuit would distract our attention away from those issues."

North Mississippi Medical Center has agreed to provide free care to patients who make up to twice the income outlined in the federal poverty level guidelines, AP reported.

Uninsured patients who make between two and four times the federal rate will receive a discount off the Medicare rate for procedures, according to the agreement. Uninsured patients who paid for services over the last three years will be eligible for refunds.

Scruggs estimated the hospital will pay about $150 million for refunds as well as providing charity care for the next seven years.

The settlement is subject to federal court approval.

For more information, click here.

In related news, HCA, Nashville, and Universal Health Services, King of Prussia, PA, were named in a suit alleging both systems charge uninsured patients up to six times the price of medical care. The suit was filed in Nevada where both systems operate hospitals.

According to an August 6 Associated Press report, the lawsuit said the companies also tried to collect payments from uninsured patients through "harassing and predatory collection efforts including lawsuits, which result in property liens and wage garnishment."

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