St. Luke's Health settles patient litigation over insurance billing practices

St. Luke's Health System in Kansas City, Mo., will pay $3.5 million and attorneys fees after it refused to accept health insurance from hundreds of patients injured in car accidents in lieu of trying to collect potentially higher payouts from automobile insurers instead.

Three patients sued the hospital after it attempted to recoup payments they received from their automobile insurers for medical treatment. Such payments are often higher than what St. Luke's can collect from health insurers because the automobile insurers don't negotiate payment levels in advance, according to the Kansas City Star.

If the automobile insurer didn't offer a settlement, St. Luke's often filed liens against patients directly.

Under the terms of the settlement, St. Luke's agreed to accept only valid health insurance from patients and can only file liens against those who have co-payments or other out-of-pocket costs. It also agreed to drop collections and liens against 193 insured patients whose coverage it initially rejected. It also established a fund of $500,000 for the 737 patients.

The agreement covers St. Luke's eight hospitals in Missouri, but not its four facilities in Kansas.

The Kansas City Star reported that three other hospitals in the region are also currently facing lawsuits for similar practices. It suggested that the St. Luke's settlement may be the first in the U.S. to end such conduct.

Health plans and employers often try to collect civil payouts to accident victims, a practice known as subrogration. However, attorneys suggest that the practice also occurs in many hospitals, including outside of Missouri. "We are looking at cases in other states where hospitals are also refusing to submit a patient's bill to health insurance in auto accident cases," Ralph Phalen, an attorney involved in the St. Luke's litigation, told the Kansas City Star.

To learn more:
- read the Kansas City Star article