Wisconsin hospitals filed 37% more lawsuits against patients from 2001 to 2018, study finds

Hospital lawsuits against patients over unpaid medical bills rose 37% in Wisconsin from 2001 to 2018, with Black patients and those living in less populated counties more frequently facing litigation, according to a recent study.

In a review of 125 hospitals and 42,844 legal filings targeting patients, researchers found that just 10% of the state’s hospitals were responsible for more than 40% of patient lawsuits from 2014 to 2018.

These same hospitals represented 22.8% of the state’s inpatient discharges and 21.3% of its hospital beds. Among the worst of these offenders identified by the researchers were SSM Health’s St. Agnes Hospital/Agnesian Health (2,632 total lawsuits from 2014 to 2018), Mile Bluff Medical Center (1,763 lawsuits) and ProHealth Waukesha Memorial Hospital (1,687 lawsuits).

Over the five-year period, the researchers found smaller hospitals were more likely to have sued their patients, as were those with higher shares of Medicare discharges, lower shares of commercial discharges, nonprofit hospitals and critical access hospitals.

“The higher rates of lawsuits for small hospitals and in less densely populated counties points to an important rural-urban divide in hospital litigation,” Yale and Stanford researchers wrote in Health Affairs. “The finding that nonprofit hospitals had higher lawsuit rates reinforces existing evidence of the mixed relationship between hospital ownership and hospital behavior.”

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The researchers said their analysis, published this week, is the longest examination of hospitals’ patient lawsuits to date and “key to understanding long-run trends” in a collections practice drawing increased public scrutiny over the last several years.

“Although Wisconsin expanded some state insurance programs, it did not participate in the Affordable Care Act Medicaid expansion and had a smaller increase in coverage than its neighboring states. This allowed us to measure trends in hospital litigation unconfounded by sharp changes in insurance coverage,” they wrote in the journal. “Our study contributes to an understanding of how the rate of lawsuits varies across patients and hospitals and is the first to examine lawsuits by (inferred) patient race.”

To conduct their analysis, researchers collected the state’s publicly available court records and identified those in which a Wisconsin hospital was listed as the plaintiff. They inferred defendants’ race or ethnicity using Bayesian Indirect Surname Geocoding, a validated tool that determines probabilistic race or ethnicity-based on individuals’ names or census blocks.

Hospital lawsuits per 1,000 residents increased from 1.12 per 1,000 to 1.53 per 1,000 across the nearly two-decade study period, the researchers found.

The bulk of the increase came between 2006 and 2009, they wrote, although the average size of each lawsuit stayed relatively stable across the full study period. The percentage of cases that ultimately resulted in wage garnishment, however, rose from 41% in 2001 to 52% in 2018.

The researchers also saw clear trends in the hospital lawsuits based on a patient’s race or ethnicity. Across the full study period, hospitals filed 1.86 lawsuits per 1,000 Black residents, 1.32 cases per 1,000 white residents, 1.1 per 1,000 Hispanic residents and 0.11 per 1,000 Asian residents, according to the study.

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“The higher rates of lawsuits per capita among Black patients and patients living in poorer counties contribute worrying new evidence of disparities in financial hardship across racial and income groups,” the researchers wrote. “To the extent that these lawsuits negatively affect patients’ financial well-being and health, policies that reverse these trends may be warranted.”

Medical debts are a major burden for much of the U.S. population. In July, a sampling of debt listings reported to one credit bureau between 2009 and 2020 suggested that these bills now outweigh all other sources combined as the largest contributor to personal debt in the country.

Scrutiny of hospitals’ medical debt lawsuits picked up steam following a 2019 study that identified more than 20,000 warrants in debt lawsuits and 9,200 wage garnishment cases that were filed by roughly a third of Virginia’s hospitals in 2017.

The analysis generated name-and-shame media attention which, according to a JAMA Network Open study published in late August, appeared to decrease the number of new lawsuits being filed by some of those Virginia hospitals