When care costs dearly: New York nonprofit hospitals garnish patient wages to right medical debts, report finds

Tens of thousands of working New Yorkers had their wages garnished for medical debt by nonprofit hospitals in the state from 2015 to 2020, a new report says.

The report was the last in a series put together by Community Service Society (CSS), a nonprofit working on urban poverty. It aimed to understand how pervasive "predatory" debt collection practices are in the state. According to court records the nonprofit surveyed, about half of nonprofit hospitals sued more than 53,100 patients. Twenty hospitals were responsible for 80% of the cases. 

Some of the wealthiest hospital systems sued the most, including Northwell Health, New York University and New York Presbyterian. The vast majority of cases were won by default by hospitals, and about a quarter of hospitals also placed liens on patients’ homes during the period. Cases primarily seemed to involve patients who work for low-wage employers, and many live in communities where the median income qualifies for financial assistance under state law.

“Our analysis found that the typical wages paid by the employers bringing wage garnishment cases verge on poverty-level wages, or just above,” CSS Vice President Elisabeth Benjamin said in a press release. “That means most of the patients whose wages are being garnished were probably eligible for the state Hospital Financial Assistance law and should not have been sued in the first place.”

The average outstanding medical debt that triggered a lawsuit was $1,900. Medical debt disproportionately affects Black, Latino and low-income patients, according to federal data the report cited. Among five hospitals responsible for nearly a quarter of all lawsuits filed during the period, their reported hospital financial assistance was $6 million, though they received $19 million from the state for financial aid.

The New York State Senate and Assembly recently passed bills that would ban these collection practices, and are currently awaiting the governor’s signature. The report advocated for the ban of wage garnishments for medical debt and expanding income eligibility for financial assistance under state law.

“These hospitals receive millions of taxpayer dollars intended to offset the cost of serving poor families” Richard Buery, CEO of the Robin Hood, New York City's largest anti-poverty philanthropy and a funder of the report, said in a press release. “So, when they sue those families and use wage garnishment as a debt collection tool on them, we need the state to step in and say enough is enough. This practice must stop.”