Nonprofit Hospital Vows to Forgive Debts and Stop Suing Poor Debtors

Nonprofit hospitals have been receiving bad press for suing poor patients who are unable to afford their bills. In some cases, hospitals are filing 20,000 lawsuits each year to garnish the wages of former patients with medical debt, even when patients qualified for financial assistance.

Keep in mind, many of these hospitals do not have to pay taxes because they are nonprofit institutions designed to help the poor and financially vulnerable.

Bad press, public outcry and pressure from U.S. Senator Charles Grassley (R-Iowa) have caused a few nonprofit hospitals to rethink their policies on debt collection. One of the hospitals is located in St. Joseph, Missouri. Mosaic Life Care, formerly known as Heartland Regional Medical Center, has vowed to cut back on the number of debt collection lawsuits targeting former patients. Under the new policies, debtors with past due medical bills can be evaluated for financial assistance during a grace period.

Can IRS Rules Curb Nonprofit Hospital Debt Collection?

Mosaic Life Care is not the only nonprofit hospital making changes to its billing practices. Some nonprofit hospitals may be forced to change due to new IRS rules. Rules released by the IRS in 2014 might curb aggressive nonprofit hospital debt collection.

Part of the problem with many nonprofit hospitals is that they are not being proactive in letting patients know they qualify for financial assistance. Another issue is that the IRS has been lax on its enforcement of the new policies.

As a result, financially vulnerable patients end up paying many times the amount required. The IRS rules require nonprofit hospitals to post financial assistance policies on their websites. Nonprofit hospitals are also required to give patients written information on financial assistance policies.

The Kansas City bankruptcy attorneys at The Sader Law Firm can help people struggling with medical debt find solutions.