A Missouri lawmaker has filed a bill in the state's senate to ban the practice of hospitals refusing a patient's health insurance in hopes of collecting a bigger check from an injury settlement.
Rob Schaaf, a Republican state senator, says the practice targets victims of auto accidents. Some hospitals in the state have used the practice, and it has been the subject of lawsuits. It has been used elsewhere around the country, and the state of Indiana already has banned it.
Schaaf, a physician and chairman of a company that offers malpractice insurance to Missouri doctors, decided to file the legislation after The Kansas City Star reported last year that some Missouri hospitals acknowledged they did not accept health insurance for some auto accident victims. They said the practice was legal under state law. By refusing an auto accident victims health insurance, hospitals avoid the discounted payments for care they have agreed to with health insurers.
The hospitals go after money a person injured in a vehicle accident might get from an auto insurance settlement, rather than accept reduced payments. Hospitals get the money by attaching a lien on the settlement.
Schaafs bill, if enacted, would ban the practice of not accepting health insurance as long as the patient submitted proof of coverage within 30 days of being discharged. The only expenses that could be recovered from any future financial settlement would be for services not covered by health insurance or money owed by the patient, such as the deductible.
The Star's article last year noted that lawsuits seeking class-action status had been filed against St. Lukes Hospital and Research Medical Center in Kansas City and SSM DePaul Health Center in St. Louis. Those suits contended the contracts the hospitals have with health insurers require them to file for the insurance payments. The hospitals in legal filings said they can refuse the health insurance.
In the lawsuit filed against St. Lukes, the hospital argued in circuit court that the states liens law offer it wide authority to collect the bill from a financial settlement instead of accepting the patients health insurance. It rejected arguments that it was unjustly enriching itself by seeking to recover the medical bill without the discounts. The judge ruled in favor of St. Luke's.
The patient appealed her case to the Missouri Court of Appeals, which ruled the hospital didnt have unfettered rights to use the liens to collect a higher bill. Instead, the case hinged solely on whether the hospital was required to submit the health insurance and accept the discounts that satisfied the debt.
Now, Schaaf's legislation comes as Liberty Hospital and Truman Medical Centers, both in Kansas City, also face lawsuits over the practice. Those cases involve patients injured in auto accidents and liens that were filed to collect from liability settlements from auto insurers.
Bill Colby, Truman Medical Centers general counsel, in a statement reported that the hospital provided $130 million in uncompensated care in 2013 and "accordingly we work hard to maximize all avenues of revenue, including at times proceeding against third-party recovery after an automobile accident."