Gov. Michelle Lujan Grisham signed a 2021 bill into law carving out new consumer protections for people with medical debt. The law required hospitals and debt collection agencies to verify patients’ income level before taking them to court or sending a hefty bill.

But some hospitals have routinely failed to do that since the Patients’ Debt Collection Protection Act took effect in July 2021, according to Nicolas Cordova, an attorney at the New Mexico Center on Law and Poverty. Among other protections, the new law requires hospitals to verify that a patient’s income status doesn’t fall below 200 percent of the federal poverty line before taking them to court or sending their unpaid bill to a collection agency like CBF Services or Kryptonite Credit Servers, two of the most prolific debt collection firms working in New Mexico.

“I can tell you anecdotally, we know there are hospitals that are not doing that,” Cordova said. “They’re required to verify someone’s income status before taking them to court or selling their debt to a medical debt buyer. They aren’t complying with that specific part of the law.”

Cordova declined to name which hospitals he alleges are violating the law or say more about those cases.

But a spokeswoman for the Attorney General’s Office, Jerri Mares, confirmed that state attorneys have “received multiple complaints” about providers failing to properly screen patients’ income status under the Debt Collection Protection Act. The office has not filed any formal legal action, but Mares said attorneys are “actively investigating” two hospitals that file more lawsuits against patients over medical debt than any in the state of New Mexico.

In response to Cordova’s claims, NM Political Report reviewed a sliver of roughly 400 court cases that hospitals or debt collectors filed between July 2021 and mid-June 2022 against patients to recover about $1.5 million in total debt. Cordova said hospitals are still filing suit against patients over unpaid bills.

But the most litigious among them are Carlsbad Medical Center and MountainView Regional Medical Center. Both are owned by the same Tennessee-based company, Community Health Systems, a private company that operates hospitals across the sunbelt.

In December, 2021 alone, the two hospitals took close to 100 people to court over unpaid bills, according to Cordova. The economic hardship of the pandemic didn’t seem to slow the legal filings, which health care and debt expert Mark Rukavina called an aggressive step for hospitals to take.

It’s an action that should require “a high bar,” Rukavina said, a program director for Community Catalyst, a Boston-based national health advocacy nonprofit.

“It shouldn’t be used to threaten people,” Rukavina said. “It shouldn’t be used to intimidate people, and it certainly shouldn’t be used to keep people away from care. But anecdotally, we know that it does. People are reluctant to get care if they think they’re going to get sued.”

Yet MountainView and Carlsbad Medical Center together filed 274 lawsuits since the law took effect in 2021, according to the Center on Law and Poverty’s Cordova. The hospitals account for roughly 68 percent of all medical debt lawsuits filed in the first year in New Mexico after the state’s consumer protection law took effect.

Carlsbad Medical Center – which is the only hospital in Carlsbad – has a long history of taking swift and frequent legal action against patients struggling with debt. A New York Times investigation found that the hospital filed close to 3,000 lawsuits against patients from 2015 through 2019, reporting that “few hospitals sue so many patients so often.”

In the handful of cases from December 2021 and January 2022 reviewed by NM Political Report, the two southern New Mexico hospitals continued their legacy of prolific litigation, seeking courts to compel payment for roughly $100,000 from late December through January. Cordova said the eight cases reviewed are only a small sliver of hundreds of lawsuits that hospitals or debt collectors filed and continue to file against New Mexico patients during the pandemic.

Melissa Suggs, a spokeswoman for Carlsbad Medical Center, declined interview requests with her or other executive hospital staff. In a written statement, she defended the hospital’s practices and said they make numerous attempts to contact patients and help them find resources. She said the hospital takes legal action as a last resort.

“Carlsbad Medical Center cares deeply about the patients we serve,” Suggs said in an email. “Legal action is taken in only a small percentage of the nearly 110,000 patient service encounters through inpatient, emergency room, outpatient services and physician practice visits each year.”

She added that the hospital “only initiates litigation against individuals who appear to have the resources to pay for their care and who do not respond to numerous attempts to discuss their accounts. 

“We do not pursue legal action against patients we know can’t pay for their care,” Suggs said.

Suggs didn’t answer any follow-up questions from NM Political Report seeking to confirm how many cases the hospital referred to court or debt collections agencies last year.

Families in New Mexico face collections

Despite Suggs assurances that Carlsbad Medical Center doesn’t try to recoup costs from people who appear to be unable to pay for their care, a couple from a small town in Lincoln County were among hundreds of people taken to court by Carlsbad Medical Center and MountainView Regional Medical Center from late December 2021 through June 2022.

In the Lincoln County couple’s case, their charges from Carlsbad Medical Center at first totaled $35,000. It’s not clear whether they had insurance; court records redact that information due to medical privacy laws. Documents show almost $25,000 of their bill was paid. But they still owed nearly $3,800 to the hospital.

Then they were taken to court in late December, 2021.

Court records show the hospital at some point contracted Kryptonite Credit Servers LLC, although the hospital is still listed as the plaintiff in the case, represented by Faber and Brand, LLC. Jon Shoener, chief operating officer and a partner at the Missouri-based law firm, declined to comment on the story and did not respond to a follow-up inquiry. The firm operates in numerous sunbelt states, specializes in medical debt collection and often represents Carlsbad Medical Center to retrieve debt.

The couple declined an interview request made through an attorney in contact with them.

In another example, court records show a woman who lives in a trailer in Las Cruces, was initially charged nearly $61,000 for a medical procedure. Many of the details are again blacked out in public court documents, so it’s not clear whether the women had health insurance. But if she did, it didn’t pay for a shred of her hefty bill.

Even after her bill was “adjusted” by the hospital, she still owes almost $25,000 to Las Cruces Medical Center (now MountainView Regional Medical Center) as of late January, 2022. She was served a summons for court in June and the case is still unresolved.

Although she lives in a trailer park and her debt is equal to about 150 percent of the federal annual poverty level, an order for discovery and expert witness disclosure signed by Third Judicial District Court Judge James Martin in January, 2022,still declared that “the possibility of settlement is good.”

Attempts to reach the woman were unsuccessful.

NM Political Report declined to name these examples because they are not public figures.

A problem even for insured 

Experts say stories like this are all too common. Patients fall through the cracks of Medicare or Medicaid coverage and get strapped with thousands of dollars of medical debt. Or patients still get saddled with debt even when they have health coverage because insurers won’t cover the whole bill.

Jenifer Bosco, a staff attorney with the National Consumer Law Center, said estimates of total national medical debt range from $88 billion to nearly $195 billion. The true number is difficult to pin down, Bosco said.

“It’s an inevitable conflict if healthcare is a business, when it really is an essential human need,” said Bosco.

Uninsured patients are most likely to incur the most debt. But even patients with insurance often end up struggling with co-pays and deductibles, spurring them to drain their savings, ask family members for help, rack up credit card debt to pay off medical debt or face expensive lawsuits, garnished wages and postponed medical care, said Sara Collins, vice president of health care coverage for the Commonwealth Fund, a private healthcare advocacy group.

The number of people without health coverage in New Mexico declined by 58 percent since 2010, but roughly 214,000 people in the state still lack insurance, according to a 2020 estimate from the Urban Institute, a think tank and research nonprofit funded by the Annie E. Casey Foundation and the Ford Foundation.

The group estimated that about 18 percent of New Mexico residents have medical debt in collections. But it isn’t spread equally. Twenty percent of people in communities of color in New Mexico have medical debt compared to 12 percent for white communities. That’s despite average household income totaling $53,554 compared to $82,553 for white New Mexico residents.

According to the latest survey from the Commonwealth Fund, about 38 percent of U.S. residents nationwide reported difficulty paying off medical debt or struggling to pay medical bills. That includes more than one-third of people with medical insurance and half of people without insurance.

“These are pretty significant numbers,” said Collins. “We have a healthcare cost problem in the United States. We pay much more for our health care than people in other high income countries – substantially more, and we get less for our money. And the primary reason we spend so much more is because of the prices that are paid to providers by commercial insurers.” 

Without Congressional action to cut rising health care costs the real root of the problem will remain unsolved, Collins said. Considering that, “It seems pretty unfair that those hospitals would go after patients for nonpayment of debt,” she added.

Investigations

When asked about the New Mexico Center on Law and Poverty allegations that hospitals aren’t always following the new consumer protection law, Attorney General Hector Balderas said during a roughly 30-minute interview, “If that is true, we would conduct an investigation and work with the Superintendent of Insurance,” and if warranted, “At a minimum I would enter into some type of consent decree.

“Any of those vulnerable populations – if they’re systemically having their property rights violated, we would entertain a consent decree,” Balderas added. “Number two: These institutions pump a lot of public funds through their operations, so they also have a higher standard of care to ensure they’re strictly following the rule of law.”

Attorney General spokeswoman Mares confirmed in a follow-up inquiry that the office has received complaints against MountainView Regional Medical Center and said that they “are actively investigating” the hospital along with Carlsbad Medical Center. She said attorneys haven’t filed any legal action against either hospital. The office has received 82 complaints in total related to the Debt Protection Collection Act.

Balderas had high praise for passage of the law, calling it “transformational in concept,” but he chastised lawmakers for not providing his office with extra funding to enforce that hospitals and debt collectors are complying with it.

“There’s been a legacy of abuse in debt collection – exploiting the poor – and it’s kind of like playing whack-a-mole. We’ve been really trying to clean up these industries, so I think it’s a great start,” Balderas said.

“But what I don’t understand is why anybody, conceivably, in the 112 members of Legislature that cares about consumers … would you guys ever think in a poor state – ever – that you pass an act like this and not throw staff at the AG’s office?” Balderas continued. “That’s almost anti-poor people. Is it arrogance? Or is it you don’t like Hector?”

Balderas then lamented a $250,000 cut to his budget to prosecute and remove licenses from abusive police officers, calling the decision “total bullshit,” and added, “It was just arrogance. And so when this passed, I was just like: I don’t even go over there,” he said, referring to the Legislature.

“Why wouldn’t they submit resources? Why is that not gross incompetence when they’re sitting on trillions of dollars in trust funds and revenue?” the outgoing attorney general continued.

Balderas is term-limited and cannot run for reelection.

Taylor Bui, a campaign manager for Democratic attorney general candidate Raúl Torrez said in a statement, “One of the most important jobs of the Office of the Attorney General is to protect New Mexican consumers from being abused and taken advantage of, particularly low-income patients seeking medical treatment.

“As Attorney General, Raúl will promulgate rules that will further the intent of the legislation to protect consumers from abusive collection practices and ensure access to necessary healthcare,” Bui added. “Additionally, he will hold any hospital or healthcare agency accountable for violating the provisions of the law. Raúl is committed to protecting New Mexican consumers and their right to access medical treatment.”

A widespread problem

Debt can haunt patients at any hospital.

MountainView, Carlsbad Medical Center and Lea Regional Hospital, LLC, take the most aggressive actions to recoup unpaid medical care, according to the state’s Center on Law and Poverty. But other hospitals take action too, usually relying on debt collectors. Most hospitals were not willing to share how many people’s unpaid bills are sent to such agencies.

NM Political Report reached out to every major hospital network in the state asking them if they take patients to court over medical debt, if they would voluntarily share the number of patients each network took to court and how many patient cases they referred to collections agencies in 2021.

A spokeswoman for Lovelace Health System, Whitney Marquez, declined to say whether the hospital pursues legal action to recover medical costs or share the number of cases the network referred to debt buyers in 2021.

But Marquez said the hospital network provided more than $75 million worth of care that was paid for “through our charity care program,” and added that in cases where patients incur debt, they’re informed of their payment options and payment assistance plans, and they’re reached out to by phone and mail at least five times.

“Overall, less than three percent of all patient balances are referred to collection agencies,” Marquez said in an email.

Carly Newlands, a spokeswoman for the University of New Mexico Hospital in Albuquerque, said UNMH doesn’t take people to court over unpaid bills. But she said the hospital system referred 19,533 patients to collections agencies.

In a follow-up email, Newlands said UNMH complies with the 2021 Debt Protection Collection Act and “compliantly work(s) with professional debt collectors in an effort to not harass or threaten and appropriately communicate and provide all relevant/needed information to patients on their options regarding any possible debt owed.”

Presbyterian Health Services previously said they do not take patients to court over unpaid bills but declined to share how many cases they refer to debt collectors. In a follow-up statement, Presbyterian revenue executive Laura Calkins acknowledged that “the cost of care can be a challenge, and so we work proactively to understand and connect them to available financial assistance options both before and after they receive care.”

Calkins said about 90 percent of the network’s patients qualify for charity care or are “actively engaged in paying remaining balances after applicable insurance has been billed.”

If there’s a remaining balance for 120 days of being billed and “several statements [and] customer service outreach calls” a collection agency is contracted. Calkins declined to disclose how many patients were referred to debt collectors in 2021.

A spokesman for Christus St. Vincent Regional Medical Health System did not respond to questions.