Yakima medical group will pay $4.5 million settlement in charity care case

Yakima Regional Medical and Cardiac Center and its parent company have agreed to a $4.5 million settlement in a class action lawsuit over the hospital’s charity care practices.

The settlement comes a little more than three years after the lawsuit was filed on behalf of indigent patients who were forced to pay for medical care at Regional and Toppenish Community Hospital. The suit claimed staff failed to inform patients of charity care for which they were potentially eligible, in violation of state law. The violations occurred during the time the hospitals were owned by Health Management Associates.

“I think it’s a great outcome for the community,” said attorney Andrea Schmitt with Columbia Legal Services, one of the firms that brought the lawsuit. “On a wide level, I think that this settlement sends a message to hospitals all over Washington that they need to follow charity care law or they could be in serious trouble.”

Regional officials could not be reached for comment.

The settlement will be officially filed in Yakima County Superior Court on Friday, and attorneys hope to receive preliminary approval next week. Notice can then go out to all possible members of the class instructing them how to file a claim to recover the money they were wrongfully charged while the hospitals’ errant policies were in place, between Oct. 22, 2007 and Sept. 1, 2014.

In the agreement, the two sides agreed that the hospitals would pay for attorney fees, which the court must approve but will likely be 35 percent of the $4.5 million, Schmitt said. That leaves roughly $3 million to divide among class members according to what they paid for care.

In July, a judge found that the hospitals violated the state Consumer Protection Act, which opened up the possibility of triple damages for each claim if the case had gone to trial. Schmitt said the settlement amount was calculated in the hopes of offering triple the amount of each claim that’s submitted and verified, though it depends on how many patients submit claims and for what amounts.

Attorneys still don’t know how many people are eligible for damages, as the hospital did not keep records of every indigent patient who qualified for charity care and didn’t receive it. Tens of thousands of people received care between 2007 and 2014 and will receive notice of how to apply for damages.

If there’s not enough money to issue triple damages for each claim, the $3 million will be divided evenly to provide the most relief to everyone, Schmitt said – for example, 2.3 times the claim amount.

If there should happen to be money leftover even after giving triple damages to everyone, the court will choose a nonprofit organization that benefits people in similar situations to get the remainder.

Settling both guarantees and expedites financial relief for patients in the class, Schmitt said.

“We think there’s a chance that the case could have been worth more than ($4.5 million), but in a settlement, you always compromise somewhat,” she said. “And we’re really glad that it’s getting resolved. More litigation and taking longer to get people their money back is always a bad thing.”

Both Regional and Toppenish are now owned by for-profit hospital chain Community Health Systems, which bought out their previous parent company Health Management Associates in 2014.

Documents submitted in the lawsuit indicate hospital staff were given incentives and talking points to help them get as much money as possible from low-income patients, and that they were directed not to mention charity care as an option unless a patient knew to specifically ask for it.

That’s directly counter to the state Charity Care Act, which requires hospitals to proactively offer charity care to anyone making below 200 percent of the federal poverty level, or $48,500 annually for a family of four. Annual income between 100 and 200 percent of federal poverty level qualifies patients for some level of discount; below 100 percent means they’re eligible for free care.

The law also requires hospitals to publicly display their charity care policies and explain them to patients at the time of service.

Other court documents for the case include statements from one of Regional’s financial directors, who blamed the hospitals’ noncompliant policies on turnover in ownership and the tumultuous state of management. Regional was first bought by HMA from the nonprofit Sisters of Providence in 2003, and then HMA began the process of merging with CHS in 2013.

The lawsuit was filed in October 2013. Regional updated its charity care policy to bring it in line with state requirements in early 2014.

Another charity care lawsuit is currently progressing against Northwest Hospital and Medical Center in Seattle. Schmitt said the Yakima settlement will likely be a factor in that case, as well as a warning to all other hospitals in Washington state.

“We’re pleased with it,” Schmitt said of the ruling.

When patients receive notice of the settlement, they’ll get a claim submission form asking them to certify that they went to the hospital in the designated period and were not screened for charity care. Schmitt said the legal team will provide details on federal poverty levels in the relevant years. Patients will check a box on the form saying whether or not they remember how much they paid for care.

Working with an outside claims processor, the hospitals will then be responsible for finding patient billing records and reporting the exact amounts paid.

That part will be “relatively easy,” Schmitt said.

People also can submit claims for costs incurred by being wrongfully taken to collections or even to court over unpaid medical bills; and there will be an opportunity for class members to comment on the settlement at a later hearing.

Once notice goes out, members of the class will have roughly 90 days to participate in the claims process.

“We’re very confident we’re going to get people a recovery, at least for the amount that they lost,” Schmitt said. That’s partly because “very unfortunately, in these kinds of systems where you have to return something in order to make a claim, the number of claims is usually far lower than the number of people harmed.”