February 23, 2005

Courts are saying “NO” to the uninsured who claim non-profit hospitals must be charitable

There are currently over seventy lawsuits in the works claiming that non-profit hospitals are overcharging their uninsured patients for hospital care and are then being overly aggressive in their pursuit of bill payment.

These suits are primarily based upon the assumption that a non-profit hospital has an express and/or implied agreement with all patients to provide affordable medical care. Courts are disagreeing that any such agreement necessarily exists, to the extent they are premised on federal law.

The U.S. District Court for the District of Colorado said “there is no private right of action created by Section 501(c)(3) of the Internal Revenue Code” (the section that details tax exempt status). They also stated that any contract created by Section 501(c)(3) was not intended to benefit uninsured patients.

The U.S. District Court for the Western District of Oklahoma ruled similarly in another case.

While the decisions thus far tend to favor hospitals, it is important to keep an eye out as the rest of the suits unfold.

To get a detailed account of what has happened so far, along with details about how the cases are turning out, check out BNA's Health Law Reporter (PDF file).