By David Barer & Josh Hinkle

PFLUGERVILLE, Texas (KXAN) — The hardest thing Amanda Korth said she ever experienced was battling breast cancer as she raised two little girls, all while managing the mountain of medical expenses her family amassed during her treatment and recovery.

She said the fast-moving cancer could have taken her life in 2018, just months after she turned 30. It took more than a year to complete a mastectomy, chemotherapy and radiation.

Korth was steadily reminded of the illness’ cost by a barrage of bills, she said.

“You get a bill from the anesthesiologist and then from the hospital and then from the first surgeon and then from the second surgeon,” Korth said. “One of the hardest things about having cancer is tracking all that stuff.”

She got reconstructive surgery at a hospital in Williamson County. To handle the charges, Korth said she had both primary health insurance and a secondary plan to cover out-of-pocket costs.

To get reimbursed by her insurance provider, she said she needed an itemized receipt. Korth said she tried, repeatedly, to get that itemized receipt from the hospital but was unsuccessful.

She ultimately gave up trying to get the receipt and the unpaid bill dropped off her radar, she said. Then she was sued in January 2021 for $1,000 plus $750 in attorney’s fees. We are not naming the hospital because its method of collecting outstanding debt from patients is legal.

The lawsuit surprised her. Korth hadn’t received any phone calls or letters saying she was in danger of being sued, she said.

The lawsuit against her is one of hundreds filed by that hospital against patients in Central Texas in recent years. Thousands of similar lawsuits initiated by other hospitals checker the state and country.

The hospital declined requests for an interview. In a statement provided to KXAN, it said it does not want to sue patients and works to provide discounts and payment plans.

‘Just wanted it over’

Korth was already exhausted when the lawsuit arrived. Her insurance had paid tens of thousands, at least, related to the surgery, she said. She opted to pay the attorneys in a lump sum, roughly $1,700, effectively ending the case in March 2021.

“I was so tired of fighting – fighting hospitals, fighting treatments, fighting for my life,” Korth said. “I didn’t want to fight with anybody anymore. I just wanted it over.”

From January 2019 through March 2022, the hospital primarily used a single law firm to file the 1,271 lawsuits against patients for unpaid medical bills.

In its statement, the hospital added it “does not initiate legal action against any patient the hospital knows has an income at or below 200% of the Federal Poverty Level.”

A single person earning $27,180 or less, in the continental U.S. is at or below 200% of the federal poverty level, according to the federal Office of the Assistant Secretary for Planning and Evaluation.

“Defendants in collections lawsuits filed in 2021 had a presumptive average income of more than 500% of the federal poverty level – based on third-party scoring estimates – and most had insurance,” the hospital said in an email. “We believe these individuals have an ability to pay for at least some portion of their bill over time, yet they have declined to work with us to set pay arrangements.”

In its statement, the hospital explained it “only initiates litigation against individuals who appear to have the resources to pay for the medical care they received and who do not respond to numerous attempts – often 10 or more times – to communicate with them about their bill.”

The hospital declined to comment on specific patients, citing medical privacy laws.

Protecting yourself from debt collection

Those who feel a debt collection is improper under the Texas Debt Collection Act can file a complaint with the Office of Texas Attorney General Ken Paxton. Thousands of Texans have done so in the past several years for various debt-related issues.

The state’s debt collection act protects consumers from abusive collection tactics like harassment or threats of arrest or seizing assets without proper court proceedings. Debt collectors cannot take a person’s wages or home in Texas, if it is declared a homestead.

Paxton’s office can investigate and punish violators of the act, but that rarely happens, according to records KXAN obtained through the Texas Public Information Act.

From January 2019 through March 2022, Paxton’s office received over 4,300 debt collection complaints. At least 410 – roughly 10% – were related to medical debt, according to complaint records.

There has been only one complaint in the past three years against the hospital where Korth went for reconstruction. It does not mention specific problems, and there is no indication it was ever investigated.

As all those complaints came in, Paxton’s office took enforcement action only once for a violation related to the act since 2019, and it wasn’t related to medical debt.

A spokesperson for Paxton’s office said the debt collection act is one of “dozens and dozens” of consumer protection statutes the agency enforces, and it has hundreds of active investigations for consumer statutory violations. Paxton’s office also touted its successes in consumer protection cases against opioid manufacturers and other companies that have netted millions of dollars for the state.

‘Couldn’t afford to get a lawyer’

Roughly half of the 1,271 debt lawsuits filed in Williamson County on behalf of that hospital from January 2019 to March 2022 remain pending. The vast majority of the cases are filed in Williamson County Justice of the Peace Court 2, which can hear claims up to $20,000.

The cases are disposed in a variety of ways. Some cases end with agreed judgments, where defendants often agree to pay monthly installments to the attorney’s firm. Many cases end in default judgment, which typically happens when individuals fail to appear in court.

Hundreds of other individuals – including Korth and another Central Texas mother named Christina Jeffcoat – have been “non-suited.” In Jeffcoat’s case, that meant the law firm hired by the hospital dropped the suit against her after she paid the amount owed in a lump sum.

“I couldn’t afford to get a lawyer, as well as time off work,” Jeffcoat said. “I didn’t want it to affect me being able to pay my rent or my car note or anything else.”

Jeffcoat, who lives on the rural outskirts of Liberty Hill, said she went to the hospital in the past. She liked the treatment she received from doctors and nurses, she said. When it came to settling her bills, Jeffcoat said she always paid. She had been on a payment plan with the hospital in the past, she added.

Jeffcoat said she was stunned to learn she had been sued by the hospital for $1,200 in medical bills related to a 2019 visit, according to court documents.

Jeffcoat said she still doesn’t know what hospital treatment led to the lawsuit because the hospital did not provide her an itemized bill despite her request for one. The lawsuit included an additional $750 in attorney fees.

Jeffcoat said she is no stranger to that hospital or medical billing. She added each of her children has health problems. Her youngest, now an 18-year-old man, has severe asthma attacks, and her two daughters have diabetes.

“As a single parent,” she explained, “you’re making all these decisions. You’re being mom and dad altogether.”

Jeffcoat reached out to the hospital to try to work something out, but she was told the hospital could not help her and she had to call the attorneys to make arrangements, she said.

KXAN provided Jeffcoat’s statements to the law firm for comment, but the attorneys did not respond.

Jeffcoat had no desire to fight in court. To resolve the lawsuit, she tapped into her savings, paid the debt in full and the case was dropped in June 2021, she said.

‘Times are hard’

The hospital sued 42 other people the same day as Jeffcoat, including Korth, court records show.

In Korth’s case, the hospital sought about $1,000, but KXAN’s investigation found other cases seeking less, according to court records.

KXAN spoke with more than a dozen patients sued by the hospital since 2019.

Some said they have no recollection of receiving a warning they could be sued. Some patients said they didn’t pay their bill because they needed itemized receipts for reimbursement but struggled to get those detailed records from the hospital. One is currently fighting the hospital over a bill for a visit in 2016.

One defendant, Deora Burns, entered into an agreed judgment with the hospital in July 2021 for over $3,000 in medical bills and $1,000 in attorney fees. Her bill stemmed from a heart attack that sent her to the emergency room.

When she got sued, she said she should have paid the bill, “but times are hard sometimes.”

Now she’ll be paying $30 a month to the law firm for years, she said.

In its statement, the hospital said it does “not have a desire to initiate litigation against patients who cannot pay for his or her care.” The hospital also said it has financial counselors who can help patients understand insurance, treatment costs, financial assistance and payment plans.

The hospital added it has “robust financial assistance policies” that provide free care to uninsured people making less than 250% of the federal poverty level and provides discounts to people making between 250% – 400%, it said, adding every patient is given the option to apply for financial assistance.

The hospital also said it “always” works with patients who can afford their care, or who don’t apply for financial assistance, to establish affordable payment plans as low as $25 a month, according to its statement.

Burns said she would have sought financial aid, but she was unaware any options existed.

For-profit, investor-owned

KXAN discovered these types of hospital lawsuits are not confined to Williamson County. The hospital is owned by a national corporation with dozens of hospitals in several states including Texas. It is also a for-profit, investor-owned and publicly-traded company.

Across the country, the company’s hospitals filed more than 19,000 lawsuits against patients since March 2020, according to a CNN investigation from May 2021.

Nationwide, there are more than 5,100 community hospitals – 57% of those are not-for-profit and 23% are for-profit, according to the American Hospital Association. In nearly every state in the country, not-for-profit hospitals outnumber for-profit ones, but not in Texas, according to AHA data.

Texas has, by far, the largest number of for-profit, investor-owned hospitals. It also has the second highest percentage of for-profit hospitals – 52% of Texas hospitals are investor-owned, which is second only to Nevada with 54%, according to AHA data.

We asked the hospital why it chooses to collect unpaid bills through lawsuits. The hospital declined to explain, and its parent company referred comment back to the hospital on all matters.

Outsourced debt collection

KXAN searched for medical debt lawsuits filed between 2019 and 2022 by every major hospital in Travis, Williamson, Hays and Bastrop Counties – all Central Texas counties with online searchable court databases. Other than the hospital that sued Jeffcoat and Korth, we found no hospitals listed as plaintiffs in such suits.

But other hospitals could still be doing it.

In some cases, a hospital can outsource its collection to a separate collection entity, or the collection entity could have a different name but operate under the same corporate umbrella, according to research compiled by ClearHealthCosts – a national journalism company partnering with media outlets across the country to provide expertise in health care reporting and improve community engagement.

In its statement to KXAN, the Central Texas hospital said, “Many health systems sell their medical debt to third parties or file collection suits in the name of a company other than the hospital where the care is provided. Thus, it is not readily apparent that these systems are initiating collection litigation against their patients. Our hospitals neither sell medical debt nor assign collections to other companies, which we believe skews any attempt to compare our hospitals to others with respect to patient collection suits.”

Austin-based healthcare attorney Doug Aldeen said once the debt is sold to a third party, it becomes nearly impossible to track.

“There’s a whole other market out there, where you don’t even know who the underlying creditor is,” Aldeen said. “And it’s not just the hospitals; it’s the independent physicians; it’s the anesthesiologists; it’s the radiologists; it’s a dermatologist. So, they’ve got their independent practices. They don’t get paid; they sell it off to somebody else.”

Third parties can take several avenues to collect debt. They can sue. They can send debt collection letters and call debtors repeatedly. They can also mark a person’s credit and impact their credit score.

Credit impairment “has a huge impact on your ability to do normal things,” Aldeen said.

Aldeen has worked with charity group RIP Medical Debt, which purchases medical debt from original creditors – like hospitals – and retires the debt. The charity says it buys medical debt for pennies on the dollar and can relieve $10,000 in debt with a $100 donation.

In Texas, there are nearly 2,400 companies registered with the state that can buy and collect debt, according to Secretary of State records. Any one of those could be suing individuals for medical debt, but it would be difficult to distinguish because a hospital that originally owned the debt wouldn’t be a party in the case.

It’s a big industry in Texas with not enough oversight, Aldeen said.

Enforcement is typically sparked by a complaint. Both the federal and state governments receive complaints and can enforce the state’s debt collection law. Violators can face criminal and civil penalties, including fines and injunctions.

On the federal level, the Consumer Financial Protection Bureau keeps a complaint database. The CFPB received more than 3,200 medical debt collection complaints from Texas since 2019. Those complaints identify over 300 different companies.

Nearly every one of those is a third-party debt collector, meaning they typically buy debt for a fraction of its initial value and then try to recoup as much of the original amount as possible.

“The real issue is: who enforces anything?” Aldine said.

‘Get medical help’

State legislators have been working to improve the Texas’ Debt Collection Act. The last update came in 2019 through the “Fair Consumer Debt Collection Act” authored by Rep. Nicole Collier, D-Fort Worth.

Collier’s bill tightened consumer protections by barring third-party debt collectors from trying to collect on debts that are beyond the statute of limitations. The bill also required debt collectors to explicitly disclose if a debt is beyond the statute of limitations.

Collier was spurred to file the bill after learning collections lawsuits were rising, she said.

The term “zombie debt” was coined because debt collectors were able to revive debt that was beyond the statute of limitations by contacting debtors, having them acknowledge the debt and agree to pay it.

But Collier’s bill applies to entities that have bought debt, or represent a debt buyer, not the original creditor, such as a hospital that has an unpaid medical bill.

Collier said she is open to improving the Act in the future, and she would look at KXAN’s findings.

“I want people to get medical help. If they are facing a healthcare challenge, if they’re having a healthcare crisis or issue, I want them to go to the doctor. I want them to go to the hospital,” Collier said. “I don’t want them to think, ‘Oh, I’m going to have a high bill. I might get sued.’ That’s the last thing we want to see happen.”

 

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