Court: Illegal For Hospitals To Make Claims To Money Owed To Patients

By Claire Caulfield
Howard Fischer, Capitol Media Services
Published: Wednesday, March 13, 2019 - 8:32am
Updated: Wednesday, March 13, 2019 - 10:19am

Hospitals that accept payment from the state's Medicaid program can't try to also collect more by going after money owed to the patient, the state Court of Appeals ruled Tuesday.

In a precedent-setting ruling, the judges voided sections of state law that specifically allow hospitals to impose financial liens when the amount paid by the Arizona Health Care Cost Containment System doesn't cover what they say are the full bill charges.

Appellate Judge Diane Johnsen, writing for the unanimous three-judge panel, said the practice — and the Arizona statutes that have, until now, allowed it — violate federal law.

The ruling is a victory for more than 50 people who found that their hospitals that provided their care were trying to make a legal claim to money due to the patients. Attorney Lance Entrekin said that includes situations where the patient was in an automobile accident and was entitled to collect money from the person responsible.

On the losing side are close to three dozen hospitals named in the lawsuit which had, until now, been trying to collect extra cash.

In a written statement, Ann-Marie Alameddin, general counsel for the Arizona Hospital and Healthcare Association, said hospitals have historically used liens, permitted by state law, to make up for the care they provided to patients without insurance.

"We are still grappling with this very issue at the state and federal level and need to find solutions so patients can get the right kind of care at the right time,'' the statement read. She did not address the specific question of filing liens on patients who do have insurance through AHCCCS.

AHCCCS provides free or low-cost medical coverage for those of limited income. The medical providers that have contacts with AHCCCS agree to accept what it offers in payments.

The appellate ruling does more than affect the patients who filed the original lawsuit nearly a decade ago. It also upholds an injunction issued against the hospitals by the trial judge precluding them from engaging in similar billing practices in the future.

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