Apr. 2002 – Accident victim fights hospital’s billing practices

Iowa’s Only GR8 Professional Law Firm:


  • This field is for validation purposes and should be left unchanged.

Des Moines Register. Tony Leys. April 15, 2002.

Accident victim fights hospital's billing practices

First, Doug Sawyers was hit head-on by a semitrailer truck. Then, he says, he was blindsided by a hospital.

The Indianola man was plenty worried about his body after he was critically injured in a September 2000 traffic accident. But he wasn't concerned about the huge costs he racked up during a six-week stay at Iowa Methodist Medical Center. The hospital would send the bill to his health maintenance organization, he thought, and the health insurer would settle up.

He thought wrong.

Iowa Methodist hasn't submitted the bill to the HMO, Coventry Health Care. Instead, Sawyers said, it has gone to court in an attempt to take nearly three-quarters of the $200,000 settlement he reached with auto insurers after the crash.

Sawyers, 44, contends that money was supposed to compensate him for his pain, his smashed pickup and his inability to work because of his numerous broken bones and internal injuries. But if Methodist gets its way, he said, he won't even have enough left to pay his lawyer.

The dispute leaves him with mixed emotions about the hospital. "They pulled me through," he said. "It's not like they didn't give me good care. But this just isn't right."

It's apparently legal, however. And lawyers say it's become increasingly common as hospitals try to sidestep the discounts they've granted to HMOs and other health insurers.

Sawyers' attorney, Jack Hearn, said the practice is allowed under an arcane state law granting hospitals first crack at damage settlements stemming from accidents.

Hearn said the "hospital lien law" was written decades ago to help hospitals get reimbursed for treating accident victims who don't have health insurance. Now, he said, hospitals are using the law to collect as much as possible from people, like Sawyers, who do have health insurance.

Other lawyers say trauma centers have made the practice routine in recent years. "When they see the words "auto accident," boom, they're on it right away," said Pleasant Hill attorney Don Beattie.

A Methodist Medical Center leader said hospitals have long used the lien law to ensure they are fairly compensated for saving people's lives. Vice President Jim Zahnd accused the lawyers of hypocrisy for using full-price medical bills as leverage in car-insurance negotiations, then howling when the hospitals ask to share in the resulting payments.

"We are not trying to take court awards that have been made for pain and suffering," Zahnd said. "On the other hand, should we settle for 60 percent of our charges when a court settlement has been reached based on 100 percent of our charges?"

Zahnd said Sawyers' plight is largely the fault of his lawyer, who has refused to negotiate with hospital officials.

Hearn, the lawyer, said he sees no point in talking about it, because the auto-insurance settlement wouldn't come close to compensating Sawyers for his suffering and loss of employment, much less his medical bills. Hearn acknowledged using those full-price bills as he negotiated with the auto insurers, but he said the bills played only a small part in the settlement.

The controversy extends well beyond this case. Other hospitals, including Mercy Medical Center in Des Moines and University Hospitals in Iowa City, acknowledge using the law the same way. Hospital representatives say the practice is proper.

Beattie, the Pleasant Hill lawyer, said he has seen hundreds of such cases. If patients fight back, hospital administrators often offer to knock something off their bills, he said, but they then pressure consumers to sign confidentiality agreements.

"The hospitals want to keep this very quiet," Beattie said of the billing practice. "When people find out about it, they're outraged. The public needs to know how bad the hospitals are putting it to people."

Beattie said what is happening to Sawyers couldn't happen to most Americans. In most other states, he said, hospitals may not refuse to submit bills to private health insurers with whom they have signed contracts. In Iowa, they may.

Zahnd said at least 10 other states have similar laws. He said Methodist invokes the law in less than 1 percent of its emergency-room cases, and that proportion has held constant for several years. In half of those cases, he said, the hospital winds up settling with a health insurer and never touches the auto-insurance settlement.

Beattie laughed when he heard Zahnd's figures. Of course the law is invoked in only a small percentage of cases, he said, because severe car-accident injuries make up a tiny portion of emergency-room business.

He agreed that the hospitals sometimes drop their attempts to claim auto-insurance payments. That happens, he said, when they realize the settlements are smaller than health-insurance payments would be.

When hospitals bill health insurers, the health insurers can turn around and try to recoup their costs from auto-insurance settlements, Beattie said. But their charges are reduced by the discounts the hospitals grant them. And unlike the hospitals, they have to help pay for the lawyers who obtained the accident settlements. Sawyers and others caught in his situation have to pay the entire legal bill, which can easily run into tens of thousands of dollars.

Hearn, Sawyers' attorney, said his bill will wind up being much larger than it would have been if the case had been a straightforward auto-insurance claim. "I've spent a gazillion more hours fighting Methodist on this than I did getting the settlement," he said.