Uninsured patient fights back, wins after hospital fails to offer him charity care

Robert Mustin had just quit his job and was without health insurance for about four months when he ended up in the Tulare Regional Medical Center emergency room, first in May and then again in July 2014.

The Tulare resident, now 31, didn’t think about those two visits until three years later when he was contacted by Kings Credit Services asking him to pay bills that totaled $4,409 for emergency room care and lab tests. The unpaid bills had prompted the credit company to file a lawsuit against Mustin.

Mustin, a truck driver who is often between gigs, was alarmed at the looming debt. He was making just under $22,000 annually at the time, according to his 2016 tax return.

“I tried to work something out with the hospital, but they told me it was too late, and I had to just work with the collection agency by that time,” said Mustin, who declined to discuss his reason for visiting the ER, citing privacy concerns.

As he tried to figure out how to resolve the debt he couldn’t pay, Mustin stumbled on California’s Hospital Fair Pricing Policies, which since January 2007 have mandated that acute care hospitals limit medical bills to the Medicaid reimbursement rate for the uninsured or families with incomes at or below 350% of the federal poverty level -- $90,125 in 2019 for a family of four or $43,125 for a single person like Mustin.

This is called charity care. Federal law reinforces this with similar rules for nonprofit hospitals, like Tulare Regional Medical Center. The hospital is now Adventist Health Tulare, after Adventist acquired it in mid-2019.

Hospitals charge private insurance companies a higher rate than they charge government health insurance programs, such as Medicare or Medi-Cal (California’s Medicaid program),  according to investigations from The New York Times and Kaiser Health News. So, the law says, hospitals can’t charge more than the Medi-Cal rate for low-income, uninsured patients. Additionally, hospitals are required to inform patients they can apply for the charity care rate, including posting signs to make the information visible to the public.

Mustin was not informed about the charity care rate or offered an application (in his case, the rate would have been about $573, instead of the billed $4,409). Social justice law firms say it’s a common problem. 

“A huge problem for the uninsured clients we deal with is people not getting charity care,” said Tashara Kuspa, an attorney at Central California Legal Services who focuses on health consumer law. “When patients call and say they can’t pay a bill, instead of the hospital offering charity care, they ask, ‘Well, what kind of payment can you make?’ And then the bill ends up getting to collections and interest starts accruing.”

Hospitals in California cut the amount they spent on charity care by half between 2013 and 2017, according to data hospitals reported to California’s Office of Statewide Health Planning and Development. The biggest drop came after the passage of the Affordable Care Act, according to a report from Kaiser Health News. The spending has continued to decline since then.

In 2018, California Attorney General Xavier Becerra declined three California hospitals’ request to be freed from charity care obligations and ordered them to pay millions of dollars to local nonprofits to meet their 2016 charity care requirement. Mission Community Hospital in Los Angeles had to donate $1.7 million; Emanuel Medical Center in Turlock had to donate $1.9 million; and the University of Southern California’s Verdugo Hills Hospital had to donate $1.7 million.

The hospitals argued that they should be required to spend less on charity care following the passage of the Affordable Care Act, as most people should have been insured and not in need of financial assistance as a result of the law.

But Mustin was like many others who qualified for Medi-Cal but didn’t enroll in coverage. In the 2017-2018 enrollment year, an estimated 529,000 uninsured people were eligible but not enrolled in Medi-Cal, according to the California Health Interview Survey. University of California researchers estimate that 730,000 uninsured people will be eligible for Medi-Cal in 2020 but will not enroll.

Mustin didn’t enroll in Medi-Cal at that time because he said he didn’t plan to be unemployed long and thought he would have an employer-offered health plan soon. The Medi-Cal application is 36 pages long. Once the application is submitted to the state, the applicant must wait for the state’s approval, making sure he or she qualifies for subsidized care, before accessing the benefits.

It can take 45 to 60 days to process an application. For someone who believes he won’t be uninsured long, it might not seem worth the effort to apply. In this case, Mustin didn’t expect to be unemployed for four months.

He didn’t anticipate ending up in the emergency room twice during his employment gap either.

When the collections agency started inundating him with mail and phone calls in early 2017, he decided to take the issue into his own hands before reaching out to Central California Legal Services in Fresno. He started by sending letters to Tulare Regional Medical Center and Kings Credit Services notifying them of the charity care law.

“I believe that I should have been offered and granted financial assistance … for the medical services that I received … I am uninsured, and the hospital did not inform me that I could apply for financial assistance,” Mustin wrote in a letter to the Kings Credit Services in July 2017.

“I was not given written notice regarding the hospital’s charity care or discount payment policy,” he wrote in another letter to the hospital the same month.

Soon after Mustin sent those letters, Joy Dockter, an attorney at Central California Legal Services, stepped in to help Mustin argue his case.

By early March 2018, the interim CEO of Tulare Regional Medical Center, Larry Blitz, had admitted to Dockter that Mustin’s medical bills should have been waived because he wasn’t offered charity care, according to court records from Tulare County Superior Court.

“I apologize (on) behalf of the (Tulare Local Health Care District) and want to assure you that our new management team and Board of Directors shall fully comply with these laws and regulations,” Blitz wrote in a letter to Dockter in March 2018.

The law firm has routinely assisted with charity care lawsuits, in addition to reaching out to hospitals about their charity care practices.

“There are definitely some hospital systems that are worse than others at managing charity care,” Kuspa said. “We have reached out to hospitals in the Central Valley and explained to them on a face-to-face level what the law says and what their hospital policy says and what their actual practice is, and how those things aren’t lining up. We found a lot of success in doing that.”

Follow the USC Center for Health Journalism Collaborative series "Uncovered California" here