A recent change in state law means patients with medical debt will no longer have their wages garnished or liens placed on their homes, practices that previously affected hundreds of New Yorkers a year.
Gov. Kathy Hochul signed a measure on Nov. 23 amending state law to ban health care providers from using those debt collection practices, which she called “harmful and predatory.”
More than 50,000 New Yorkers have faced lawsuits due to medical debt in the past five years, according to state officials. Health care systems that operate hospitals on Long Island filed hundreds of liens on patients’ homes in 2017 and 2018, before the law changed, a report by the nonprofit Community Service Society of New York shows.
The now-banned collection practices were “punitive” to patients, many of whom are struggling to survive on low incomes, said Elisabeth R. Benjamin, a vice president with the CSS, which advocated for the legislation.
WHAT TO KNOW
- Wage garnishment and property liens are no longer allowed when health care providers win debt-collection lawsuits, under a change in state law.
- Freezing patients' bank accounts is still allowed when health care providers win lawsuits, with certain exemptions.
- Lawsuits due to medical debt have affected more than 50,000 New Yorkers in the past five years, state officials said.
For a patient who takes home $350 a week after taxes, a $50 wage garnishment could mean “they’re not eating or they’re not buying their kids school supplies,” Benjamin said. A lien could make it impossible to get a car loan or take out a home-equity loan to make urgent repairs, she said.
If a health care provider wins a lawsuit to collect debt, it can obtain a judgment against the patient. Before the law changed, the judgment could have resulted in the patient’s wages being garnished, allowing the provider to collect 10% of the patient’s before-tax income. Or, it could have led to a lien being placed on a patient’s home.
A pregnant Nassau County woman who was suffering abdominal pain went to a local emergency room and was charged nearly $5,000 because her insurance refused to pay some of the charges, said Dennis Buchanan, an attorney in Long Beach who represented the woman when the hospital sued her in 2019. Buchanan asked that the names of the woman and the hospital not be published so his client could not be publicly identified.
The woman feared the hospital could have placed a lien on her father’s home, since her father might have been her guarantor, Buchanan said. “She was very, very distraught,” he said. Ultimately, the case was settled for $2,000, he said.
In Nassau County from 2015 through 2020, the hospital now known as NYU Langone-Long Island in Mineola filed 2,333 lawsuits; North Shore University Hospital filed 1,887; and Mount Sinai South Nassau in Oceanside filed 995, according to state records obtained by the CSS.
Throughout the state over the same period, hospitals affiliated with New Hyde Park-based Northwell Health, the state's largest health care provider, filed 22,964 lawsuits against patients; NYU Langone’s hospitals filed 3,057 and Mount Sinai Health System’s hospitals filed 1,174.
In 2017 and 2018, lawsuits by Northwell hospitals resulted in 830 liens against patients’ homes, the CSS reported. NYU Langone lawsuits resulted in 48 liens during that period, the group found.
Representatives of the three health care systems said they stopped seeking property liens and wage garnishment before the law changed. The systems said their hospitals work with patients to qualify them for health insurance and other sources of support, including charity care that exceeds state requirements and interest-free payment plans.
In its report, the CSS cited the court records of two patients who were sued by Mather Hospital in Port Jefferson. Without giving patients’ full names, the group reported that one, Gabriel R., was sued in August 2020 for a debt of $3,536 at 9% interest. A CVS employee who earned $500 a week, Gabriel had agreed to a payment plan, but the hospital's debt collectors stopped accepting payments due to the pandemic, the group wrote. The man was shocked when his wages were later garnished. “Not until my pay was garnished did I find out the law office was trying to reach me,” he told the court, CSS reported.
Providers can still sue
Mather joined the Northwell network in 2018. Northwell "paused all legal activity" at the start of the pandemic, the system said in a statement. "In the rare instances where Northwell does take legal action, it occurs only when a patient has shown a strong ability to pay and been unresponsive to multiple attempts to communicate and resolve the outstanding balance, including offers for financial assistance, discounts and counseling."
Health care providers who win lawsuits can still get court judgments to freeze patients’ bank accounts, though there are exemptions for funds such as child support, retirement and unemployment payments, said Leslie Tayne, a Melville-based debt relief attorney.
Northwell provided more than $250 million in charity care or financial aid last year, said Richard Miller, executive vice president and chief business strategy officer at the system. It offers aid to patients who earn up to 500% of the federal poverty level, higher than the 300% required by law, he said. The poverty level for a family of four is $27,750.
Miller added, “for those who have the ability to pay, we think it's important that they do so, so that we can continue to provide that type of relief to individuals that have need.”
NYU Langone provides aid to patients earning up to 600% of poverty level. The system said it directed its collection firms to halt lawsuits and withdraw “any liens, garnishments and judgments” after the CSS brought the cases to its attention last year.
Mount Sinai South Nassau "works with patients who may have challenges paying for their care" and will offer aid to those earning 400% of poverty level starting next year, the hospital said.
Nearly 18% of U.S. residents have medical debt, according to a study published last year in the Journal of the American Medical Association. The average amount was $429, but in the poorest ZIP codes the average was $677, the study found.
The change in state law is “a really important piece of legislation that helps those really burdened with medical debt,” Tayne said. Other recent measures also provide relief, such as medical debts under $500 not being reported to credit agencies, and a measure giving patients a year to pay medical debts before they can be sent to collections, instead of six months, she said.
In some cases, the unpaid debt is due to co-payments and other forms of cost-sharing, she said: “Even a $500 deductible is a lot of money for families that are struggling.”