Tax-Exempt Hospitals' Practices Challenged

Tax-Exempt Hospitals' Practices Challenged
46 Lawsuits Allege That Uninsured Pay the Most
By Ceci Connolly
Washington Post Staff Writer
Saturday, January 29, 2005; Page A01


TUPELO, Miss. -- When Tim Gardner was born at the hospital here 53 years ago, it was just "one little building on the hill" in a town best known as Elvis Presley's birthplace.

From those humble beginnings, North Mississippi Medical Center has grown into the largest non-metropolitan hospital in the country, a booming enterprise with a complex of glass and marble buildings and 40 satellite clinics stretching into Alabama and Tennessee. The company, incorporated in Delaware, has nearly $300 million in the bank and "exceptional profitability," according to one Wall Street rating agency.

And it pays no taxes. As one of 4,800 nonprofit U.S. hospitals, North Mississippi Medical Center is exempt from federal, state and local taxes in return for providing care to "charity patients."

But when Gardner, who is uninsured and suffers from heart trouble, asked for more time to pay off a $4,500 bill, the response came in the form of a summons. The hospital sued him for the balance plus $1,100 in legal fees.

Now Gardner and hundreds like him are at the center of a nationwide battle over whether nonprofit hospitals -- often flush with cash, opulent buildings and high-paid executives -- are fulfilling their mission as charitable institutions. Since last spring, a phalanx of trial lawyers who made millions suing asbestos makers and tobacco companies have been targeting tax-exempt hospitals, accusing them of gouging the poor.

"I was paying the best I could," said Gardner, who on his $18,000-a-year cook's salary had managed to pay $1,000. "I'm not trying to run. At the end of that week I was going to pay them some more."

Forty-six suits have been filed in 22 states, including one against Virginia's Inova Health System, alleging the hospitals violate their tax-exempt status by charging uninsured patients the highest rates and employing abusive tactics to collect.

"Their goal is to discourage these uninsured patients from returning," said Richard F. Scruggs, the lead attorney. "If they paid taxes, I couldn't complain. But these hospitals are given freedom from taxation for doing something."

Mississippi, Mississippi, Mississippi, . . . They sure have their priorities straight. Solve society's problems, first things first, "STOP THOSE GAYS FROM GETTING MARRIED!!!" "Oh by the way, we have a really screwey hospital system here, darn, I only wish them politicians would talk about the issues."

Note how it is those evil trial lawyers that are here to the rescue of the poor, but wait a minute! President has NO healthcare proposal. But he wants to curb trial lawyers who help the poor, that's a presidential priority, very pro-lifey too.

As someone who shall remain nameless observed to us the day after the the election, "How can half the country be so stupid?"