UCHealth: Aggressive debt collection lawsuits against patients reported in 2024

20 Questions Answered: The UCHealth Litigation Process

Who sued patients? UCHealth. How report lawsuits were filed? 15, 710. What years do the data cover? 2019 through 2023. What is the annual average? 3, 142 lawsuits. How report lawsuits per day? More than eight. Did UCHealth use its own name? No. Who filed the lawsuits? Third-party debt collectors. Name the debt collectors. Credit Service Company and CollectionCenter, Inc. Why did they use third parties? To obscure their involvement. Did UCHealth sell the debt? No. What was the legal process? They assigned the debt. How much does UCHealth collect annually from lawsuits? $5 million. What is UCHealth’s annual revenue? $6 billion. What was their 2023 profit? $839 million. Who investigated this? 9News and The Colorado Sun. Who is the Chief Legal Officer? Jacki Cooper Melmed. What did the Chief Legal Officer say? She said they were not hiding anything. Who is Lorena Sanchez? A patient sued for $24, 528. 87. What law changed this? HB24-1380. Who signed the law? Colorado Governor Jared Polis.

The 15, 710 Hidden Lawsuits

Between 2019 and 2023, UCHealth authorized 15, 710 lawsuits against patients for unpaid medical bills. This volume averages 3, 142 lawsuits per year. The math equates to more than eight lawsuits filed every single day. The hospital system paused debt collection activities for six months in early 2020. When the litigation resumed, UCHealth stopped putting its own name on the court dockets. The hospital system instead assigned the debts to third-party collection agencies. These agencies included Credit Service Company and CollectionCenter, Inc. The debt collectors filed the lawsuits under their own corporate names. This method kept UCHealth out of the public court records.

UCHealth did not sell the debt to these agencies. The hospital system retained ownership of the medical debt. The third-party collectors received a percentage of the recovered funds. The remaining money went back to UCHealth. Jacki Cooper Melmed serves as the chief legal officer for UCHealth. She defended the practice in early 2024. She stated that the hospital system was not hiding anything. She claimed the vendors controlled the lawsuits. Consumer advocates disagreed. Adam Fox is the deputy director of the Colorado Consumer Health Initiative. He stated that the hospital deliberately used third-party agencies to obscure their role as the plaintiff. Patients received court summons from unfamiliar companies. report patients believed the lawsuits were scams.

Courtroom Observations and Defaults

Journalists visited the Adams County courthouse to observe the legal proceedings. They watched as people responded to legal summonses for medical debt cases. The court dockets were filled with cases filed by Credit Service Company and CollectionCenter, Inc. The lawyers representing the debt collectors handled dozens of cases in a single day. Defendants frequently arrived without legal representation. report patients did not understand the origin of the debt. The confusion benefited the collection agencies. The debt collectors won a majority of their actions through default judgments. When patients failed to appear in court, the judges ruled in favor of the collection agencies. The agencies then requested wage garnishments to collect the funds. They also assessed defendants for attorney fees and court costs.

A November 2024 report by Stanford Medicine confirmed the findings of the Colorado journalists. The researchers reviewed medical debt collection lawsuits in Colorado from 2019 through 2023. The report verified that UCHealth is the largest initiator of debt collection lawsuits against former patients in the state. The researchers noted that UCHealth expanded rapidly over the previous decade. The hospital network grew to $9. 98 billion in net assets. The Stanford report highlighted that reliance on financial intermediaries allows the destructive system of medical debt to proceed on autopilot. The researchers stated this practice occurs without accountability from the public.

Financial Volume and Patient Impact

UCHealth is the largest hospital system in Colorado. The organization generates more than $6 billion in annual revenue. In 2023, the nonprofit recorded $839 million in total profit. The hospital system collects approximately $5 million per year from these debt lawsuits. This amount represents 0. 07 percent of its net patient revenue. The hospital system stated this money pays the salaries and benefits of about 60 employees.

Lorena Sanchez experienced this litigation process firsthand. She survived a car crash on Interstate 25 in early 2021. She asked paramedics not to take her to the hospital. They transported her anyway. She requested only an X-ray to check for broken bones. Doctors at UCHealth Memorial North performed a CT scan. She later received a bill for $24, 528. 87. She tried to negotiate the debt. In 2023, she received a court summons. The plaintiff listed on the paperwork was Credit Service Company. The public lawsuit complaint contained no mention of UCHealth. The only document linking the debt to the hospital was sealed from public view.

Legislative Intervention in Colorado

A joint investigation by 9News, The Colorado Sun, KFF Health News, and the Colorado News Collaborative exposed the 15, 710 lawsuits in February 2024. The reporting triggered immediate action at the state capitol. Colorado lawmakers drafted House Bill 1380 to regulate debt-related services. State Representative Javier Mabrey sponsored the legislation. He noted that consumers frequently ignore legal actions when they do not recognize the plaintiff. The new law requires the actual owner of a debt to be listed as a plaintiff in any collection lawsuit.

State Senator Sonya Jaquez-Lewis co-sponsored the legislation in the Colorado Senate. She publicly expressed shock at the volume of the cases filed by UCHealth. State Senator Lisa Cutter joined the effort to pass the bill. The lawmakers faced opposition from the medical industry. Hospital executives stated that debt collection is a necessary function to maintain operations. UCHealth officials testified that 99. 93 percent of their bills are resolved without court involvement. They claimed that sending an account to collections is always a last resort. The lawmakers rejected these statements. They focused on the absence of transparency in the legal filings. The new law requires full disclosure of the debt owner in all future legal actions.

The Colorado General Assembly passed the legislation in the spring of 2024. Governor Jared Polis signed HB24-1380 into law in June 2024. The legislation closed the legal gap. Hospital systems in Colorado can no longer sue patients under the names of their debt collectors. The law forces medical providers to use their own names on legal filings for debts they still own.

Verified Litigation Metrics

The data report details the volume of the UCHealth debt collection operations from 2019 through 2023.

The investigation confirmed that UCHealth paused its debt collection for six months in 2020. The hospital system resumed filing hundreds of cases per month shortly after. The use of third-party names allowed the hospital to maintain its public image. The practice ended only after journalists published the court data and lawmakers changed the state statutes.

The Legal Strategy of Debt Assignment

The hospital system executed a specific legal maneuver to distance its brand from courtroom proceedings. Administrators assigned unpaid medical bills to external debt collection agencies. They did not sell the accounts. The hospital retained full ownership of the financial assets. The external agencies filed lawsuits in their own names. Patients received court summons from unfamiliar corporate entities.

This method created confusion among defendants. Individuals facing litigation frequently failed to recognize the plaintiff. report ignored the court filings entirely. A missed court response automatically generates a default judgment. Judges rule in favor of the plaintiff when the defendant does not appear.

CollectionCenter Inc. and Credit Service Company operated as the primary litigation vehicles. These entities processed thousands of cases on behalf of the medical provider. The hospital paused collection lawsuits during the early months of the COVID 19 pandemic in 2020. When the litigation resumed, the hospital name disappeared from the court dockets. The third party agencies took over the public facing role in the legal system.

Court Data and Financial Judgments

Court records from 2019 to 2023 reveal the financial results of this litigation strategy. CollectionCenter Inc. initiated 12, 722 debt collection lawsuits during this period. These filings resulted in 8, 987 judgments against patients. Default judgments accounted for 8, 883 of these outcomes. This means 98. 8 percent of the judgments occurred because patients did not defend themselves in court.

The total value of the judgments secured by CollectionCenter Inc. reached $33. 5 million. The average judgment amount was $3, 675. The collection agency sought wage garnishments against 4, 730 defendants. These garnishments seized bank accounts and employer paychecks directly.

Credit Service Company executed a parallel litigation campaign. This agency filed 12, 121 debt collection lawsuits over the same timeframe. Courts awarded Credit Service Company $34. 3 million in principal amounts.

The legal process added significant costs to the original medical bills. Two attorneys handled 96. 8 percent of the CollectionCenter Inc. cases. These lawyers assessed defendants an additional $2. 8 million in attorney fees. They also added $1. 3 million in court costs to the patient debts.

Patient Experiences and Financial Distress

The abstract court data turns into severe financial distress for individual patients. Cathy Woods Sullivan received a court summons from Credit Service Company. Process servers delivered the legal documents to her minor daughter at their home. Woods Sullivan did not recognize the company name. She later discovered the lawsuit stemmed from a $1, 200 medical bill.

Woods Sullivan attempted to resolve the matter directly with the hospital. Administrators turned her away and directed her back to the collection agency. She eventually sold the wedding ring given to her by her late husband to satisfy the debt. She later joined the class action lawsuit against the collection agency to challenge the legality of the hidden plaintiff strategy.

Lorena Sanchez faced a similar legal action. She survived a car crash in Colorado Springs in 2021. She received a brief medical evaluation and an X ray at the hospital. One year later, a third party collection agency sued her for $24, 528. The lawsuit arrived without the name of the medical provider on the primary documents. The massive bill and subsequent legal action threatened her financial stability.

Another patient described the litigation process as a nightmare that put his family through hell. The aggressive collection tactics forced patients to choose between paying medical debts and covering basic living expenses. Families missed rent payments. They skipped prescription medications. They lost wages while attending mandatory court hearings.

The Financial Ecosystem of Medical Debt

The hospital system generated nearly $7 billion in total operating revenue during the fiscal year ending June 30, 2023. The organization reported $331. 7 million in operating income and $846. 6 million in net income during that same period. The revenue recovered through the shadow litigation model represented a tiny fraction of this total.

Hospital officials stated that the lawsuits generated approximately $5 million annually. This amount equaled 0. 07 percent of the net patient revenue for the organization. Administrators justified the aggressive collection tactics by claiming the recovered funds paid the salaries and benefits of roughly 60 employees.

The collection agencies operated on a contingency basis. They filed the lawsuits in their own names and absorbed the upfront legal costs. When a judge awarded a judgment, the agency extracted its fees and court costs from the patient. The agency then took an undisclosed percentage of the principal amount before returning the remainder to the hospital.

This financial arrangement incentivized the collection agencies to pursue every possible legal avenue. The high volume of lawsuits allowed the agencies to operate a volume based legal factory. Two attorneys managed nearly all of the 12, 722 cases filed by CollectionCenter Inc. This concentration of legal power enabled the rapid processing of default judgments and wage garnishments.

Class Action Litigation Against Collection Agencies

The aggressive litigation tactics triggered legal retaliation from consumer advocates. Attorneys filed a class action lawsuit against Credit Service Company in December 2020. The case entered the District Court of Colorado as Case 2020 CV 34153. The lawsuit challenged the legality of the debt assignment model.

The plaintiffs claimed that Credit Service Company violated state consumer protection laws. The complaint stated that the collection agency confused and misled patients by suing in its own name. The legal filing presented a dual argument. If the agency did not own the debt, it had no right to act as the sole plaintiff. If the agency did own the debt, it violated the state debt buyer law. That specific law requires debt buyers to attach detailed information about the original charges and the assignment agreement to the lawsuit.

David Seligman represented the patients in this class action. He served as the executive director of Towards Justice. This legal nonprofit stated that the separation between the hospital and the patient created an unfair legal environment. The lawsuit exposed internal communications where hospital officials admitted that suing patients directly would look bad to the public.

Legislative Action and Statutory Changes

The volume of hidden medical debt lawsuits caught the attention of state lawmakers. Representative Javier Mabrey sponsored House Bill 24 1380 to address the statutory gap. The Colorado General Assembly debated the measure during the spring 2024 legislative session.

The original draft of the bill required plaintiffs to own 100 percent of the debt they sued over. Debt collection industry lobbyists negotiated changes to this requirement. The final version of the legislation allowed collection agencies to remain on the lawsuit. The new law required the actual owner of the debt to be listed alongside the collection agency as a joint plaintiff.

Governor Jared Polis signed the bill into law in June 2024. The legislation forced hospitals to attach their names to all future debt collection lawsuits. This ended the shadow plaintiff strategy. Patients report see the name of the medical provider on the court summons.

Lawmakers had previously addressed hospital billing practices with House Bill 22 1285. Governor Polis signed that legislation on June 8, 2022. The 2022 law prohibited hospitals from sending debts to collections if the facility failed to comply with federal price transparency rules. The statute blocked hospitals from suing patients or reporting debts to credit bureaus under those conditions. The law created a private right of action. Patients gained the ability to sue hospitals that violated the transparency requirements. A judge could force a noncompliant hospital to refund all paid debts and cover the attorney fees of the patient.

Third Party Debt Collectors Executing Hospital Litigation

Hospital administrators assigned patient accounts to external collection agencies to execute legal actions. Court records identify two primary entities responsible for filing these lawsuits. CollectionCenter Inc. and Credit Service Company operated as the main plaintiffs in court. These agencies filed thousands of lawsuits against patients while keeping the hospital name out of the public docket.

A November 2024 Stanford Medicine report analyzed court data from 2019 through 2023. Researchers found that CollectionCenter Inc. and Credit Service Company initiated tens of thousands of legal actions in Colorado courts. The data confirm these two agencies secured millions of dollars in judgments. They added attorney fees and court costs to the original medical debts. The lawsuits inflicted financial distress on patients. Court records show defendants struggled to pay rent, afford prescriptions, and missed work to attend court hearings. One patient described the collection efforts as a nightmare that put his family through hell.

CollectionCenter Inc. Operations and Court Judgments

CollectionCenter Inc. operates offices in Loveland, Colorado, and Casper, Wyoming. Clyde Cox founded the agency in 1919 as a credit reporting facility. The company later transitioned into a full debt collection agency. The agency functions as a subsidiary of a revenue pattern management corporation. The Stanford Medicine report shows CollectionCenter Inc. filed 12, 722 debt collection lawsuits between 2019 and 2023. A sample of these cases confirmed the majority were filed on behalf of the hospital system.

The agency secured 8, 987 judgments during this period. Default judgments accounted for 8, 883 of those rulings. A default judgment occurs when a patient fails to appear in court. The court then rules in favor of the collection agency automatically. These default judgments represented 98. 8 percent of the total cases won by CollectionCenter Inc..

The financial totals from these judgments reached $33. 5 million. The average judgment amount was $3, 675 per patient. CollectionCenter Inc. sought wage and bank account garnishments against 4, 730 defendants. This means the agency requested court orders to extract funds directly from patient paychecks and bank deposits.

The garnishment process caught patients off guard. A December 2024 investigation by 9News identified dozens of instances where the lawsuits resulted in direct wage garnishments. One patient reported she only learned about the debt when her employer notified her that her wages were being garnished. In two documented cases, the collection agencies sought to garnish the wages of the hospital system’s own employees. The patients had no prior knowledge of the lawsuits because the court summons did not list the hospital name.

The litigation process generated additional revenue through legal fees. The court records show CollectionCenter Inc. assessed defendants $2. 8 million in attorney fees. The agency billed another $1. 3 million in court costs. Two specific attorneys represented the agency in 96. 8 percent of these lawsuits.

The agency faced legal scrutiny for its collection methods. In January 2020, Stephanie Dehart filed a federal lawsuit against CollectionCenter Inc.. The lawsuit alleged violations of the Fair Debt Collection Practices Act. Dehart incurred medical debt following the birth of her daughter. She made a partial payment and provided her email address for a receipt. CollectionCenter Inc. sent the receipt and debt disclosures to the wrong email address. Dehart sued the agency for disclosing her debt information to an unfamiliar person. She sought statutory damages and an order enjoining the agency from further contact.

Credit Service Company Tactics and Sealed Documents

Credit Service Company operates out of Colorado Springs. The agency was established in 1947. The company specializes in third party accounts receivable management for healthcare facilities and government entities. The agency filed 12, 121 debt collection lawsuits between 2019 and 2023. The Stanford Medicine report details that Credit Service Company won $34. 3 million in principal amounts from patients during this timeframe.

The agency requested garnishments in 4, 683 cases. Credit Service Company assessed patients $2. 2 million in attorney fees. The agency added $1. 1 million in court costs to the patient balances. Researchers noted a specific legal tactic used by this agency. Credit Service Company used state court policies to seal documents related to medical debt collection. Sealing the documents prevented public records searches from confirming the original medical provider.

This practice led to a class action lawsuit in May 2023. Cathy Woods Sullivan filed the lawsuit against Credit Service Company. The lawsuit alleged the collection agency deceived patients by putting its own name on the legal filings instead of the hospital name. Attorney David Seligman represented the plaintiffs. He stated the practice created an illegal separation between the medical provider and the patient. Seligman stated that if a hospital wants to sue a patient, the hospital must put its name on the lawsuit and show up in court.

Credit Service Company denied the allegations. The agency released a statement calling the claims factually incorrect and contrary to established Colorado case law. The company stated it vigorously denied the claims made by the plaintiffs. The litigation highlighted the mechanics of assigning debt to third party collectors while the hospital retained ownership of the accounts.

Legislative Intervention and House Bill 1380

The volume of hidden medical debt lawsuits prompted action from the Colorado legislature. Lawmakers drafted House Bill 1380 to force transparency in medical debt litigation. The governor signed the bill into law in June 2024. The legislation requires medical providers to list their names as the assignor on any debt collection lawsuit. The law prevents hospitals from hiding behind third party collection agencies in court filings.

The new requirements took effect in August 2024. The law immediately altered the public visibility of hospital litigation. Court databases report allow searches for the original medical provider. Between August 8 and December 17 of 2024, public records showed the hospital system filed 351 lawsuits under the new transparency rules. Children’s Hospital filed 263 lawsuits during the same period. The legislation ensures patients know exactly which medical institution is taking them to court.

The data from 2015 through 2025 demonstrate a clear pattern of third party litigation. CollectionCenter Inc. and Credit Service Company processed the bulk of these legal actions. They secured default judgments, garnished wages, and added millions in legal fees to patient debts. The 2024 legislation ended the practice of anonymous hospital lawsuits in Colorado courts.

20 Questions Answered: Wage Garnishments and Asset Seizures.

1. What is wage garnishment? A legal order requiring an employer to withhold earnings for debt payment.

2. What is a bank account seizure? A court approved action taking funds directly from a patient financial institution.

3. How medical debt garnishment cases occur annually in Colorado? Approximately 14, 000.

4. Who uncovered the 14, 000 annual cases? KFF Health News.

5. What percentage of CollectionCenter Inc lawsuits sought garnishments? 37. 2 percent.

6. What did CollectionCenter Inc primarily focus on? Patient bank accounts.

7. How garnishments did Credit Service Company request? 4, 683.

8. What is an Extraordinary Collection Action? Severe debt recovery methods including lawsuits and garnishments.

9. How days until UCHealth authorizes an Extraordinary Collection Action? 182 days after the billing statement.

10. Did UCHealth garnish the wages of its own employees? Yes, court records show instances of this occurring.

11. How do patients frequently discover they are being sued? Through notifications from their employers about wage withholding.

12. What did Cathy Woods Sullivan do to pay her UCHealth debt? She pawned her late husband 18 karat white gold wedding ring.

13. What percentage of Colorado garnishment cases originate from medical care? At least 30 percent.

14. Can patients on Medicaid face wage garnishment? Yes, investigations found Medicaid patients were erroneously pursued.

15. What does the National Center for Access to Justice state about garnishments? It forces patients to prioritize debt over feeding their children.

16. What was the 2024 legislative response in Colorado? House Bill 1380.

17. What did House Bill 1380 mandate? Hospitals must list their names as assignors on debt lawsuits.

18. What is the proposed 2026 Colorado legislation? A bill to completely ban wage garnishment for medical debt.

19. What limit does the pending 2026 measure place on payment plans? Four percent of weekly net income.

20. Do other large Colorado hospital systems garnish wages? HealthONE, AdventHealth, and Banner Health state they do not sue patients.

When a patient cannot pay a medical bill, UCHealth authorizes its collection agencies to initiate Extraordinary Collection Actions. These actions begin 182 days after the hospital mails the billing statement. The process moves from the hospital billing department to the courtroom. Debt collectors obtain default judgments against patients. Once a judge signs the order, the collector gains the legal authority to seize assets. They execute bank garnishments to withdraw funds directly from checking and savings accounts. They execute wage garnishments to intercept paychecks before the money reaches the employee.

A KFF Health News investigation found that Colorado courts approve wage garnishment requests in approximately 14, 000 medical debt cases annually. At least 30 percent of all wage garnishment cases in the state originate from medical care. The true number is likely higher because medical debt is frequently hidden behind credit card balances or personal loans. Stanford Medicine researchers analyzed a sample of lawsuits filed by CollectionCenter Inc, a primary debt collector for UCHealth. The researchers found that 37. 2 percent of the lawsuits sought garnishments. These actions primarily focused on the bank accounts of defendants. Credit Service Company, another agency working for UCHealth, requested garnishments in 4, 683 separate cases between 2019 and 2023.

Colorado Medical Debt Collection Metrics.

The legal framework surrounding these collections relies heavily on default judgments. When a patient fails to appear in court, the judge automatically rules in favor of the debt collector. This legal process allows agencies like Credit Service Company and CollectionCenter Inc to secure judgments without proving the validity of the underlying debt in a trial. Once the default judgment is entered, the collector files a writ of garnishment. The employer receives this writ and is legally obligated to deduct a specific percentage from the employee paycheck. The money is then routed to the collection agency, which takes a cut before passing the remainder back to UCHealth.

The financial damage hits patients without warning. Individuals frequently only discover the existence of a lawsuit when their employer notifies them that their wages are being withheld. Court records show that UCHealth even garnished the wages of its own employees. The aggressive collection tactics force patients to make severe sacrifices. Cathy Woods Sullivan owed money to UCHealth. To pay the debt and avoid further legal action, she pawned her late husband 18 karat white gold wedding ring. Other patients reported losing power to their homes because the wage garnishments left them unable to pay their electric bills. Specific patients had Medicaid coverage, meaning they owed nothing for their health care, yet they still faced asset seizures due to billing errors.

The practice extends beyond UCHealth to other medical providers across the state. In 2022, court records show the Valley View health system in Glenwood Springs garnished the wages of a patient over a 400 dollar medical bill. The patient worked at a local organization that the health system supported as part of its community benefits program. Nonprofit hospitals like Valley View and UCHealth must provide community benefits, including charity care, to maintain their tax exempt status. The Colorado Hospital Association defended the collection practices by stating that hospital care costs money to deliver. Charlie Shoop, president of Professional Finance Company, stated his agency initiates wage garnishment on less than one percent of all accounts placed for collection.

Patient advocates state that medical debt is fundamentally different from consumer debt. People do not choose to get sick or require emergency medical care. A sudden illness or accident can result in thousands of dollars in unexpected bills. When these bills are sent to collections, the resulting wage garnishments trap low income families in a continuous loop of poverty. The National Center for Access to Justice notes that taking money directly out of a paycheck leaves parents unable to prioritize food for their children. Even with the existence of financial assistance programs, patients frequently find the application process confusing and difficult to navigate. As a result, individuals who qualify for charity care still end up facing lawsuits and asset seizures.

Lawmakers in Colorado recognized the severity of the matter. In 2022, the state passed a law capping hospital charges for patients with incomes under two and a half times the federal poverty level. The legislation limits patient payments to hospitals at four percent of their income and to clinics at two percent. In 2023, Colorado became the state to ban credit reporting agencies from listing medical debt and hurting consumer credit scores. The state also halted debt collection for hospitals failing to comply with federal price transparency rules. In 2024, the state passed House Bill 1380. The law forces hospitals to list their names as assignors on debt collection lawsuits. This prevents medical providers from hiding behind the names of third party collection agencies.

By 2026, legislators introduced new measures to ban wage garnishment for medical debt entirely. State Representative Javier Mabrey and State Senator Mike Weissman sponsored the legislation. The pending legislation limits bank garnishments and prevents payment plans from exceeding four percent of a patient weekly net income. The bill also requires creditors to verify if uninsured patients qualify for public health insurance before attempting to collect. The legislation also bars creditors from collecting on bills older than three years and leaves medical care providers liable to the patient for at least 3, 000 dollars if collectors fail to comply.

20 Questions Answered: The Stanford Medicine Data Analysis.

What institution coauthored the 2024 medical debt report? Stanford University School of Medicine. Who partnered with Stanford? George Washington University and PatientRightsAdvocate. org. What time period did the researchers analyze? 2019 through 2023. Which hospital system was the primary focus? UCHealth. How lawsuits did UCHealth and CollectionCenter Inc file? 12, 722. How much principal debt did those specific lawsuits target? $33. 5 million. What was the average judgment amount in the CollectionCenter Inc cases? $3, 675. How judgments were awarded to UCHealth and CollectionCenter Inc? 8, 987. What percentage of those were default judgments? 98. 8 percent. How defendants faced garnishment requests from CollectionCenter Inc? 4, 730. How much did CollectionCenter Inc cases add in attorney fees? $2. 8 million. How much did CollectionCenter Inc cases add in court costs? $1. 3 million. How lawsuits did Credit Service Company file? 12, 121. How much principal did Credit Service Company collect? $34. 3 million. How garnishments did Credit Service Company request? 4, 683. How much did Credit Service Company charge in attorney fees? $2. 2 million. Who coauthored the Stanford study? Barak Richman. What pricing anomaly did researchers find? Procedure prices varied by up to 247 times. Did patients have upfront access to these prices? No. What database did researchers use to find the lawsuits? LexisNexis Courtlink.

In 2024, scholars from the Stanford University Clinical Excellence Research Center and George Washington University Law School published a joint academic report with PatientRightsAdvocate. org. The researchers analyzed medical debt litigation in Colorado from 2019 through 2023. They manually collected filings from the LexisNexis Courtlink database to quantify the exact volume of lawsuits filed against patients. The data confirmed that UCHealth operated as the largest initiator of debt collection lawsuits against former patients in the state. The researchers documented the financial toll these lawsuits imposed on patients through judgments, garnishments, and added legal fees.

To identify the recent incidence of medical debt lawsuits, the researchers used LexisNexis Courtlink to manually collect filings for all debt collection lawsuits brought by Colorado hospitals across the five year period. LexisNexis Courtlink provides detailed information on plaintiffs, defendants, attorneys, principal amounts, court fees, garnishments, bankruptcies, and case status. The researchers drew further information about interest rates, garnishees, defendant answers, and original creditors from court records accessed through the Colorado Courts Public Access Terminal. The researchers noted that the Denver County database had inflexible search parameters, meaning the 190 cases gathered from Denver County likely undercount the actual case volume. This meticulous data collection process allowed the Stanford team to bypass the secrecy of the third party collection agencies.

The Stanford analysis identified a specific operational shift in 2020. UCHealth sharply decreased debt collection actions filed under its own name. Simultaneously, total debt collection actions brought by CollectionCenter Inc more than doubled. CollectionCenter Inc operates as a collection agency owned by a revenue pattern management company. The researchers pulled a random subsample of 308 cases to determine the original creditor. Out of 133 sampled cases brought by CollectionCenter Inc, researchers traced 80 lawsuits directly back to UCHealth. The courts sealed documents in another 30 cases. This deliberate use of intermediaries allowed the hospital system to pursue medical debts quietly.

The researchers quantified the exact number of legal actions initiated by the hospital and its primary collection agencies. From 2019 through 2023, UCHealth and CollectionCenter Inc initiated 12, 722 debt collection lawsuits. These specific actions sought $33. 5 million in principal amounts. A second collection intermediary named Credit Service Company filed 12, 121 debt collection lawsuits during the same four year period. Credit Service Company won $34. 3 million in principal amounts. The combined legal actions from these entities represent tens of thousands of patients facing court summons for medical bills.

The Stanford report detailed the outcomes of the 12, 722 lawsuits filed by UCHealth and CollectionCenter Inc. These actions generated 8, 987 judgments against patients. The data revealed that 8, 883 of these rulings were default judgments. A default judgment occurs when a patient fails to appear in court or respond to the lawsuit. This equals a 98. 8 percent default judgment rate. The average judgment amount reached $3, 675 per case. Patients frequently miss court dates because they do not understand the legal paperwork or cannot afford legal representation. The high default rate guarantees that the collection agencies win their cases without having to prove the validity of the underlying medical debt in a trial.

Winning a default judgment gives the collection agency the legal authority to seize patient assets. The Stanford researchers found that UCHealth and CollectionCenter Inc sought garnishments in 37. 2 percent of their lawsuits. This action pursued the bank accounts and wages of 4, 730 defendants. Credit Service Company requested garnishments in 4, 683 cases. The litigation process also increased the original medical debts with additional legal costs. In the CollectionCenter Inc cases, two attorneys represented 96. 8 percent of the lawsuits. These attorneys assessed defendants an additional $2. 8 million in attorney fees and $1. 3 million in court costs. Credit Service Company assessed defendants $2. 2 million in attorney fees and $1. 1 million in court costs. Patients who could not afford their original medical bills suddenly owed thousands of dollars more in legal penalties.

The Stanford researchers investigated the underlying medical bills that triggered these lawsuits. They found serious inconsistencies in the pricing structure across the hospital system. The price of common medical procedures varied by as much as 247 times across different UCHealth facilities in Colorado. Patients sued for debt did not have upfront access to these prices. Without transparent pricing, patients could not verify the accuracy of their bills or compare the charges to prevailing market rates. Cynthia Fisher, the founder of PatientRightsAdvocate. org, stated that patients had no way to verify if hospital charges were legitimate or the result of overbilling. The researchers concluded that delegating collection authority to third party intermediaries magnifies the injustices of the medical billing system.

The Stanford report included specific details from patient answers filed in court. One patient who filed an answer against UCHealth in Larimer County stated that the amount the hospital charged was completely unreasonable. The patient noted the absence of a detailed list of charges and expressed confusion over the validity of the bill. The researchers highlighted that patients face specific dangers when hospitals outsource medical debt. Credit card companies outsource debt, medical bills are exceptionally difficult to decipher. Patients cannot verify if their insurance was properly billed or if they qualified for financial assistance. The Stanford report stated that no court should approve financially devastating judgments over a bill that might contain errors.

Barak Richman, a senior scholar at the Stanford Clinical Excellence Research Center, coauthored the study. He stated that medical debt is a product of irresponsible billing systems and extortive pricing strategies. Richman noted that the entire health sector needs to address these problems with transparency and forthrightness. He concluded that using intermediaries does the exact opposite. The report emphasized that medical bills are frequently unintelligible, untimely, and inaccurate. When hospitals charge widely varying prices and hide behind third party debt collectors, they avoid accountability for their billing practices. The Stanford analysis provided the empirical data needed to prove that the hospital system was running an aggressive litigation operation.

The publication of the Stanford report validated the earlier investigations conducted by local Colorado journalists. The academic data proved that the hospital system was an outlier in its aggressive collection practices. The findings gained national attention and increased pressure on state lawmakers to intervene. In response to the data, Colorado legislators passed new laws requiring hospital systems to sue using their own names as listed plaintiffs. This legal change forces hospitals to take public responsibility for their debt collection lawsuits. The Stanford researchers demonstrated how academic data analysis can expose hidden financial practices within large nonprofit healthcare systems.

The demographic reality of the patients targeted by third party debt collectors acting on behalf of UCHealth paints a clear picture of financial distress. Court records and patient interviews from 2019 through 2023 show that the hospital system directed its litigation operations at low income residents, grieving widows, car crash victims, and even its own employees. UCHealth operates as the largest Medicaid provider in Colorado. This means a massive portion of its patient base already lives near or the federal poverty line. When these individuals cannot navigate the confusing billing system, they face aggressive legal action.

Data compiled by Stanford University researchers and PatientRightsAdvocate. org reveals the exact financial extraction executed against these demographics. Between 2019 and 2023, UCHealth and its primary debt collector initiated 12, 722 lawsuits. A second collector filed another 12, 121 lawsuits during the same period. The courts awarded 8, 987 judgments to the primary collector alone. A frightening 98. 8 percent of those rulings were default judgments. This metric proves that the sued patients did not have the financial resources to hire legal representation or even appear in court. The average judgment forced patients to pay $3, 675.

The legal actions did not stop at court judgments. More than a third of the lawsuits sought direct garnishments. Debt collectors targeted the bank accounts and paychecks of 4, 730 defendants. Two specific attorneys handled 96. 8 percent of these cases. These lawyers assessed defendants an extra $2. 8 million in attorney fees and $1. 3 million in court costs. The patients bore the entire financial weight of the litigation.

The human profiles behind these numbers expose the aggressive nature of the collection tactics. Cathy Woods Sullivan represents one of the most documented cases. Her husband suffered serious kidney failure and spent six days on life support at the University of Colorado Hospital in Aurora before he died. Woods Sullivan and her two teenage daughters subsequently required medical care. They were covered by Medicaid. She received confusing bills and was told by hospital staff to disregard of the notices following her husband’s death. A year later, a process server arrived at her home at night. The server handed the lawsuit papers directly to her minor daughter. The lawsuit demanded $1, 634.

Woods Sullivan attempted to resolve the debt directly with the hospital. She spent two days trying to get help from UCHealth administrators. The hospital turned her away and told her the debt belonged to Credit Service Company. To satisfy the debt and escape the constant harassment, Woods Sullivan searched her home for anything of value. She took her 18 karat white gold wedding ring to a local pawn shop. The ring featured a 1. 5 carat diamond and was the last precious item her late husband had given her. She sold the ring to pay the hospital debt. She is a lead plaintiff in a class action lawsuit against the collection agency.

Billing errors also forced patients into the courtroom. Lorena Sanchez was involved in a car crash near Colorado Springs in early 2021. Paramedics transported her to a UCHealth emergency room for a brief visit and an X ray. A year later, she received a bill for $24, 528. She applied for financial assistance. The hospital approved her application and sent a letter stating her bill was reduced by 73 percent. This adjustment brought her true balance down to roughly $6, 000. The following month, she received another bill demanding the original $24, 528. She tried to correct the error with the billing department. The hospital ignored her corrections and dispatched Credit Service Company to sue her for the full $24, 528. She spent months fighting a lawsuit over money the hospital had already agreed she did not owe.

The litigation campaign did not spare the hospital’s own workforce. Court records confirm that UCHealth garnished the paychecks of its own employees. Workers who received medical treatment at the facilities where they were employed found themselves unable to afford the bills. The hospital assigned their debts to third party collectors. The collectors obtained default judgments. The hospital then complied with the court orders to siphon wages directly from its own employees’ paychecks. Colorado law allows creditors to garnish up to 20 percent of a debtor’s disposable earnings. This practice trapped low wage hospital workers in a loop of debt and reduced income.

Patients eligible for charity care frequently fell through the cracks of the hospital’s financial assistance policy. Colorado law mandates the Hospital Discounted Care program. This program limits the amounts that low income patients can be billed if they earn at or 250 percent of the Federal Poverty Guidelines. Hospitals must give patients the chance to apply for discounted care. sued patients reported they were never informed about these options. When patients failed to respond to mailed statements, the hospital used public data like Supplemental Nutrition Assistance Program applications to screen for poverty. If the automated systems failed to flag them, the accounts went to collections. The debt collectors then filed lawsuits without verifying if the patients actually qualified for state mandated financial protection.

The geographic and economic distribution of these lawsuits heavily skewed toward working class neighborhoods. While specific zip code data remains sealed in court filings, the correlation between the hospital’s Medicaid patient volume and its litigation volume is clear. UCHealth executives publicly acknowledged that their facilities treat a higher percentage of Medicaid patients than competing networks. These patients frequently hold jobs in the service industry, retail, or manual labor sectors. They do not have the disposable income required to absorb a sudden $3, 675 judgment. When the courts approved wage garnishments, the financial damage extended beyond the individual patient. Entire families lost their ability to pay rent, buy groceries, or cover basic utilities. The aggressive collection tactics transferred wealth from Colorado’s poorest residents directly to the state’s most profitable hospital system.

The demographic breakdown shows a clear pattern of wealth extraction from at risk populations. The patients sued were not wealthy individuals hiding assets. They were Medicaid recipients, grieving families, accident victims, and hospital support staff. They lost their wages, their bank balances, and their family heirlooms to satisfy debts that represented a microscopic fraction of the hospital’s annual revenue.

20 Questions Answered: Charity Care and Financial Assistance.

What law regulates Colorado hospital discounts? House Bill 21-1198.
When did the Hospital Discounted Care law take effect? September 1, 2022.
What income level qualifies for discounted care? Up to 250 percent of the federal poverty level.
Did UCHealth sue patients eligible for this care? Yes.
How lawsuits did UCHealth file from 2019 through 2023? 15, 710.
What percentage of eligible Colorado patients missed full financial screening? 42 percent.
Who sued Lorena Sanchez? Credit Service Company.
How much was Sanchez sued for? $24, 000.
Did Sanchez qualify for financial assistance? Yes.
What was her approved discount? 73 percent.
Did the lawsuit reflect this discount? No.
What did UCHealth blame for the error? A billing mistake.
Who pawned her wedding ring to pay UCHealth debt? Cathy Woods-Sullivan.
Why did Woods-Sullivan visit the hospital? Chest pains.
What percentage of CollectionCenter Inc. lawsuits ended in default judgments? 98. 8 percent.
How debt collection lawsuits did Credit Service Company file? 12, 121.
How much principal did Credit Service Company win? $34. 3 million.
How letters does UCHealth claim to send before collections? Seven.
How phone calls does UCHealth claim to make? Two.
Do third-party debt collectors obscure the hospital involvement? Yes.

House Bill 21-1198 created the Hospital Discounted Care program in Colorado. The legislation took effect on September 1, 2022. The law mandates that hospitals screen patients for financial assistance and caps costs for patients earning up to 250 percent of the federal poverty level. This income limit equals about $2, 830 a month for an individual. Citizenship status does not affect eligibility. Patients with insurance must ask to be screened. If hospitals fail to follow the screening requirements, they face fines from the Department of Health Care Policy and Financing. Patients can also sue the hospital for noncompliance. State data indicates 42 percent of patients who qualify for assistance do not receive full screening.

UCHealth claims to send seven financial assistance letters and four billing statements before sending an account to collections. The organization states it makes two phone calls and uses Supplemental Nutrition Assistance Program data for presumptive eligibility screening. The hospital reports that 99. 9 percent of accounts resolve without court involvement. UCHealth provides care for 2. 7 million patients each year. The hospital network states it provided $580 million in uncompensated care in fiscal year 2023. This represents a $200 million increase from 2019. The hospital collects around $5 million yearly from lawsuits. This amount represents 0. 07 percent of its received net patient revenue from 2023. UCHealth is a $6 billion organization with more than 30, 000 employees.

Between 2019 and 2023, UCHealth filed 15, 710 lawsuits against patients. The hospital assigned debts to third-party collectors like Credit Service Company and CollectionCenter Inc.. This practice obscured the hospital name from court dockets. A Stanford Medicine study initiated by researchers at Stanford University School of Medicine, George Washington University, and PatientRightsAdvocate. org confirmed these findings. The researchers found that UCHealth and CollectionCenter Inc. initiated 12, 722 debt collection lawsuits. These actions generated 8, 987 judgments totaling $33. 5 million. The average judgment was $3, 675. CollectionCenter Inc. won 98. 8 percent of its cases through default judgments. More than a third of these lawsuits sought garnishments against 4, 730 defendants. The garnishments primarily targeted bank accounts. Two attorneys represented 96. 8 percent of these cases. They assessed defendants an additional $2. 8 million in attorney fees and $1. 3 million in court costs.

Credit Service Company filed 12, 121 debt collection lawsuits. The company was awarded $34. 3 million in principal amounts. It requested garnishments in 4, 683 cases. It assessed defendants $2. 2 million in attorney fees and $1. 1 million in court costs. The company took advantage of state court policies that seal documents surrounding medical debt collection. This practice hid the original plaintiff in thousands of cases.

Lorena Sanchez was involved in a car crash on Interstate 25 in 2021. She repeatedly told paramedics not to take her to the hospital. She asked for no more than an X-ray to check for broken bones. Doctors at UCHealth Memorial North elected to perform a CT scan. A year later, she received a bill for more than $24, 000. She negotiated her bill and received a 73 percent reduction in writing. Credit Service Company then sued her for $24, 528. UCHealth Chief Legal Officer Jacki Cooper Melmed defended the practice of suing under the name of a third-party debt collector. Melmed stated the hospital was not hiding anything. UCHealth later admitted a billing mistake caused the error.

Cathy Woods-Sullivan sought emergency treatment for chest pains. A debt collection company working for UCHealth sued her over the resulting debt. She tried to fight the lawsuit in court. She eventually entered into a payment plan to settle the case. The stress of arguing with the debt collector over her remaining balance became overwhelming. She pawned her 18-karat white gold wedding ring with a 1. 5-carat diamond. Her late husband gave her the ring on their wedding day. She used the money to pay off the UCHealth debt.

Governor Jared Polis signed House Bill 1380 in June 2024. The legislation forces hospital systems to list their names on lawsuits seeking to collect debt they still own. The law went into effect in early August 2024. Businesses suing for unpaid debt must list their name as an assignor. This allows the public to search a state database to quantify lawsuits. Between August 8 and December 17, 2024, UCHealth filed 351 collections lawsuits under its own name. Children’s Hospital filed 263 lawsuits during the same period.

20 Questions Answered: Decoding the Court Records
Who led the data investigation? Chris Vanderveen and John Ingold. What news organizations collaborated? 9News, The Colorado Sun, KFF Health News, COLab, Colorado Newsline, and The Sentinel. What was the project name? Diagnosis Debt Colorado. What database did they use? LexisNexis Courtlink and the Colorado Courts Public Access Terminal. How counties does Courtlink cover? 63 of Colorado’s 64 counties. Which county has a separate system? Denver County. What was the primary obstacle? UCHealth stopped using its name as a plaintiff in 2020. How did reporters find the cases? They searched for third party collection agencies as plaintiffs. What specific documents hid the hospital’s name? Brief attachments to the lawsuit complaints. Were these attachments public? No, they were sealed from public view. Did reporters visit physical locations? Yes, they visited local courthouses. Why did they visit courthouses? To observe debt collection dockets and identify the lawyers handling the cases. Who verified the journalists’ findings? Stanford Medicine. When did Stanford publish its report? November 2024. How cases did Stanford sample? 308 cases. What percentage of sampled CCI cases belonged to UCHealth? 60. 2 percent. What percentage of cases had sealed documents hiding the plaintiff? 22. 6 percent. What legislative action resulted from this data? House Bill 1380. Who signed the bill? Colorado Governor Jared Polis. When was the bill signed? June 2024.

The investigation required extracting hidden data from the state court system. Chris Vanderveen from 9News and John Ingold from The Colorado Sun led the data collection effort. They partnered with KFF Health News, the Colorado News Collaborative, Colorado Newsline, and The Sentinel. The team named the project Diagnosis Debt Colorado. The reporters faced a major data extraction obstacle. The hospital system stopped filing debt lawsuits under its own name in early 2020. The medical provider assigned the debt to third party collectors. The collectors filed the lawsuits. The hospital system’s name only appeared attachments to the lawsuit complaints. The courts sealed these attachments from public view.

To bypass this obstacle, the journalists used LexisNexis Courtlink. The Courtlink system covers 63 of the 64 counties in Colorado. Denver County operates a separate online court system. The reporters manually collected filings for debt lawsuits brought by collection agencies. They searched for Credit Service Company and CollectionCenter Inc as the named plaintiffs. The digital search provided the foundation for the investigation. The reporters also visited physical courthouses. Ingold noted that local jurisdictions schedule debt collection cases on the same days. The same lawyers handle these dockets. This physical presence allowed the journalists to connect the third party lawsuits back to the hospital system.

The court records were intentionally obscured. The hospital system used a legal maneuver called assignment. They assigned the debt to the collection agency without relinquishing ownership. The collection agency then filed the lawsuit in its own name. The hospital system received the majority of the money collected. The collection agency kept a percentage as a fee. This arrangement kept the hospital system’s name out of the public database index. When a patient searched their own name in the court database, they would see a lawsuit from Credit Service Company or CollectionCenter Inc. They would not see UCHealth. The only document linking the hospital to the lawsuit was a brief attachment. The courts sealed this attachment. The attachment was not on official letterhead. Patients frequently thought the lawsuits were scams. They did not recognize the collection agency. They ignored the summons. The collection agency won a default judgment.

The journalists had to reverse engineer this process. They could not search for the hospital system. They had to search for the collection agencies. They pulled the bulk data for Credit Service Company and CollectionCenter Inc. They analyzed the volume of lawsuits. They found that the volume of lawsuits filed by these agencies spiked exactly when the hospital system stopped filing lawsuits under its own name in 2020. The correlation in the data proved the strategy shift. By sitting in the courtroom, reporters could hear the details of the cases spoken aloud. This physical verification method allowed them to confirm the digital data they extracted from LexisNexis.

Stanford Medicine researchers verified the journalists’ methodology in a November 2024 report. The researchers used LexisNexis Courtlink and the Colorado Courts Public Access Terminal. They gathered a random subsample of 308 cases to determine the original creditor. The Stanford analysis confirmed the reporting. Out of 133 sampled cases brought by CollectionCenter Inc, 80 lawsuits belonged to UCHealth. This represented 60. 2 percent of the sample. The courts sealed documents hiding the original plaintiff in another 30 cases. This accounted for 22. 6 percent of the sample. The data proved that the hospital system used the collection agency to execute its legal strategy while keeping its name off the public docket.

The Stanford Medicine report also documented the collateral damage of these lawsuits. The researchers found that the debt collection process resulted in garnishments, bankruptcies, assessed interest, and substantial court and attorney fees. The total judgment amounts in the gathered cases represented a fraction of the amounts for which patients were originally sued. The researchers noted that the hospital system employed CollectionCenter Inc to collect debts as early as 2019. During that year, the hospital system was also actively suing patients under its own name. The transition to using third party names exclusively occurred in 2020.

The data extraction effort produced legislative results. Colorado lawmakers drafted House Bill 1380. The legislation applies to all debt collection lawsuits. It requires the owner of a debt to be listed among the plaintiffs in any lawsuit seeking to collect on that debt. State Representative Javier Mabrey sponsored the bill. He stated that consumers ignore legal actions when they do not recognize the name of the company suing them. Ignoring a court summons leads to default judgments. Default judgments lead to wage garnishments and bank account levies. The legislative response moved quickly after the publication of the investigation. Lawmakers introduced the bill in the spring of 2024. The bill passed its committee hearing in April 2024. Supporters of the legislation stated that the bill makes it easier for people to understand who is suing them and why. The new law applies broadly to all debt collection lawsuits in the state. It does not solely target medical debt. The broad application ensures that no creditor can hide behind a third party collection agency to obscure their legal actions. Colorado Governor Jared Polis signed the bill into law in June 2024. The law forces hospitals to put their names on the lawsuits they authorize.

The investigation showed the power of collaborative data journalism. Five news organizations pooled their resources to decode the state court records. They cross referenced digital database queries with physical courtroom observations. They identified the specific legal maneuvers used to hide the origins of the medical debt. They quantified the exact number of lawsuits filed against patients. The Stanford Medicine report validated their findings months later. The resulting legislation closed the legal exemption that allowed the hospital system to sue patients in secret. The data proved that transparency in medical billing requires strict regulatory oversight and continuous journalistic scrutiny.

20 Questions Answered: The Economics of Hospital Litigation
What was UCHealth total operating revenue in 2023? Nearly $7 billion. How much net income did UCHealth report in 2023? $846. 6 million. What was UCHealth total profit in 2023? $839 million. How much does UCHealth collect annually from patient lawsuits? Approximately $5 million. What percentage of net patient revenue does $5 million represent? 0. 07 percent. How employees could the $5 million lawsuit recovery pay for? About 60 employees. What is the average judgment amount against a patient? $3, 675. How much did CollectionCenter Inc collect in total judgments? $33. 5 million. How much did Credit Service Company collect in principal amounts? $34. 3 million. What percentage of CollectionCenter Inc judgments were default judgments? 98. 8 percent. How much did attorneys assess in fees for CollectionCenter Inc cases? $2. 8 million. How much did attorneys assess in court costs for CollectionCenter Inc cases? $1. 3 million. How much did Credit Service Company assess in attorney fees? $2. 2 million. How much did Credit Service Company assess in court costs? $1. 1 million. How much was Lorena Sanchez sued for? $24, 528. 87. Did HealthONE sue patients for medical debt? No. Did AdventHealth sue patients for medical debt? No. Did Banner Health sue patients for medical debt? No. Did CommonSpirit Health use debt collectors to sue patients? Yes. Did Childrens Hospital Colorado use debt collectors to sue patients? Yes.

The financial gap between Colorado’s largest hospital system and the patients it sues reveals a distinct economic imbalance. UCHealth reported nearly $7 billion in total operating revenue for the fiscal year ended June 30, 2023. Financial documents show the nonprofit organization recorded $331. 7 million in operating income and $846. 6 million in net income during that same period. The hospital system collected $839 million in total profit in 2023.

Against this massive accumulation of wealth, the hospital system pursues micro debts from individual patients. UCHealth officials admitted the organization collects approximately $5 million per year from these lawsuits. That $5 million return represents exactly 0. 07 percent of the net patient revenue UCHealth reported receiving in 2023. The hospital system stated this recovered money pays for the salaries and benefits of about 60 employees. The organization employs more than 30, 000 people across its network of hospitals and clinics.

The math demonstrates that UCHealth initiates thousands of legal actions for a fraction of a percent of its total revenue. A Stanford University study reviewed medical debt collection lawsuits in Colorado from 2019 through 2023. The researchers found that UCHealth and its primary third party collector initiated 12, 722 debt collection lawsuits. These actions generated 8, 987 judgments. The average judgment amount was $3, 675.

The financial cost to patients extends beyond the principal debt. The Stanford study revealed that 98. 8 percent of the judgments won by CollectionCenter Inc were default judgments. This means the patients did not appear in court to defend themselves. Two attorneys represented 96. 8 percent of these cases. These lawyers assessed defendants an extra $2. 8 million in attorney fees and $1. 3 million in court costs. A second collection agency named Credit Service Company filed 12, 121 debt collection lawsuits. This agency won $34. 3 million in principal amounts. Credit Service Company assessed patients $2. 2 million in attorney fees and $1. 1 million in court costs.

The aggressive litigation strategy contrasts sharply with the practices of other major healthcare providers in Colorado. An investigation by 9News and The Colorado Sun contacted multiple large health systems to compare their debt collection methods. The results highlight a divided industry.

List of Colorado Hospital Debt Collection Practices:.

• HealthONE: Representatives confirmed the system does not currently sue patients for payments.
• AdventHealth: Officials stated they do not take legal action against patients over unpaid medical bills.
• Banner Health: The organization reported it does not sue patients for medical debt.
• SCL Health: part of Intermountain Health, this system confirmed it does not sue patients.
• CommonSpirit Health: The hospital network confirmed it uses debt collectors to file lawsuits on its behalf.
• Childrens Hospital Colorado: Representatives verified the facility uses third party collectors to sue patients.
• UCHealth: The system authorized 15, 710 collections lawsuits against patients over five years.

The human cost of this litigation strategy involves severe financial distress for working residents. Lorena Sanchez was involved in a car crash near Colorado Springs in early 2021. She visited the hospital for a brief examination and an X ray. A year after the accident, a third party collector sued Sanchez for $24, 528. 87. The lawsuit demanded four times the amount she actually owed. UCHealth later claimed the incorrect lawsuit amount was an error.

Patients frequently face wage garnishments and bank account seizures. The Stanford study found that more than a third of the lawsuits filed by CollectionCenter Inc sought garnishments against 4, 730 defendants. These legal maneuvers primarily targeted the bank accounts of former patients. Credit Service Company requested garnishments in 4, 683 cases.

The hospital system defends its practices by claiming litigation is a last resort. UCHealth Chief Legal Officer Jacki Cooper Melmed stated the large number of lawsuits reflects the massive volume of patients the system treats annually. She claimed the hospital system is not an outlier in the healthcare industry. The data proves otherwise when compared to HealthONE and AdventHealth.

To visualize the extreme disproportion between the hospital system wealth and the amounts extracted from patients, the following chart breaks down the 2023 financial metrics.

The practice of hiding behind third party collectors allows the hospital system to protect its public image while extracting minor sums from working residents. The Stanford report noted that medical debt accounts for nearly 60 percent of bankruptcies nationwide. The researchers concluded that the utter absence of transparency allows hospitals to devastate the financial health of their patients.

UCHealth reported providing $580 million in uncompensated care during the 2023 fiscal year. This figure represents a $200 million increase over the system’s 2019 numbers. Even with this increase in uncompensated care, the hospital system maintained a profit margin that dwarfs the $5 million it recovers through aggressive litigation. The decision to sue thousands of patients for an average of $3, 675 demonstrates a calculated strategy to monetize every possible account.

The legal fees added to these micro debts push patients into deeper financial ruin. When a patient is sued for a $3, 675 medical bill, the addition of attorney fees and court costs can increase the total judgment by hundreds or thousands of dollars. The third party collectors file these lawsuits in their own names and receive an undisclosed cut of the recovered money. The remainder goes back to UCHealth.

The operations of this litigation system rely on a legal process called assignment. UCHealth does not sell the patient debt to Credit Service Company or CollectionCenter Inc. Selling the debt would mean the hospital system permanently parts ways with the account. Instead, the hospital system assigns the debt to the collection agencies. This legal maneuver grants the third party the right to sue the patient under the agency’s name. The hospital system retains ownership of the debt and collects the majority of the final judgment.

This assignment process shields the hospital system from public scrutiny. When a patient receives a court summons, the document lists a generic collection agency as the plaintiff. The patient frequently does not recognize the company name and assumes the lawsuit is a scam. This confusion contributes directly to the 98. 8 percent default judgment rate recorded by CollectionCenter Inc. Patients ignore the unfamiliar summons, the court awards a default judgment to the collection agency, and the hospital system secures the right to garnish the patient’s wages.

The economic impact on the community is severe. A default judgment damages a patient’s credit score and limits their ability to secure housing or employment. The Stanford study highlighted that one in three adults delays medical care out of fear of financial ruin. When a hospital system with $7 billion in revenue pursues a $3, 675 debt, the financial return for the hospital is mathematically insignificant. For the patient, that same $3, 675 debt represents a catastrophic financial event.

The contrast becomes even sharper when examining executive compensation and cash reserves. While the hospital system sues patients for minor debts, the organization maintains massive cash reserves and investment portfolios. The Department of Health Care Policy and Financing reported that Colorado hospitals experienced a rebound in the investment market in 2023. UCHealth total margin for the two quarters of 2024 exceeded 17 percent. The system’s financial stability is not dependent on the $5 million it extracts from patient lawsuits.

The collection agencies also profit heavily from this arrangement. By processing thousands of lawsuits per year, companies like Credit Service Company and CollectionCenter Inc generate millions of dollars in fees. The Stanford researchers noted that Credit Service Company took advantage of state court policies to seal documents surrounding medical debt collection. This secrecy prevents the public from knowing exactly how much money the agency keeps and how much it returns to the hospital system.

References.

• Stanford University Clinical Excellence Research Center. Hospitals Suing Patients. 2024.
• The Colorado Sun. UCHealth sues thousands of patients every year. 2024.
• 9News. Colorado hospital giant lawsuits fill county courtrooms. 2024.
• Fierce Healthcare. Report UCHealth authorized 15, 000 patient lawsuits in 5 years. 2024.
• Colorado Department of Health Care Policy and Financing. 2025 Hospital Financial Transparency Report. 2025.

20 Questions Answered: Colorado Legislative Action on Medical Debt.

What law did Colorado pass in 2024 regarding medical debt lawsuits? House Bill 24-1380.

When did Governor Jared Polis sign House Bill 24-1380? June 2024.

When did the new law take effect? August 2024.

What does House Bill 24-1380 require hospitals to do? List their own names as plaintiffs in debt collection lawsuits.

Which state senator co-sponsored the legislation? Senator Sonya Jaquez Lewis.

Which state representative co-sponsored the bill? Representative Javier Mabrey.

Which other state senator helped push the legislation? Senator Lisa Cutter.

How lawsuits did UCHealth file between August 8 and December 17 of 2024? 351 lawsuits.

How lawsuits did Children’s Hospital Colorado file in that same period? 263 lawsuits.

How lawsuits did National Jewish Health file during those months? 31 lawsuits.

Did HCA HealthONE file any lawsuits against patients during this time? No.

What was the maximum administrative penalty set by the new law for violations? $1, 500 per violation.

What previous legislation protected Colorado patients from medical debt credit reporting? House Bill 23-1126.

When did House Bill 23-1126 take effect? August 2023.

What did House Bill 23-1126 prohibit? Reporting medical debt to credit bureaus.

What is the national conforming loan limit value exception for 2024? $766, 550.

Who supported House Bill 24-1380 during committee hearings? The Colorado Attorney General.

What specific practice did House Bill 24-1380 ban? Suing patients under a third-party debt collector name while retaining debt ownership.

What organization provides legal assistance to sued patients? Colorado Legal Services.

When does the Department of Revenue need to report conclusions on the credit reporting ban? January 1, 2028.

Colorado lawmakers responded to the medical debt litigation practices of UCHealth by passing specific statutory restrictions. The legislative action targeted the exact legal method that allowed hospitals to conceal their identity in county courtrooms. State Representative Javier Mabrey and State Senator Sonya Jaquez Lewis introduced House Bill 24-1380 in April 2024,. Governor Jared Polis signed the legislation into law in June 2024. The statute took effect in August 2024. The law mandates that hospitals and other creditors must list their own names as plaintiffs when they own the underlying debt.

The legislation eliminated the assignment model used by UCHealth. Prior to the law taking effect, UCHealth assigned debts to third-party collection agencies like Credit Service Company. The collection agencies then filed lawsuits under their own names. The hospital retained ownership of the debt and collected the financial judgments. House Bill 24-1380 made this practice illegal.

The new law requires the original creditor to appear in the case caption. If a collection agency files the lawsuit, the complaint must list the name of the original creditor or assignor. The collection agency name follows the creditor name. This ensures public court records accurately reflect the entity demanding payment. The Colorado Attorney General supported the legislation during committee hearings. The law includes enforcement rules for noncompliance. The state administrator can order refunds for unlawful charges and impose administrative penalties of up to $1, 500 per violation. Aggrieved parties can seek judicial review in the Colorado Court of Appeals.

“I really do think we owe you a little bit of thanks, maybe a lot of thanks and gratitude, for sure, because it pointed us in the right direction. be able to know how times a Colorado hospital takes a Coloradan to court.”

The statutory change produced immediate data. The law enabled journalists and researchers to query state court databases for hospital names. Between August 8 and December 17 of 2024, state court records showed UCHealth filed 351 collections lawsuits under its own name. Children’s Hospital Colorado filed 263 lawsuits during the same period. National Jewish Health filed 31 lawsuits.

HCA HealthONE operates as the largest for-profit hospital system in Colorado. Court records show HCA HealthONE filed zero lawsuits against patients during this timeframe. The financial support policy for HCA HealthONE explicitly prohibits suing patients or filing liens on patient accounts.

A class-action lawsuit filed against Credit Service Company challenged the legality of the assignment model. The lawsuit stated that state law requires the actual owner of the debt to appear as the plaintiff. The legal action stated that third-party vendors cannot sue over debt owed to a separate entity. This class-action litigation advanced alongside the legislative efforts in the state capitol.

The legislative hearings featured testimony regarding the confusion caused by hidden hospital lawsuits. Lorena Sanchez experienced this confusion directly. She survived a car crash on Interstate 25 in 2021. She asked paramedics to avoid a hospital transport. They transported her to UCHealth Memorial North. She requested only an X-ray to check for broken bones. The medical staff performed a CT scan. She received a bill exceeding $24, 000.

Sanchez attempted to negotiate the balance. She received a written offer for a 73 percent reduction. She later received a court summons from Credit Systems Inc. She did not recognize the company name. The lawsuit did not mention UCHealth on the primary documents. The only reference to the hospital appeared in sealed attachments unavailable to the public. Lawmakers referenced cases like this when drafting House Bill 24-1380. Representative Mabrey noted that consumers frequently ignore legal actions when they do not recognize the plaintiff name. Ignoring a court summons results in a default judgment. A default judgment allows the creditor to garnish wages and seize bank assets.

Lawmakers also addressed the financial consequences of medical debt through separate legislation. House Bill 23-1126 took effect in August 2023. This law prohibits debt collectors and collection agencies from reporting medical debt to consumer credit bureaus. Colorado became the state to enact such a prohibition. The 2023 law prevents collection agencies from factoring medical debt into a consumer credit score. The statute includes a specific exception for credit transactions involving principal amounts that exceed the national conforming loan limit value. The Federal Housing Finance Agency set this limit at $766, 550 for 2024.

Debt collectors must include a specific disclosure in their initial written communication to consumers. The disclosure states that Colorado law prohibits credit bureaus from reporting medical debt or factoring it into a credit score. The Colorado Department of Revenue must study the effects of this prohibition and submit a report to legislative committees by January 1, 2028.

The Colorado Center on Law and Policy championed House Bill 23-1126. The organization published educational resources in English and Spanish to inform residents about their new rights. The law places the responsibility on credit bureaus to keep medical debt off consumer reports. Residents retain the right to dispute any medical debt that appears on their credit file. The removal of medical debt from credit reports affects a consumer’s ability to secure housing, employment, and loans with favorable interest rates.

Lawmakers introduced additional legislation in 2024 to restrict wage garnishments. Representative Mabrey introduced a bill in February 2024 to ban wage garnishment for medical debt. The proposal aimed to limit bank garnishments and cap payment plans at four percent of weekly net income. The legislation also sought to require creditors to verify public health insurance eligibility before initiating collection actions.

The proposed wage garnishment legislation addresses the final stage of the debt collection process. A KFF Health News investigation revealed that Colorado courts approved wage garnishment requests in an estimated 14, 000 medical debt cases annually. The proposed legislation seeks to leave medical care providers liable to the patient for at least $3, 000 if debt collectors fail to comply with the new rules. The bill also bars creditors from collecting on medical bills older than three years. Lawmakers in eight states introduced similar legislation in 2024 to restrict wage garnishments for unpaid medical bills. These states include Florida, Hawaii, Indiana, Maine, Michigan, Ohio, and Washington.

The legislative response in Colorado aligns with broader regulatory actions across the United States. New York enacted the Fair Medical Debt Reporting Act in December 2023. The New York law prohibits hospitals and healthcare professionals from reporting medical debt to consumer reporting agencies.

References.

The Colorado Sun. “Hospitals suing patients over unpaid bills would have to put their names on lawsuits under new Colorado measure.” April 12, 2024.

9News. “Debt in the dark: UCHealth sues patients daily and have no idea why.” December 18, 2024.

9News. “Debt in the Dark.” June 26, 2025.

Colorado News Collaborative. “Hospitals Can No Longer Quietly Sue Patients Under Another Business Name Following 9NEWS Investigates Report.” June 13, 2024.

KUNC. “UCHealth sued thousands through third-party debt collectors. patients fight back.” February 20, 2024.

Consumer Finance Monitor. “CO and NY enact laws to prevent reporting of medical debt to credit bureaus.” December 20, 2023.

Colorado Center on Law and Policy. “Colorado’s medical debt credit reporting law takes effect.” August 15, 2023.

Kiowa County Press. “Colorado lawmakers consider banning wage garnishment for medical debt.” March 18, 2026.

Colorado General Assembly. “HB24-1380 Regulation of Debt-Related Services.” 2024.

What law forced the hospital to change its policy? House Bill 1380.

Who signed the bill into law? Governor Jared Polis.

When did the governor sign the legislation? June 6, 2024.

When did the new rules take effect? August 2024.

Who sponsored the legislation? Representative Javier Mabrey.

Which state senators supported the bill? Lisa Cutter and Sonya Jaquez Lewis.

What practice did the law ban? Suing patients under a debt collector name.

What is the legal term for this banned practice? Deceptive trade practice.

Which consumer protection act enforces this? The Colorado Consumer Protection Act.

Did the hospital executives defend the old rules? Yes.

How lawsuits did the hospital file between August and December 2024? 351.

Which hospital filed the second most lawsuits in that period? Childrens Hospital.

How lawsuits did Childrens Hospital file? 263.

Which institution filed 31 lawsuits? National Jewish Health.

Who confirmed the hospital released active claims? Stanford Medicine.

When did Stanford Medicine publish its report? November 2024.

What did the hospital system stop doing? Assigning debt to intermediaries for covert litigation.

Did the hospital stop suing patients entirely? No.

What happens if a debt collector violates the new law? They face administrative penalties.

How much is the penalty per violation? Up to $1, 500.

The publication of the joint investigation by 9News and The Colorado Sun in February 2024 forced an immediate reckoning within the executive offices of UCHealth. For years, the hospital system assigned medical debts to third party collection agencies. These agencies then filed lawsuits under their own names. This method shielded the hospital from public scrutiny. Once the news outlets published their findings, public anger mounted. Patients, lawmakers, and consumer advocacy groups demanded transparency. The hospital faced intense pressure to change its litigation practices.

State lawmakers responded swiftly to the findings. In March 2024, Colorado Representative Javier Mabrey, along with Senators Lisa Cutter and Sonya Jaquez Lewis, introduced House Bill 1380. The bill, titled Regulation of Debt Related Services, targeted the exact legal maneuver used by the hospital system. The legislation proposed making it a deceptive trade practice under the Colorado Consumer Protection Act for debt collectors to take legal action without naming the original owner of the debt. The bill required the original creditor to appear as a named plaintiff in the case caption.

The Colorado General Assembly debated the bill throughout the spring. The House of Representatives passed the measure on April 17, 2024, with a vote of 41 to 19. The Senate followed suit shortly after. On June 6, 2024, Colorado Governor Jared Polis signed the bill into law. The legislation went into effect in early August 2024. This new legal framework eliminated the hospital system ability to obscure its involvement in debt collection lawsuits.

Faced with the new law, UCHealth executives reversed their internal policies. The hospital system halted the practice of assigning debts to CollectionCenter, Inc. and Credit Service Company for the purpose of covert litigation. A November 2024 report by Stanford Medicine confirmed this policy change. The researchers found that the hospital system discontinued suing patients through intermediaries. The report also noted that the hospital released active claims against patients who had already been sued under the previous method.

With the new law in place, the hospital system resumed filing lawsuits under its own name. This change provided a clear view of the hospital ongoing litigation volume. Between August 8 and December 17, 2024, 9News tracked court documents to measure the impact of the new legislation. The data revealed that the hospital system remained the most litigious healthcare provider in the state.

The court records from late 2024 show the exact number of lawsuits filed by major Colorado hospital systems. The data confirms that the hospital system continued to pursue patients in court, the new transparency laws forced them to do so publicly.

The 351 lawsuits filed by the hospital system over a four month period demonstrate a continued reliance on the court system to collect medical debts. While the hospital system changed its policy regarding third party assignments, it did not stop suing patients entirely. The new transparent filings allow consumer advocates to track the exact number of patients facing legal action. patients interviewed by 9News in December 2024 reported they were unaware they owed any money until they received a court summons. One patient stated she had already paid off her balance online before the hospital filed the lawsuit.

The policy reversal at the state largest hospital system sent a clear message to other healthcare providers. The legislation and the subsequent media coverage forced a statewide shift in medical debt collection. Other hospitals that previously used similar tactics had to adjust their operations to comply with the new transparency requirements. The Colorado Consumer Health Initiative noted that the new law helps patients understand who is taking them to court. When patients recognize the name of the hospital on the lawsuit, they are more likely to respond and avoid default judgments.

The hospital system collects more than $6 billion in patient care revenue annually. The money recovered through these lawsuits represents a tiny fraction of their total income. Yet the legal actions cause serious financial distress for the patients involved. The Stanford Medicine report highlighted that these lawsuits frequently lead to wage garnishments and bankruptcies. The policy reversal brought the hospital actions into the public record, allowing researchers and journalists to monitor the exact financial toll on the community.

The hospital system continues to face questions about its billing and collection practices. While the internal policy reversal ended the covert lawsuits, the sheer volume of legal actions remains a subject of public debate. The new transparency laws ensure that the hospital system cannot hide its litigation efforts in the future. The data from late 2024 proves that the hospital system continues to use the courts to collect debts, they must do so under their own name.

Before the passage of House Bill 1380, the hospital system chief legal officer, Jacki Cooper Melmed, defended the use of third party collectors. She stated that the hospital was not hiding anything and claimed that using the debt collector name was less confusing for patients. Lawmakers disagreed. Representative Mabrey stated that when consumers do not recognize the name on a lawsuit, they ignore the action. Ignoring a court summons leads directly to a default judgment. A default judgment allows the debt collector to garnish wages or seize assets.

The legislative hearings for House Bill 1380 featured testimony from patients who suffered under the previous system. These patients described the confusion of receiving legal documents from companies they had never heard of. The debt collection industry lobbied heavily against the bill. They negotiated a compromise that allowed the collection agencies to remain on the lawsuit, provided the original hospital name appeared. This compromise ensured the bill passed while still achieving the primary goal of public transparency.

The Stanford Medicine researchers emphasized that hospital administrators care deeply about community goodwill. The researchers concluded that hospitals use intermediaries specifically to avoid public backlash. By forcing the hospital system to put its name on every lawsuit, the state of Colorado aligned the hospital legal practices with its public relations risks. If the hospital wants to sue 351 patients in four months, it must accept the associated damage to its reputation.

The enforcement process of House Bill 1380 relies on the Uniform Consumer Credit Code administrator. The administrator holds the power to problem cease and desist orders against any debt collector that violates the naming requirements. The administrator can also force the collection agency to refund any unlawful charges to the patient. The $1, 500 penalty per violation provides a strong financial incentive for debt collectors to comply with the new rules. This regulatory framework ensures that the hospital system cannot revert to its old methods.

The policy reversal at UCHealth marks a major victory for consumer advocates. The joint investigation by local journalists exposed a hidden legal operation. The state legislature acted on that reporting to close a major legal gap. The hospital system, faced with a new legal reality, changed its internal policies and released pending claims. The data from late 2024 shows that the fight over medical debt is not over. Patients still face lawsuits and wage garnishments. The new law simply ensures that the battle takes place in the open.

20 Questions Answered: National Nonprofit Hospital Debt Collection.

1. Do other nonprofit hospitals sue patients? Yes.

2. How lawsuits did Johns Hopkins Hospital file between 2009 and 2018? They filed 2400 lawsuits.

3. What was the median debt in the Johns Hopkins cases? The median debt was $1438.

4. Did Johns Hopkins garnish wages? Yes.

5. How lawsuits did UVA Health file over six years? They filed 36000 lawsuits.

6. What was the total amount UVA Health sought in those lawsuits? They sought more than $106 million.

7. Did UVA Health seize property? Yes.

8. How lawsuits did Methodist Le Bonheur Healthcare file between 2014 and 2018? They filed more than 8300 lawsuits.

9. Did Methodist Le Bonheur sue its own employees? Yes.

10. How much debt did Methodist Le Bonheur eventually erase? They erased at least $11. 9 million.

11. What percentage of nonprofit hospitals bill patients eligible for charity care? Forty five percent do.

12. How much bad debt did nonprofit hospitals report to the IRS in 2017? They reported $2. 7 billion in bad debt from patients who likely qualified for financial assistance.

13. How much do nonprofit hospitals receive in tax exemptions annually? They receive about $28 billion.

14. How much do they spend on charity care? They spend about $16 billion.

15. Did Mary Washington Hospital sue patients? Yes.

16. How lawsuits did Virginia hospitals file in 2017? They filed 20000 lawsuits.

17. How lawsuits did Oklahoma hospitals file since 2016? They filed more than 22000 lawsuits.

18. Do nonprofit hospitals use third party debt collectors? Yes.

19. Does federal law mandate a specific amount of charity care? No.

20. Do these practices affect low income patients? Yes.

UCHealth filed 15710 lawsuits against patients between 2019 and 2023. This volume places the Colorado health system among the most aggressive debt collectors in the United States. Other nonprofit hospitals across the country employ similar tactics to extract payments from patients. A review of court records and tax filings from 2015 to 2025 reveals a nationwide pattern of litigation. Nonprofit hospitals receive billions of dollars in tax exemptions annually. They are expected to provide charity care in return. Yet of these institutions pursue low income patients through the court system. They garnish wages and place liens on homes.

The University of Virginia Health System executed one of the largest debt collection campaigns in recent history. UVA Health filed 36000 lawsuits against patients over a six year period ending in 2018. The hospital sought more than $106 million in unpaid medical bills. The state owned institution sued patients for amounts as low as $13. They garnished thousands of paychecks. They seized $22 million in state tax refunds over six years. UVA Health placed property liens on patients homes. These liens drained home equity years after the hospital visits occurred. The hospital even sued its own employees. They filed lawsuits against about 100 UVA Health workers annually. The institution eventually canceled a massive backlog of court judgments and liens in 2021 after public scrutiny.

Methodist Le Bonheur Healthcare in Memphis Tennessee operated a massive debt collection operation. The faith based nonprofit hospital filed more than 8300 lawsuits between 2014 and 2018. The hospital owned its own licensed collection agency. They repeatedly garnished wages from low income defendants. They sued dozens of their own workers for unpaid medical bills. One hospital housekeeper faced a lawsuit for more than $23000 in 2017 while earning only $16000 that year. The hospital added interest and attorney fees to the original medical debts. Methodist Le Bonheur suspended its court collection activities in 2019. The hospital subsequently erased at least $11. 9 million in medical debt owed by more than 6500 patients.

Johns Hopkins Hospital in Baltimore Maryland filed 2400 lawsuits between 2009 and 2018. The hospital sought $4. 8 million in alleged debt from former patients. The median unpaid debt that led to a lawsuit was $1438. The hospital targeted residents in the poorest neighborhoods of Baltimore. Nine of the ten zip codes with the highest number of sued patients had poverty rates above the state average. Johns Hopkins obtained court judgments to force employers to withhold earnings from patient paychecks. The hospital was the most frequent employer listed in its own garnishment requests. They garnished the wages of their own staff to collect medical debts. The hospital paused its practice of suing patients in 2020.

Nonprofit hospitals receive massive financial benefits from their tax exempt status. The Kaiser Family Foundation reported that nonprofit hospitals shared received about $28 billion in tax benefits in 2020. They spent only about $16 billion on charity care that same year. Forty five percent of nonprofit hospital organizations routinely send medical bills to patients whose incomes qualify them for charity care. These organizations estimated they gave up collecting $2. 7 billion in bills sent to patients who likely qualified for financial assistance in 2017. The absence of federal laws mandating specific charity care amounts allows hospitals to operate aggressive collection departments.

Virginia hospitals filed 20000 lawsuits in 2017 alone. Oklahoma hospitals filed more than 22000 suits against former patients starting in 2016. Colorado courts approved wage garnishments for medical debt in roughly 14000 cases a year between 2022 and 2024. Medical debt cases trail people for up to 14 years. Debt collectors revive the cases when patients change jobs. The original debt amounts frequently grow by 25 percent due to interest and court fees.

Nonprofit hospitals classify unpaid bills as bad debt. They report this bad debt to the Internal Revenue Service. A Kaiser Health News investigation found that 1134 nonprofit hospital organizations operate 1651 hospitals across the country. These hospitals estimated they abandoned $2. 7 billion in bills sent to patients who likely qualified for financial assistance. BJC HealthCare in St Louis estimated $77 million of its $134 million in bad debt in 2017 belonged to patients eligible for free or discounted care. Hospitals owned by Ballad Health in Tennessee reported $60 million of bad debt in 2016 came from patients eligible for help. The Hospital of the University of Pennsylvania reported $43 million of its bad debt involved patients who qualified for financial assistance.

State officials occasionally intervene when nonprofit hospitals violate charity care requirements. St Joseph Medical Center in Tacoma Washington faced a lawsuit from the state attorney general. The hospital demanded upfront deposits from low income patients before providing emergency care. The hospital owner settled the lawsuit and agreed to pay more than $22 million in refunds and debt forgiveness. The settlement required the hospital to stop erecting blocks to charity care. Similar legal actions force hospitals to revise their billing operations.

Wage garnishments cause severe financial damage to low income workers. Courts approve garnishment orders that force employers to divert a portion of a worker paycheck directly to the hospital or a third party debt collector. Studies in North Carolina Virginia and New York confirm that nonprofit hospitals routinely garnish wages from indebted patients. These patients predominantly work in low wage occupations. The garnishments reduce their take home pay and push them further into poverty. The American unions AFL CIO and National Nurses United documented these aggressive tactics in multiple states. The organizations found that hospitals pursue lawsuits even when the collected amounts represent a fraction of one percent of their total operating revenue.

Hospitals obscure their involvement in lawsuits by assigning debts to third party collection agencies. This tactic shields the hospital brand from public scrutiny. Lawyers representing patients with medical bills report that hospitals frequently file claims under the names of these third parties. The collection agencies add legal fees and interest to the original medical debt. The total amount owed multiplies rapidly. A $881 medical bill in Colorado grew to $1155 due to interest and court fees before the debt collector garnished the patient wages. The debt collectors revive cases years later when patients secure new employment.