Judge dismisses suit claiming bad practices at hospital

A class action lawsuit filed last September against Yale-New Haven Hospital and its affiliates for wrongfully charging uninsured and low-income patients was dismissed from Connecticut district federal court Tuesday in a bench ruling by Judge Stefan Underhill.

While the hospital has characterized the decision as a move in its favor, representatives for the plaintiffs’ attorneys said the ruling only stipulates that state — and not federal — court is the appropriate venue for the case, and they plan to pursue the matter in state court.

The hospital is one of 65 hospitals across the nation being sued by a number of law firms, which together identify themselves as the Not-For-Profit Litigation Group, that claim the hospitals abuse their tax-exempt status granted by the Internal Revenue Service. The status allows the hospitals to not pay federal or property taxes but they must provide charity care to indigent community members.

Hospital spokesman Vin Petrini said the ruling exposes faults in the lawsuit and reinforces the hospital’s reputation as a charitable and community-minded health care provider.

“The judge ruled that it was a weak case,” Petrini said. “This is one of dozens of cases concerning billing and collections issues that have been thrown out recently.”

The plaintiff’s case seeks reimbursement of health care charges the plaintiffs claimed were above the just amount, as well as the interest accrued from late payments to the hospital. Additionally, the case asks for injunctive release, a measure NFPLG spokeswoman Lin Wu said would prevent the hospital from “going after these patients, or hounding them for the payments.”

“We are not going anywhere,” Wu said. “We are taking our case to state court, where we will win. And we believe that we will.”

The NFPLG is led by attorney Richard Scruggs, who has served as lead counsel in high-profile lawsuits against tobacco companies and asbestos manufacturers in the past decade.

In state court, the plaintiffs will present their case in front of a jury, and might find support from state consumer protection laws as well as breach of contract — protections not applicable in a federal court.

“The hospitals are losing, and they will be defeated in state court where a jury will understand,” Wu said. “Before a jury, how could we lose? How will they ever decide it is justified to overcharge these people for their health care?”

But Petrini said the hospital expects the plaintiffs’ case will not hold up in state court.

“We have the same level of confidence that the state court will respond in the same way that the federal court has,” Petrini said.

The NFPLG claims that the hospitals it has filed suit against often charge uninsured patients two to six times what an insured patient would pay for both treatment and medication.

A hospital statement regarding Tuesday’s ruling suggested Underhill’s decision has implications for pending lawsuits against the hospital filed by the Service Employees International Union 1199 on behalf of indigent-care patients claiming the hospital billed them unfairly.

Petrini said the ruling against Scruggs is also representative of weaknesses in the union’s suit.

“This lawsuit mirrors the charges brought against the hospital by the SEIU,” Petrini said. “The judge’s decision to dismiss this case reflects on the others.”

But Local 1199 spokesman William Meyerson said the Scruggs lawsuit should not be compared to the pending SEIU lawsuit against the hospital.

“We are not party to the Scruggs suit, and I don’t know how it compares to our suit,” Meyerson said. “The hospital seems to be leaping to a self-serving conclusion.”

SEIU attorney Dan Livingston said the union’s lawsuit is currently in pretrial discovery and no trial date has been set.

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