Attorney General Richard Blumenthal filed a lawsuit Thursday against Yale-New Haven Hospital, alleging that the hospital misused millions of dollars donated for the purpose of providing free care to needy patients.
The lawsuit contends that the hospital has not provided free medical care for many eligible patients, despite an endowment of approximately $37 million in “free bed funds.” Instead, the attorney general said the hospital restricted legitimate access to the funds and engaged in aggressive debt collection practices against individuals who might have qualified for free care.
“Yale-New Haven failed to use the money as donors intended, violating its legal fiduciary duty,” Blumenthal said in a statement. “It hoarded millions intended to help provide health care, and hired collection agencies to pursue patients improperly billed.”
According to the lawsuit, the hospital is expected to invest the charitable gifts in question while applying the interest earned on the investments to providing hospitalization and free care for the needy. Instead, Blumenthal said, the hospital allowed the funds to “accumulate excessively” while preventing Medicare patients and others from receiving aid.
A written response issued by the hospital Thursday said it was “shocked and surprised” to learn of the lawsuit and claimed it has managed the free bed funds appropriately.
“Yale-New Haven Hospital has a long history of meeting the needs of our patients and community, and provided over $52 million in free and under-compensated care to those in need in 2002,” the statement said.
But Blumenthal said the hospital established income requirements for needy patients that were not stipulated in the original gifts and also failed to inform eligible patients about the existence of the funds. Between 1996 and 2000, the hospital received an average of 55 applications per year for the funds, a number Blumenthal said does not correlate with the number of patients who cannot pay their medical bills.
“In many instances [the hospital] required patients to apply for government assistance, shifting the financial burden to taxpayers,” Blumenthal said. “As the amount of free bed funds rose, the hospital reaped the interest income for other purposes.”
In the complaint, the attorney general asked for a court order requiring the hospital to provide “real and meaningful access” to the funds for individuals who are unable to pay their medical bills. Blumenthal also requested the court to compel Yale-New Haven to eliminate barriers that make it difficult to apply for the funds and cease its debt collection against patients eligible for free care.
Yale President Richard Levin, who serves on the hospital’s board of trustees and appoints eight of its 28 members, said he had not yet had an opportunity to examine Blumenthal’s allegations. Yale-New Haven Hospital is affiliated with the Yale School of Medicine and serves as its primary teaching hospital.
“I can assure you that if there is any substance to the attorney general’s claim, as a board member I will take it very seriously,” Levin said.
At a public hearing of the General Assembly’s Public Health Committee Thursday, Blumenthal said his office was also investigating whether other hospitals across the state were underusing their free bed funds. In addition, a bill currently under consideration by the General Assembly would limit the ability of hospitals to collect debt payments from patients.
State Rep. Patricia Dillon, who serves on the Public Health Committee, said Blumenthal spoke very forcefully in his testimony concerning Yale-New Haven Hospital. Dillon said charitable funds for needy patients have become particularly important in Connecticut as budget deficits jeopardize state and federal funding for uncompensated care.
Dillon, a Democrat who represents New Haven, said she had not been aware of any specific problems concerning the hospital’s free bed fund before Blumenthal filed his lawsuit.
“It appeared that there were individuals who had liens placed on their houses who could have been told that there were funds available,” she said. “If that’s true, it’s very, very sad.”