Some of the country's largest nonprofit hospitals are targeted in class-action lawsuits alleging they have distorted the extent of their charity care while using punishing tactics to obtain payments from uninsured patients.
The lawsuits were filed late Wednesday by Richard F. Scruggs, a Mississippi attorney who earned millions of dollars and a national reputation with his legal pursuits of the tobacco and asbestos industries.
In the latest lawsuits, Scruggs represents plaintiffs in several of the cases that seek monetary damages for the hospitals' alleged failure to comply with agreements between the medical facilities and the federal, state and county governments.
Primarily, the suits claim the hospitals, located in eight states, failed to provide charitable medical care to poor patients in exchange for enjoying tax exemptions.
Alicia Mitchell, a spokeswoman for the American Hospital Association, said Thursday that her office had just received a copy of one of the suits and that it was being reviewed.
"But from our view, this lawsuit is baseless and misdirected," Mitchell said. "It diverts focus from the real issue of how we as a nation are going to extend health coverage to all Americans."
Mitchell said of particular concern was that the suit would "consume already limited health care resources that hospitals need to continue their daily work of caring for uninsured and all other patients in their communities."
The lawsuits claim that hospitals in Illinois, Minnesota, Ohio, Texas, Georgia, Alabama, Florida and Tennessee used "creative" accounting practices to "grossly distort the small amount of charity care they provide to uninsured patients."
"Instead, the hospitals charge the uninsured 'sticker' prices for health care, an amount higher than any other patient group, and then, when the uninsured can't pay, harass the uninsured through, among other tactics, aggressive collection efforts such as garnishment of wages and bank accounts, seizures of homes, and personal bankruptcies," Scruggs said.
Scruggs said the complaint has been brought by a group of lawyers from law firms across the country, many of whom have worked together in the tobacco litigation cases.
He said additional, similar lawsuits were in the works.
Scruggs, commenting on the lawsuits in a conference call Thursday, accused many nonprofit hospitals in the United States of operating in similar fashion to for-profit organizations and amassing large sums of money while operating for-profit subsidiaries.
He said the hospitals are "hoarding billions of dollars while dispensing relative pennies in health care."
Scruggs, an attorney in Oxford, made his fortune suing asbestos companies even before he made millions suing the tobacco industry. In the past, Scruggs has said he expects to earn about $844 million from tobacco lawsuits, including $366 million in fees from a Mississippi suit.