Press Release
CSS Report Highlights Practice of Nonprofit Hospitals Garnishing Patient Wages
Bill pending in Albany would prohibit wage garnishments in debt collection actions
From 2015 to 2020, thousands of working New Yorkers experienced punishing wage garnishments of 10 percent of their gross pay because they were unable to pay their hospital bills. A new Community Service Society (CSS) report, “Discharged into Debt: New York’s Nonprofit Hospitals Garnish Patient’s Wages,” highlights the harmful practice of nonprofit hospitals imposing garnishments on patients’ wages after suing them for a medical debt. The report finds that practice appears to be primarily imposed on patients who work for low-wage employers, such as social service agencies or big-box retailers, like Wal Mart.
The report is the fifth and final report in a series examining the pervasiveness of predatory medical debt collection practices deployed by many nonprofit hospitals in New York.
In 2022, the federal Consumer Financial Protection Bureau (CFPB) issued an analysis that describes how $88 billion of medical debt accounts for 58 percent of all consumer debt. The CFPB analysis also found that Blacks and Latinos and low-income people of all races and ethnicities are more likely to have medical debt than the national average.
The new report, which was co-authored by CSS Director of Health Policy Amanda Dunker and CSS Vice President of Health Initiatives Elisabeth Benjamin, underscores this national research. The median outstanding medical debt that triggers medical debt lawsuits -- leading potentially to liens placed on patients’ homes or the garnishing of their wages -- is only $1,900. The authors analyzed the employers of a random sample of 1,611 wage garnishment cases. The report finds that the indebted patients work in low-wage occupations including: health care and social service agencies (24 percent of employers); manufacturing (20 percent of employers); and retail (15 percent of employers).
The report analyzes cases from five hospitals which collectively sued 12,411 patients between 2015 and 2020 (23 percent of all cases brought during the period). Depending on the hospital, wage garnishments were imposed in six to 46 percent of cases. Ninety eight percent of all hospital lawsuits are won on default. According to the IRS, wage garnishment is an “extraordinary debt collection practice” and has declared that before it can be used the patient must be evaluated for financial assistance. The court cases do not indicate that financial assistance was offered to these patients. Additionally, while these five hospitals reported providing $6 million in hospital financial assistance, they received $19 million from the state’s Indigent Care Pool (ICP) fund, which is provided to hospitals to incentivize the provision of financial aid. The hospitals thus appear to have secured a $12.4 million windfall.
In recognition of the pernicious effects of medical debt on low- and moderate-income patients and patients of color, the New York State Senate and Assembly recently passed bills -- S6522A/A7363A -- which would ban the extraordinary collection practices of garnishing patients’ wages or imposing liens on their primary residences. The bills were sponsored by State Senator Gustavo Rivera, Chair of the Senate Health Committee, and Assemblymember Richard Gottfried, Chair of the Assembly Health Committee. This bill awaits Governor Hochul’s signature.
“No one should be at risk of losing their hard-earned wages or their home because they needed medical care,” said State Senator Gustavo Rivera, Chair of the State Senate Health Committee. “The Community Service Society's report makes the case for my legislation (S.6522A/A.7363A) protecting patients from liens against their primary residences and wage garnishments in predatory debt collection actions. We're calling on Governor Hochul to sign it so these abuses become a thing of the past and to help end medical debt.”
“New Yorkers struggle with health care costs even when they have insurance. People seeking care end up with bills to cover ever-increasing out-of-pocket pocket costs, including high deductibles, copays and even various fees insurance doesn’t cover,” said Richard Gottfried, Chair of the Assembly Health Committee. “This new Community Service Society report details the legal maneuvering hospitals will go through to collect debt despite state laws to provide patients with financial assistance and despite state funding for uncompensated care. People’s homes and income should not be threatened to satisfy medical debt. I urge Governor Hochul to sign A.7363A into law to help protect patients from these egregious practices.”
“Nonprofit hospitals should not be imposing wage garnishments on low income workers to recoup medical debt” said David R. Jones, CSS President and CEO. “These are not deadbeats with luxury yachts, we are talking about hard working families who are already struggling.”
“These hospitals receive millions of taxpayer dollars intended to offset the cost of serving poor families” said Richard Buery, CEO of the Robin Hood, New York City's largest anti-poverty philanthropy and a funder of the report. “So, when they sue those families and use wage garnishment as a debt collection tool on them, we need the state to step in and say enough is enough. This practice must stop.”
“Our analysis found that the typical wages paid by the employers bringing wage garnishment cases verge on poverty level wages, or just above,” said CSS Vice President Elisabeth Benjamin. “That means most of the patients whose wages are being garnished were probably eligible for the state Hospital Financial Assistance law and should not have been sued in the first place. The Legislature has rightfully recognized that patients should be able to seek medical care without fear of losing their home or wages and we urge Governor Hochul to sign the bill that would protect them.”