Testimony: Patients Deserve Legal Representation in Civil Court
Elisabeth Ryden Benjamin
Statement of Elisabeth R. Benjamin, MSPH, JD
CSS Vice President for Health Initiatives
The Chief Judge’s Civil Legal Services Hearing
Thank you for the opportunity to testify about the unmet need for civil legal services for low-income New Yorkers faced with medical debt.
The Community Service Society of New York (CSS) has worked with and for New Yorkers since 1843 to promote economic opportunity and champion an equitable city and state. We advocate for change through a strategic combination of research, services, and advocacy to make New York more livable for people facing economic insecurity. By expanding access to health care, affordable housing, employment, opportunities for individuals with conviction histories, debt assistance, and more, we make a tangible difference in the lives of millions.
Annually, CSS provides health care consumer assistance to over 130,000 New Yorkers. Our healthcare system is Byzantine. CSS’s health insurance enrollment assistance and ombudsprograms are dedicated to making the healthcare system work for patients when they run into barriers. We do this through a “hub and spokes” model in which CSS acts as the hub by securing and administering state, city, and private funding, and operating a central, live-answer helpline which is listed on insurance carrier notices. The “spokes” are 50 community-based organizations, many of which are legal services entities, who provide direct assistance to New Yorkers residing in all 62 counties of the State.[1] This work translates into real savings for health care consumers: for example, our Community Health Advocates program (CHA) has saved New Yorkers over $140 million since 2010.
Access to Health Care and Medical Debt
Over the past two years, CHA has seen a 64 percent increase in medical debt cases in New York. This spike is consistent with national research that finds medical debt is pervasive, and it disproportionately hurts patients who are low-income and who are racial and ethnic minorities. In 2021, researchers analyzed the medical debt of nearly 40 million unique individuals and found that it primarily impacts patients who live in low-income zip codes.[2] Federal regulators have found that the $88 billion in medical debt owed in the U.S. accounts for 58 percent of all consumer debt. This analysis also found that Black and Hispanic people and low-income people of all races and ethnicities are more likely to have medical debt than the national average.[3] These national disparities hold true in New York, with communities of color experiencing over twice the amount of medical debt in collections as their white counterparts in many counties, such as: Albany, Erie, Monroe, Onondaga, Rockland, Schenectady, Westchester counties.[4]
Medical debt has real consequences for New Yorkers. A 2022 survey funded by the Robert Wood Johnson Foundation found that 70 percent of New Yorkers are not confident they can afford costs related to a major illness.[5] Even patients with insurance report difficulty affording care because of rising deductibles and cost-sharing.[6] The survey also found that 38 percent of respondents said they or a family member are avoiding medical care—including not filling prescriptions and skipping tests or treatments ordered by their doctors—because they are afraid of being unable to afford it.[7] Thirty-four percent said they are facing financial hardships because of medical debt, including being put into collections, being unable to pay for basic necessities like food, or using up all of their savings.[8]
Paucity of Civil Legal Services is Ruinous for Many New Yorkers
From 2020-2022, the Community Service Society conducted an extensive study of medical debt in New York published in five Discharged Into Debt reports. CSS developed a database of all civil lawsuits filed against patients in New York State by nonprofit hospitals between 2015 and 2020. In all, 53,182 hospital medical debt cases were identified.[9]
CSS focused its research on hospital debt because all of New York’s hospitals are nonprofit 501(c)(3) charities pursuant to state law. They do not pay taxes and benefit from a $1.1 billion Indigent Care Pool (ICP) fund, designed to “assist in paying for the cost of care for low income individuals.”[10] In exchange for ICP funds, hospitals are required to develop and offer financial assistance policies to patients whose incomes are below 300 percent of the federal poverty level.[11] Eighty percent of the hospitals that sued patients received more in ICP funds than they reported offering in financial assistance in 2017. Nonprofit hospitals are also bound by Internal Revenue Service rules that prohibit them from pursuing “extraordinary” collection practices, such as filing lawsuits, placing property liens, garnishing wages, and reporting to collection agencies without determining if a patient is eligible for financial assistance.[12] However, as the CSS research indicates, that rule is honored by its breach—and IRS enforcement is lax.
This is a summary of Discharged Into Debt series findings:
- Between 2015 and 2020, 112 hospitals sued 53,182 patients in civil court.[13] The practice of suing patients is concentrated: 20 hospitals in 15 counties are responsible for 80 percent of New York’s medical debt cases.
- The median amount of medical debt sought in the lawsuits is just $1,900, having little to no discernable impact on any given hospital’s operating margin.[14]
- All the hospitals are represented by professional debt collection attorneys; 99 percent of patients are not.
- Approximately 98 percent of civil medical debt cases are won on default, indicating that patients have no capacity to defend themselves.[15]
- A quarter of New York’s hospitals (56) report that they place over 2,200 liens on patients’ homes annually, jeopardizing their economic security.[16]
- Many hospitals impose punishing 10 percent gross wage garnishments on debtors that appear to work in low-wage professions.[17]
- An analysis of defendant-patients’ zip codes indicates that nonprofit hospitals disproportionately sue patients who reside in zip codes with a disproportionate number of low-income and minority people.[18]
As described above, medical debtors do not have access to lawyers. Few patients can take time off work to go to court to defend themselves—with a devastating impact on their economic security. Just a handful of law firms represent hospitals. Reviews of the pleadings in these cases indicate that they often appear to be electronically filed en masse with few details—typically just a date of service and amount alleged to be owed. Some law firms are alleged to employ suspect practices, such as deficient service of process.[19] None of the thousands of cases we reviewed indicate that the hospitals had evaluated the patient for financial assistance under the State’s Hospital Financial Assistance Law.[20] This law requires hospitals who participate in the state ICP program to offer financial assistance to patients with incomes up to 300 percent of the Federal Poverty Level.
The New York State Legislature has tried to help address the plight of medical debtors by enacting laws over the past three years to better protect patients. Recent reforms include: reducing the statute of limitations for medical debt from six years to three; reducing the consumer judgment interest rate from 9 percent to two percent; and barring medical providers from imposing liens and wage garnishments in medical debt cases. That said, these are incremental reforms at best. The real solution would be to prohibit non-profit hospitals from suing anyone. Suing patients for medical debt is unheard of in all other democratic countries, yet total abolition of medical debt cases is unlikely in our market-driven health care system.
Until health care is treated as a human right in our country, the solution in New York is to bolster patient protections laws and to empower patients by leveling the playing field. This is where the Permanent Commission on Access to Justice and Judiciary Civil Legal Services funding comes in. New York should fund civil legal services lawyers to represent patients and other consumer debtors in civil courts. Our research finds that only 1 percent of patients have access to lawyers in medical debt cases. Justice requires us to arm patients in the medical debt struggle by funding civil legal service attorneys to represent defendants in civil courts.
Thank you again for the opportunity to offer these remarks.
Notes
1. Participating legal services organizations include: Empire Justice Center, The Legal Aid Society, Nassau Suffolk Law Services, Neighborhood Legal Services, Legal Assistance of Western New York, BronxWorks, and Legal Services of the Hudson Valley.
2. Raymond Kluender, et al., “Medical Debt in the US, 2009-2020,” Journal of the American Medical Association, 2021, pages 250-256.
3. Consumer Financial Protection Bureau, “Medical Debt Burden in the United States,” February 2022.
4. Urban Institute, “Debt in America: An Interactive Map,” last updated March 31, 2021, https://apps.urban.org/features/debt-interactive-map/?type=medical&variable=perc_debt_med&state=36 &county=36047
5. Robert Wood Johnson Foundation, “How New Yorkers Feel about Affordability and Healthcare Reform: Results from a Statewide Survey,” March 2022, https://www.rwjf.org/en/library/research/2021/11/healthcare-affordability--majority-of-adults-support-significant-changes-to-the-health-system.html.
6. Peterson, Kaiser Family Foundation Health System Tracker, “The burden of medical debt in the United States,” March 2022.
7. “How New Yorkers Feel about Affordability and Healthcare Reform: Results from a Statewide Survey,” Robert Wood Johnson Foundation, March 2022,
8. Id.
9. The CSS database was created by searching public county civil court records for all hospitals that file institutional cost reports with the New York Department of Health, including any known name variations (212 hospitals in total, some of which are different campuses of the same hospital and thus file lawsuits under one name).
10. New York State Department of Health, “New York State Indigent Care Workgroup Report,” February 2019.
11. N.Y. Pub. Health L. §2807-k(9).
12. Internal Revenue Service, Billing and Collections – Section 501(r)(6), https://www.irs.gov/charities-non-profits/billing-and-collections-section-501r6.
13. Amanda Dunker and Elisabeth Benjamin, “Discharged Into Debt: New York’s Nonprofit Hospitals Garnish Wages,” July 2021, Community Service Society of New York (Appendix C).
14. Id.
15. CSS database derived from the New York State Civil Courts database of civil litigation in all 62 counties. https://iapps.courts.state.ny.us/webcivil/ecourtsMain.
16. Elisabeth Benjamin and Amanda Dunker, “Discharged Into Debt: Nonprofit Hospitals File Liens on Patients’ Homes,” November 2021, Community Service Society of New York,
17. Supra n. 13.
18. See, e.g., Amanda Dunker and Elisabeth Benjamin, “Discharged Into Debt: Medical Debt and Racial Disparities in Albany County,” March 2021.
19. See, e.g., In Burks v. Gotham Process Inc, Mullooly, Jeffery, Rooney & Flynn LLP, et al (20 civ. 1001) (EDNY) (Northwell’s law firm is alleged to hire process servers who engage in “sewer service,” by failing to actually serve the summons and complaint, making false sworn statements about serving defendants’ relatives, and using fake names in their affidavits of service).
20. N.Y. Pub. Health L. §2807-k(9).