Advocate Health, the third largest non-profit health system in the country, has announced it will cancel more than 11,500 debt judgments it holds against people who failed to pay medical bills.
The move comes after more than a year of public scrutiny of the hospital conglomerate’s aggressive debt collection practices – including news articles by the Guardian and other media outlets and a study by the Duke University School of Law and the state treasurer of North Carolina, where the chain is headquartered.
The study, released in August 2023, found that the hospital group filed more debt lawsuits against patients – 2,482 – than any other hospital system in the state between 2017 and 2022.
Advocate Health – which operates under the name Atrium Health in North Carolina, South Carolina, Georgia and Alabama – called the debt-cancelation initiative a “bold step to address medical debt”. It said it will cancel all liens it holds against the homes and other real estate belonging to indebted patients, and forgive all debts associated with those liens.
The debt forgiveness will help patients like Terry Belk, a 68-year-old used car salesman in Charlotte, North Carolina, who was sued twice by the hospital system – including for more than $23,000 in 2005 for his late wife’s breast cancer treatment and nearly $7,000 in 2010 for his own prostate cancer treatment.
His case drew national attention to the hospital group’s debt collection methods last year after the Guardian and WTBV, a Charlotte television station, reported on his ordeal. His story was highlighted again earlier this month in a report by NBC News. Days later, Atrium’s parent, Advocate Health, revealed it was wiping away the debts of Belk and thousands of other patients.
The news, “felt good, I was ecstatic”, Belk said. “But at the same time I still would like to see laws in place that prevent them from doing this,” he said. “Right now, it’s Atrium’s policy. It’s a good policy, but that can still at some point change.”
The North Carolina state treasurer, Dale Folwell, said the debt forgiveness announcement did not end the responsibility of Advocate Health’s CEO, Gene Woods, and other leaders to address the impacts of the hospital group’s debt collection tactics.
“Repent not only means to stop but to reverse course,” Folwell said. “It’s going to be on Gene Woods and the board of trustees to go back and figure out how much damage they’ve done to their patients with these practices over the decades.
“The fact is Atrium is doing this because they got caught, and because of the sunshine, and because people learned months and sometimes years later that they had put a lien on their property without telling them,” Folwell added.
In reply to questions from the Guardian, an Atrium spokesperson said that Folwell’s comments were “neither accurate nor fair. We have been on a continual journey to make care more affordable and accessible for all.”
In a statement about the debt relief plan, the hospital group said its previous policy changes aimed at reducing medical debt included a decision to stop reporting medical debts to credit agencies and an expansion of its financial assistance program for low-income and uninsured patients.
Brad Clark, chief financial officer of Advocate Health, said in the statement that when the chain expanded its charity care policy, it “immediately began assessing all previous outstanding liens and determined that most of those patients would qualify under our new policy. As the next step in our roadmap to make care more affordable, we are accelerating this process and removing judgment liens that were placed on homes and property to cover unpaid medical bills”.
The hospital chain said patients did not have to take any action to get their liens removed. “Advocate Health is working to resolve the cases, oldest to newest,” it said. “We will be in contact with those individuals named on the lien at the appropriate time. This may take some time as canceling liens requires coordination between our attorneys and the courts in each jurisdiction.”
It is unclear whether the liens Advocate intends to cancel are across multiple states or primarily in North Carolina. Along with its operations in four southern states, it also operates as Aurora Health Care in Wisconsin and as Advocate Health Care in Illinois. The chain said it would be forgiving liens “throughout its service territories”.
About one in 10 people in North Carolina have medical debt in collections, according to an Urban Institute analysis. White communities and communities of color don’t share the burden equally. In Mecklenburg county, where Atrium is headquartered, 12% of people in communities of color have medical debt in collections versus just 5% of white communities.
“No matter how [Americans] feel about every other topic in their life, everyone knows something is wrong” with the system “when people have a bigger fear of the bill than they do of the procedure”, Folwell, the state treasurer, said.
Debt judgments are especially punitive in North Carolina, where judgments automatically result in a lien on property. That makes it impossible for debtors to sell, buy or refinance a home without paying off the lien.
In addition, Atrium directed attorneys to pursue the maximum interest against debtors – 8% annual percentage rate. That means some debtors would have paid much more than their initial hospital bill.
Because many of the liens held by Atrium are more than a decade old, many debtors have already faced repercussions. Medical debt is the leading cause of bankruptcy in the US and debt judgments severely affect credit scores used by everyone from landlords to employers.
“My credit still has been affected by this,” Belk said. “I still have lots of aftermath [from] when they first done it way back.” In Belk’s words: “The blood is still fresh.”
Belk – whose experiences have led him to become an unofficial spokesperson for people struggling with oppressive medical debt – said there was a lot more work that US hospitals and public officials need to do to combat the problem.
“Is it fair that we are the richest country in the world and we’re punishing people for getting sick and seeking healthcare?” he asked.
