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At The Non-Profit Bar

Just as necessity is the mother of invention, outrage may inspire new legal thinking.

The latest outrage is that charity hospitals around the country are charging poor and uninsured patients their highest retail rates, while the insured--and presumably better off patients--receive steep discounts for the same health care services. Adding insult to the outrage are hospitals that use abusive collection methods against those charity patients who can't pay on time, if at all. As the hospitals run up legal collection costs, they tack those onto the bill as well.

We now say that there is a contract made between a hospital and the state and federal governments, and the bargain is made so that indigent, uninsured and underinsured patients have access to free or discounted medical care. As the intended beneficiaries of the contract, they have the right to enforce it by going to court. The answer to the federal judge who asked, "Are you prepared to let private citizens sue the Red Cross if they think the charity is not complying with the tax code?" is "Yes" if the Red Cross starts charging fees for disaster relief.

Outrageous conduct demands a determined response. Congress may respond, but not any time soon. The IRS is missing in action. Even if every one of the state attorneys general responded, the result would likely be uneven. In the meantime, a little bit of Sir Coke's legal fictionalizing could jump-start a response to a genuine outrage. Why not? If we're willing to accept the legal fiction that a corporation such as Microsoft is a person just like you and me, then we should be willing to accept a new legal fiction that charity hospitals should provide charity care.


Bruce D. Collins

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