May 9, 2003
Yale-New Haven Hospital says it will stop foreclosing on the homes of patients unable to pay their bills and will wipe out $84,000 owed by 170 patients whose bills are more than five years old.

In February, Connecticut Attorney General Richard Blumenthal sued the hospital for failing to use millions of dollars in so-called "free bed funds" money donated for the purpose of providing free patient care to the indigent. Blumenthal alleges that rather than use available free bed funds, Yale New Haven billed and sought to collect payment from needy patients.

Blumenthal charged that although the hospital's free bed fund has grown to $37 million, it has systematically failed to inform patients about the fund's existence, has made it difficult for them to apply and has adopted aggressive collection policies.

"The hospital billed needy patients when it had millions of dollars donated specifically to provide free medical care. Yale New Haven failed to use the money as donors intended, violating its legal fiduciary duty. It hoarded millions intended to help provide health care, and hired collection agencies to pursue patients improperly billed," said Blumenthal.

"In many instances it required patients to apply for government assistance, shifting the financial burden to taxpayers. As the amount of free bed funds rose, the Hospital reaped the interest income for other purposes."

Yale-New Haven has not formally responded to Blumenthal's lawsuit and the hospital's latest action stops short of addressing all of the issues Blumenthal raised.

Although the hospital initially said it was "shocked and surprised" by the suit, the issues are hardly new. As early as May 2001, the New Haven Advocate wrote about the hospital's billing practices in an article headlined "Heartless Hospital."

According to the lawsuit, Yale New Haven Hospital:

  • Improperly created a number of barriers to the use of free bed funds by needy patients. For example, the Hospital has determined that Medicare Patients, regardless of their financial status, are automatically disqualified from receiving free bed funds even though their bills may exceed the amount reimbursed by Medicare or may not be covered by Medicare at all.
  • Failed to inform patients who might be eligible of the existence of the funds and has instead initiated aggressive collections actions including wage garnishment and attaching real estate -- against them when they are unable to pay their bills.
  • Improperly set arbitrary income eligibility requirements that are not contained in the gifts creating the funds.

Earlier this year, The Wall Street Journal profiled a New Haven widower who was still sruggling to pay a $38,000 hospital bill that resulted from his late wife's treatment there in 1982. The hospital forgave the bill after the story appeared.