Munson Medical Center in Traverse City, part of Munson Healthcare.

TRAVERSE CITY — Collections lawyers contracted by Munson Healthcare have filed hundreds of new collections lawsuits in local court during the past four months.

In July, the Record-Eagle reported on hundreds of legal actions initiated by the northwest Michigan hospital system in order to collect on outstanding debts from patients.

Since July 1, Munson Healthcare and Munson Medical Center have issued 242 summons to patients with unpaid debts. Munson collection actions account for 14 percent of all new summonses issued in the 86th District Court in the past four months, according to court databases.

The hospital’s lawyers have also advanced or collected on 211 garnishment cases, and issued a court summons on one debt that is over 10 years old.

Hospital executives said billing agents and patient advocates take extensive efforts to avoid going to court. If a patient is uninsured, hospital employees come to their bedside to help that patient apply for Medicare or Medicaid. Otherwise, they check to see if that patient is eligible for charity care, which fully covers patients who make up to 200 percent of the Federal Poverty Guideline, which equates to $25,760 per year in 2021 and discounts for slightly higher earners.

It’s only patients who don’t qualify for these programs that then get referred to the hospital’s billing department. If billing agents don’t get a reply, then the hospital contracts collections agencies to pursue the debts in court.

Hospital officials said that as of recent mergers and acquisitions Munson contracts with two agencies, Sherloq Solutions and Velo Law, to collect patient debt. Chief Communications Officer Dianne Michalek said the hospital is constantly reviewing billing practices, and that it would address concerns over medical billing once the current surge of COVID-19 cases calms down.

“We understand that medical billing continues to be a topic of concern and frustration across the country,” Michalek said. “As a healthcare system, we’re here to serve the community, and that includes helping patients navigate the complex world of medical billing. It is always our desire to work directly with each patient on a payment plan that will work for their financial circumstances.”

In many cases, patient debt is owed by the uninsured or underinsured. That category often includes service industry workers, the self-employed and contract laborers or construction workers. These are patients who earn more than the $25,760 hospital guideline, but also might not make enough to buy their own insurance, or who don’t qualify for federal insurance.

Unions, politicians, and advocates across the country have recently begun to push back against hospital collections actions, which can blindside unknowing patients and lead to bankruptcy.

“These people don’t have the funds. They are uninsured or underinsured, often for a reason,” said Simone Singh, an associate professor of Health Policy at the University of Michigan. Singh has authored nationwide studies on how nonprofit hospitals do, or don’t, give back to their communities.

“And the system is very complex, so the patient is the one left in the dark and left to figure it out,” Singh said. “Especially for nonprofits, it’s sort of questionable, given their mission.”

On the other hand, collections lawyers insist they do their utmost to vet patient finances and be sure that the debt owed is collectible. Scott Renner, a lawyer for Velo law, said that their collections firm doesn’t garnish the wages of those who can’t pay.

Other recent cases filed on behalf of Munson date back years, but are still being litigated by a lawyer who contracted to collect the debt before the hospital system restructured its collections policy around Sherloq and Velo.

That lawyer, Gary Allen Gardner, filed a summons on Oct. 22 against an Antrim county man who received $38,000 in medical treatment at a Munson Hospital in September 2011, a little more than 10 years ago, court filings show.

Gardner did not return calls seeking comment for this article.

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