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Call It Yale v. Yale

Law-School Clinic Is Taking
Affiliated Hospital to Court
Over Debt-Collection Tactics

By LUCETTE LAGNADO
Staff Reporter of THE WALL STREET JOURNAL
Nov. 14, 2003

NEW HAVEN, Conn. -- Yale Law School's legal clinics have a history of fighting for the poor and dispossessed. Clinic students once won a $1 million judgment against a landlord over lead paint, and they have represented Haitian boat people and HIV-afflicted inmates in the state prison system.

This time the students have taken on a cause closer to home: They are suing Yale-New Haven Hospital on behalf of poor patients who have tangled with the hospital's aggressive debt-collection tactics. The hospital isn't part of Yale University, but it has close ties. It is the teaching hospital for Yale's School of Medicine, and the university's president sits on the hospital's board.

Since last spring, the hospital has been one of the prime focuses of a national outcry over hospital billing practices. An article in The Wall Street Journal described the case of Quinton White1, a 78-year-old widower who was still paying his wife's Yale-New Haven bill 20 years after her death, largely because of high interest charges and fees. A short while later, the Service Employees International Union issued a report that profiled other people who were coping with the hospital's collection tactics.

In response, Yale-New Haven forgave Mr. White's debt2, and it has recently abandoned its long-time collection law firm. Connecticut Gov. John Rowland signed legislation that slashes to 5% from 10% the amount of interest that hospitals in the state can tack onto their bills. Other states, including California and Illinois, began to seek remedies as well. Meanwhile, the American Hospital Association urged its 4,800 members across the country to adopt kinder, gentler collection methods, and its spokesman said Thursday that "every hospital has looked at what they're doing," and some "are asking some very tough questions."

But such responses haven't stopped the students at Yale Law School. They plan to argue that the hospital has garnisheed wages, imposed housing liens and initiated foreclosures on poor people's homes despite the existence of a multimillion-dollar fund set up years ago to provide the poor with access to the hospital's care that the hospital could have used. They have already filed three lawsuits, sent the hospital multiple "demand" letters and arranged for debts to be forgiven in several cases. They are also threatening to bring a class-action suit against Yale-New Haven.


[Image]
Students (from left) Dana Goldblatt, Anita Khandelwal, Jennifer Sung, Georgia Albert, Vinney Kalra and Andrew Sackett, with Prof. Solomon.

Yale law student Jennifer Sung read about Yale-New Haven last spring and floated the notion of bringing the class action against the hospital through one of the law school's clinics, which are designed to give students hands-on legal experience. She and other students asked Robert Solomon, a clinical professor of law, to supervise the project, and he agreed.

Starting in May and throughout the summer, the students interviewed a stream of Yale-New Haven patients who had been sued by the hospital for unpaid bills. Many had never had their own lawyer and were directed to the clinic by SEIU researcher Grace Rollins. Some came because chunks of their wages had been garnisheed. Others were bewildered by how rapidly their bills had grown because of steep interest charges and legal fees.

The students' first client was Velma Williams, a library assistant who has worked at the Yale medical school library for 22 years. In November 1998, the hospital got a $6,004 judgment, plus fees, against her ex-husband for a bill for his uninsured son, who had been shot; it later placed a lien on the couple's house. The bill went unpaid, and by the spring of 2000 a court had entered a judgment of foreclosure.

By then, Ms. Williams's marriage had ended and she was living in the house alone. Fearing the loss of her house, she said, she agreed to pay off the bill, which had risen to about $9,800 and ultimately more than doubled to $13,634 because of interest, court and foreclosure costs and fees. She gave the hospital a partial lump sum payment of $10,341.91 and agreed to pay the balance in monthly $100 payments.

A Yale law student and his professor wrote some letters and made a phone call, and the hospital eventually agreed that Ms. Williams no longer owed any money, even returning her last $100 payment. In June, the students sued both Yale-New Haven Hospital and its law firm in the Superior Court of New Haven, charging that they "wrongfully took, obtained or withheld the property of the plaintiff, including but not limited to her money and the interest in her home."

Jonathan Elliot, who represents the hospital in the suit filed by the Yale clinic, stressed that both Yale-New Haven and its attorneys had conducted themselves appropriately when they sought repayment for the debt. "Nobody intended to victimize Ms. Williams," says Mr. Elliot, arguing that there was already a lien on the property and Ms. Williams's ex-husband's "nonpayment of debt had potential adverse consequences for her." A hospital spokeswoman adds that the hospital was only pursuing the ex-husband's share of the house, not Ms. Williams's half.

The legal team challenging the hospital numbers half a dozen students, ranging in age from 22 to 36. Some, like Dana Goldblatt, 27 years old, and Andrew Sackett, 32, are pursuing Ph.D. degrees as well as J.D.s, Ms. Goldblatt in medieval literature, and Mr. Sackett in Latin American history. Declares 22-year-old Vinney Kalra, who has roughly two months of law school under her belt: "This is a pretty blatant case."

About two-thirds of Yale's law students take at least one clinical course during their law-school years. Professors must accompany the students to court and sign any court papers and legal correspondence. But the students are encouraged to meet with "clients" and are given business cards, though the cards are generic and require the students to add their own names by hand.

The Yale students plan to base their class action on the existence at Yale-New Haven of a "free bed" fund, a pool of money donated by philanthropists years ago to help the poor get medical care. Internal guidelines and state statutes govern the use of the funds. They currently stipulate that individuals with incomes that are 250% of the poverty level and below can apply for help.

Connecticut Attorney General Richard Blumenthal, whose office is conducting its own inquiry into how Yale-New Haven hospital has made use of its funds, has filed his own suit against the hospital.

In a 48-page memo, dated Oct. 17 and addressed to the hospital's in-house counsel and its outside lawyer, the students contend that the hospital "failed to inform low-income patients" who may have met the income threshold about the availability of the "free bed" fund. "Instead," the memo says, Yale-New Haven Hospital "pursued aggressive collections, including lawsuits, wage and bank executions, liens and foreclosure actions."

The students claim that the number of people who actually applied and received help from the funds was far lower than it should have been. The funds had a value of about $37 million in 2001, though they are now worth closer to $24 million because of market declines.

In their memo, the students cite some 17 patients they contend were mistreated by overly zealous hospital collection lawyers. One woman, the memo says, complained in a letter to the hospital that she had difficulty "making payments to Yale-New Haven Hospital and keeping her children fed and clothed."

The students' proposed remedies, outlined in eight pages, call for the hospital to stop its legal pursuit of low-income patients who should be getting free care, and to seek out patients who were unfairly pressured in the past and return their money.

The class action could have implications for numerous former and current hospital patients caught in the collection treadmill. For example, the case of Mr. White could be reopened, and the thousands of dollars he paid the hospital over two decades could be returned to him -- with damages.

Katherine Krauss, the hospital's spokeswoman, says the hospital approves of the educational aspect of the law-school venture. "As a teaching hospital, it makes perfect sense to us," she says. She adds that the hospital can't comment in detail on the students' 48-page memo or the threat of a class-action suit. She also says that the attorney general's inquiry and the hospital's continuing negotiations with his office make it difficult to elaborate on how the hospital has used the "free bed" funds.

Yale-New Haven defends its billing and collection practices, saying it has been the target of a deliberate campaign waged by labor unions. "I think that we are probably better than a lot of hospitals, but we have become the poster child on billing and collection," says Ms. Krauss. She maintains that the SEIU wants to unionize hospital employees and has tried to whip up public sentiment.

Ms. Krauss also argues that individual cases of debtors suffering from hard-nosed collections have been the exception not the rule.

William Gedge, a senior vice president at Yale-New Haven, is personally overseeing new policies on billing and collection, including barring hospital bill collectors from seeking to foreclose on homes. Other controversial practices such as putting liens on homes will now have to be approved by the hospital, he says. He also cites steps to increase awareness of the hospital's ability to offer charity care to the poor, including posting bigger signs and handing out notices in English and in Spanish. He adds that over a period of 10 years, the hospital has pursued foreclosures only some 40 times; this was out of a total of 25,000 accounts referred for collection each year. None of these proceedings has ever resulted in property being taken by Yale-New Haven, he adds.

Tom Conroy, a Yale University spokesman, says the Yale Law School clinic didn't tell the administration it planned to challenge the hospital, but it didn't have to. Prof. Solomon concurs. "We do not run cases by anyone," he says. "We make our own independent judgment."

Stephen Wizner, another clinical-law professor and a founder of the Yale clinic system back in 1970, concedes it's somewhat unusual to be suing an institution affiliated with the university. But he says, "During the 33 years I have been here, we have filed maybe 50 class actions, and we have sued every agency in the state." The students are remarkably uncynical, he adds. They "may be naive, but drastic change can occur only if someone is naive."

A professor at Yale's archrival, Harvard Law School, thinks the Yale students stand a good chance of winning their fight. "The hospital thought it was safe squeezing poor families who didn't have the resources to fight back," says Elizabeth Warren, who holds Harvard's Leo Gottlieb chair. "Now it's going to tangle with a whole new animal -- a student-run legal clinic. Law students are tigers-in-training -- bright, aggressive and fearless. The hospital will learn that there is nothing more dangerous."