Is Senator Grassley Our Savior?: The Crusade Against 'Charitable' Hospitals Attacking Patients for Unpaid Bills

• Author: Amanda W. Thai
• Position: J.D. Candidate, The University of Iowa College of Law
• Pages: 761-789

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Is Senator Grassley Our Savior?: The

Crusade Against “Charitable” Hospitals

Attacking Patients for Unpaid Bills

Amanda W. Thai

ABSTRACT: This Note addresses 501(c)(3) tax-exempt hospitals’ practice

of aggressively pursuing uninsured patients for outstanding medical bills.

Specifically, this Note will examine whether Senator Chuck Grassley’s

additions to President Obama’s Patient Protection and Affordable Care Act,

which imposes stricter requirements on hospitals for keeping their tax-

exemption status, is a viable way of approaching the situation. This Note

requires a look at historical context, current circumstances, and a possible

model for reform. This Note argues that Senator Grassley’s additions are a

step in the right direction. However, the additions must orient themselves to

local communities, demand clearer tax-exemption requirements, and also

develop public discourse around the matter to effect long-term change, in

accordance with the changing perspective of healthcare in the United States

from within the industry and from society at large.

I. INTRODUCTION ...................................................................................... 763

II. AN OVERVIEW OF 501(C)(3) HOSPITALS, THEIR CHANGING ROLES,

AND WHAT WENT WRONG FROM SOCIETY’S PERSPECTIVE ..................... 765

A. HISTORY OF TAX-EXEMPTION LAW .................................................... 765

B. HISTORY OF NONPROFIT HOSPITALS ................................................. 766

C. 501(C)(3) STATUS AND HOSPITALS ................................................... 767

D. NONPROFIT HOSPITALS V. PATIENTS ................................................. 769

E. BAD DEBT AND DEBT COLLECTION .................................................... 770

F. SENATOR GRASSLEY AND THE PPACA ............................................... 772

III. BATTLING 501(C)(3) HOSPITALS’ DEBT-COLLECTION HABITS WITH

SENATOR GRASSLEY’S CONTRIBUTION ................................................... 773

A. “REASONABLE EFFORTS”: A PROPOSED ATTEMPT AT CIVILITY ............ 773

 J.D. Candidate, The University of Iowa College of Law, 2011; B.A., New York

University, 2008. I would like to thank Mom, Dad, and Pete for their unwavering love and

support.

762 IOWA LAW REVIEW [Vol. 96:761

B. SENATOR GRASSLEY’S INNOVATION: PRICES NOT MEANT FOR THE

POOR ............................................................................................... 775

C. A HOSPITAL’S WORLD WITHOUT TAX EXEMPTION ............................. 778

D. DEBT COLLECTION: A HOSPITAL RIGHT OR EXCUSE? ......................... 779

E. EXECUTIVE JUSTIFICATION FOR DEBT COLLECTION ............................. 782

F. DEBT BY ANY OTHER NAME . . . MIGHT NOT BE DEBT ...................... 783

G. A LESSON FROM CARILION: SENATOR GRASSLEY’S CONTRIBUTION

NEEDS ADDITIONAL REGULATORY MEASURES TO BE EFFECTIVE

AGAINST VIRAL 501(C)(3) HOSPITAL DEBT COLLECTION .................. 785

H. MAXIMIZING SENATOR GRASSLEY’S IMPACT ....................................... 786

IV. CONCLUSION ......................................................................................... 788