Federal Lawsuit Filings Reveal Kentucky’s Predatory and Unconstitutional Medical Debt Collection Scheme
KENTUCKY— The National Center for Law and Economic Justice (NCLEJ), Kentucky Equal Justice Center (KEJC), and Bradley Arant Boult Cummings LLP took a major step forward in the ongoing federal class action litigation against the University of Kentucky (UK) Healthcare and the Kentucky Department of Revenue (DOR) over their unconstitutional medical debt collection practices, filing a motion for summary judgment.
In 2020, UK Healthcare patients sued UK Healthcare and the DOR for violating their due process rights by failing to give patients adequate notice or an opportunity to contest their debt before taking their property, as required by the 14th Amendment. On behalf of UK Healthcare, the DOR has garnished wages, withheld tax refunds, and swept bank accounts to collect on medical debts that many patients should not even owe, all without a court order. To make matters worse, DOR adds a twenty-five percent collection fee and a penalty interest rate, which some class members will spend the rest of their lives trying to repay. These forced collections have had a devastating impact on UK Healthcare patients and their families.
“I told the Department of Revenue how my bill was coded wrong,” said Lucy Alexander, mother of two and a plaintiff in the case. “They didn’t care. They took a whole two weeks’ paycheck, seized my wages, and told me the only thing that I could do was make a payment plan.”
The class-action lawsuit seeks to stop the DOR from seizing patients’ assets until UK Healthcare gives patients a meaningful right to be heard on their medical debts.
Plaintiffs presented evidence that:
- The DOR collects medical debts alleged to be owed by UK Healthcare’s patients by administrative levy, garnishing Kentuckians’ paychecks and seizing their state tax refunds and funds from their bank accounts without any judicial intervention whatsoever.
- UK Healthcare’s notices are designed to look like junk mail and to avoid ever letting patients know that their assets are at risk.
- UK Healthcare and the DOR use the fact that patients do not know that they have a right to a hearing to coerce them into entering payment plans.
- Between September 2008 and January 2021, DOR collected $50,450,501.59 for UKH Healthcare from people across Kentucky.
“Medical debt is a national problem that ruins lives and drives people into bankruptcy. You often can’t choose whether or not to have a life-saving procedure and low-income individuals are the ones who are hit the hardest. Twenty-seven percent of all Kentuckians report having medical debt. For years, UK Healthcare and the Department of Revenue have trampled on people’s rights and simply taken their money. It is time for that to stop.”
Karina Tefft, Staff Attorney, National Center for Law and Economic Justice
“This case is about trusted institutions choosing profit over people through denying them their constitutionally-guaranteed rights. UK Healthcare and the KY DOR intricately designed a debt collection process that preys on the most vulnerable pushes people further into poverty and leaves them buried in medical debt—often for bills that they shouldn’t have even owed in the first place. Since 2008, this process has resulted in a profit of more than seventy million dollars and has thus, disrupted the lives and financial security of thousands of members in this class—an inexcusable failure of a healthcare system whose mission claims to ‘foster… patient-centered care.”
Shannon Rempe, Health Law Fellow, Kentucky Equal Justice Center
The National Center for Law and Economic Justice advances racial and economic justice through ground-breaking impact litigation, policy advocacy, and support for grassroots organizing.
The Kentucky Equal Justice Center aims to promote equal justice for all residents of the Commonwealth by serving as an advocate for low-income and other vulnerable members of society.
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