They could have qualified for charity care. But Mayo Clinic sued them

ROCHESTER — One night in November 2021, Sierra Dale heard a knock on the door of her Rochester home. Her three young daughters were spooked to see two strangers waiting outside. She answered the door and was served with papers.

Dale was being sued by her own employer — Mayo Clinic — for unpaid medical bills.

The lawsuit was to recover a payment that Dale, a desk operations specialist in the Oncology Department, owed due to a stay at Mayo back in 2019. She had given birth at the hospital, and although she was covered by Mayo’s employee insurance plan, she still owed $11,875.

Unable to get on an affordable payment plan, Dale’s account was sent to collections. Two years later, she was sued by Mayo Clinic’s Edina-based legal firm, D.S. Erickson & Associates. In July of this year, Mayo received a default judgment against her, which means that her wages will be garnished, Dale says — possibly by up to 25% — for $12,180, including the bill and court fees.

But Dale says she never should have been charged in the first place. Based on Mayo Clinic’s financial assistance policy, she believes she was entitled to free care.

Every nonprofit hospital, including Mayo Clinic, is required by the Affordable Care Act to provide free or discounted care, also known as “charity care” or “financial assistance,” to eligible patients. The federal requirement is intended to obtain public benefit in exchange for the nonprofit’s tax-exempt status.

“It’s like a contract — the taxpayers give nonprofit hospitals tax breaks with the understanding that hospitals will help the community by subsidizing low-income patients who need help,” said Ge Bai, a Johns Hopkins University accounting and public health professor, who has conducted research about charity care.

According to Mayo's charity care policy, patients whose income is below 400% of the federal poverty level are eligible for a 50% discount on bills — and free care if their income is below 200%. That means a single person can qualify for financial assistance if they make less than $54,360 and a family of five, like Dale’s, would qualify for free care if they make less than $64,940.

The Post Bulletin interviewed 20 patients sued by Mayo Clinic for unpaid bills and determined that 14 could have qualified for charity care based on the household income information provided during the interview. Yet all but one were forced to pay their bills in full after they were sued, often through wage garnishment. Most had no idea charity care was an option .

Mayo Clinic meets the IRS’s requirement that nonprofit hospitals “widely publicize” their charity care policies. In an email, Mayo said that it promotes its financial assistance programs on its website, authorization forms, hospital and emergency room signage and monthly statements and letters.

Yet 12 of the 14 income-eligible patients interviewed said Mayo made no mention of charity care when they called for help with an unaffordable bill, instead suggesting payment plans or assistance outside of Mayo. The two who discussed charity care with clinic billing employees said they were informed about the policy only when they explicitly asked about it.

The IRS requires that nonprofit hospitals make “reasonable efforts” to determine if a patient could qualify for financial assistance before sending debt into collections or suing a patient, however the IRS guidelines are vague and lack enforcement mechanisms. Bai said Mayo is meeting the legal requirement in that it informs patients of the policy in letters and billing statements, but Mayo could have done more, including telling patients who called in about the policy.

In the past year, Mayo sued for unpaid medical bills ranging from $1,029 to $233,723. The median payment being pursued was $4,758, with Mayo looking to reclaim $1.5 million in total. While $1.5 million is a small slice — 0.01% of Mayo's $15.7 billion annual revenue — these bills can be crippling to patients.

• Terry Whiting said she is planning to declare bankruptcy.
• Nicole Groshens said she will have to drop out of graduate school.
• Kris P. said she had to switch hospitals because Mayo wouldn’t let her continue her chemotherapy treatments until her debt was paid.

“Lawsuits and debt in collections cause a great deal of suffering and stress,” Bai said. “If patients knew that charity care was an option early on in the process, all of this could have been avoided.”

Mayo said that it often provides financial assistance and that patients can apply at any point. It said that legal action occurs “only in a small percentage of accounts and only when the patient is unwilling to discuss financial options or there is no indication from that patient that they may be eligible.”

“Our approach generally is to connect with patients who need financial assistance in multiple ways multiple times to ensure they’re aware of the financial options available to them and what information is needed to process requests for assistance,” Mayo said.

However, some patients felt that Mayo Clinic wasn’t as transparent as they claim . One of those patients was Kate Stomberg.

Stomberg’s son has been visiting his Mayo critical care team for the past eight years, since he was 4 years old and diagnosed with syringomyelia, a rare condition in which cysts grow in the spinal canal.

Stomberg and her husband had insurance but struggled over the years to afford their son's bills. Their household income meant they could have qualified for discounted care — 50% off their bills — but Stomberg said she didn’t know charity care existed, even as her family was in and out of collections.

In January 2021, Stomberg’s account was sent to collections for a $2,163 bill, even though she was already on a payment plan to pay off the balance. What was worse: The billing office said her son couldn’t see Mayo doctors while her account was in collections.

“When he doesn’t see his doctor it can impact his life forever,” Stomberg said. “And there’s nowhere else for him to go.”

Unable to pay the bill on top of her monthly payments, Stomberg called and messaged Mayo at least nine times, begging for help. At one point, she drove nearly 80 miles from her home in St. Paul to Rochester to speak with someone in person.

Standing outside the billing window at the Mayo and Gonda building, Stomberg cried as she tried to negotiate — offering to double her monthly payments if it meant her son could see his doctors. Stomberg recalled the staff person said, “There was nothing she could do for me.”

According to its billing and collection policy , Mayo Clinic will make reasonable efforts to “orally notify individuals” about the charity care policy 30 days before sending a patient to collections or suing them. But Stomberg says she didn’t receive that notice. Not from the billing office. Not from the financial counseling center. Not even from the social worker, who suggested Stomberg look into assistance through the county or her insurance company.

Mayo said, due to patient privacy, it could not comment on specific patient situations but said that it sends multiple written documents indicating that financial assistance is available before suing a patient. However, none of the patients interviewed by the Post Bulletin said they recalled receiving these notifications or didn’t realize they could have qualified.

This was the case for Stomberg. During her interview with the Post Bulletin, after she was sued and her husband’s wages were garnished, Stomberg flipped through a binder of old bills and communications, and discovered that in an email and her billing statement, Mayo had included a one-sentence mention of financial assistance. She had overlooked it at the time, assuming it was referring to Medical Assistance, Minnesota’s Medicaid program.

Looking back, Stomberg said she is angry that Mayo wasn’t more forthright during their many conversations.

“At the time I figured, ‘OK, they can tell I’m having trouble here,’ ” Stomberg said. “If there was something that could help me cover the bill, they would let me know.”

Some hospitals do more to communicate. The University of Wisconsin Health system requires patients to read and sign a summary of the financial assistance policy before a patient can make an appointment. Doctors at the hospital offer information about charity care during some appointments.

These types of actions are ideal, said Berneta Haynes, an attorney at National Consumer Law Center. But what she sees more frequently is people like Stomberg who should qualify for charity care, but apparently aren’t being fully informed of it.

The ACA instituted IRS guidelines to protect eligible patients from being sued. The law states that before a hospital pursues an “extraordinary collection action” such as sending debt into collections or suing a patient, it must make “reasonable efforts” to determine if a patient could qualify for financial assistance.

However, Haynes said the IRS guidelines are toothless. They don’t require hospitals to screen patients for eligibility or mail them the charity care application before pursuing legal action. They only stipulate that hospitals inform patients of the policy.

“Advertising the charity care policy in one sentence on a billing statement isn’t enough,” said Haynes, who researches charity care across the country. “Advertising it on the website isn’t good enough. But because the ACA guidelines are so minimal, hospitals can do the bare minimum.”

Haynes hopes ACA will strengthen the requirements to require eligibility screening or that state governments will take it upon themselves to provide more hospital oversight. She suggests hospitals could be required to include a charity care section within the initial intake forms that patients receive upon arrival.

When medical bills are not paid for a period of time, Mayo said that it is “evaluating the use of vendors to perform presumptive financial assistance in-lieu of sending an account to bad debt,” but said it’s premature to share any additional information at this time.

Haynes said the IRS is the only entity tasked with ensuring compliance and enforcement, and it’s understaffed and underfunded.

“We are in a situation where patients have to hope that the IRS is paying attention and that’s not happening right now,” Haynes said. “However, any hospital that is not making a reasonable effort to determine eligibility for financial assistance before pursuing legal action is playing with fire if the IRS should start paying closer attention.”

The most devastating effect of being sent to collections for many was that they were denied care at Mayo Clinic. This was the case for Stomberg, whose son couldn’t see his doctors for five months due to her debt.

Yolanda Pierson had a similar experience with her son, Wayland Jr., who has a rare eye disorder called Coats disease. He has been seeing his Mayo team since 2017. Pierson’s account was sent to collections for a $2,838 bill in 2020, and although she could have qualified for discounted care, she didn’t know it was an option.

Pierson started taking Wayland to Twin Cities doctors because Mayo wouldn’t see him, but the new doctors weren’t familiar with Coats disease.

In August 2022, after Pierson was sued, her mother was looking at a family photo and realized that her grandson’s eye was drooping more than normal. She and Pierson decided they could no longer wait to take Wayland to Mayo. Pierson didn’t have enough credit to pay off the bill, so Pierson’s mother, who is retired, opened up a new credit card to resolve the debt.

Wayland’s doctors expected him to come every six months. Because of the debt in collections, Wayland wasn’t able to seek the care he needed for almost three years. He finally had his appointment in October.

Mayo said that it only delays patient appointments due to an outstanding balance in “situations where the services were determined by the care team to be non-urgent or not unique to Mayo.” However, Pierson and Stomberg question whether the billing office talks with the care team before making this determination.

When Pierson scheduled Wayland’s October appointment, his doctor asked her why she hadn’t brought him in for so long. When Stomberg’s account was first sent to collections in 2016 and her son was barred from receiving an MRI post-spinal surgery, her son’s neurosurgeon was irate when he found out. Stomberg said the doctor intervened with the billing office, demanding that Mayo allow her son to get the care he needed.

Pierson said she is frustrated that Mayo — an institution which says its primary value is that “the needs of the patient come first” — not only delayed her son’s care, but also, in her view, didn’t properly inform her that she could have applied for charity care.

“Some days I was on the phone with them in tears because I was so afraid of what was going to happen to my son,” Pierson said. “And this whole time, I could have received financial assistance.”

Mayo Clinic has sued 310 patients on average each year over the past 10 years. This is a small percentage of its patient roster and less than other hospitals — like Northwell Health in New York, which sued 2,500 patients in 2020 . But some, like Minnesota’s Allina Health, never resort to lawsuits.

Haynes said using lawsuits to reclaim medical debt is common, but she is working to change that. Her team is pushing to ban aggressive debt collection tactics, such as suing patients, garnishing wages and denying care due to owed debt. An October JAMA editorial categorized these tactics as harmful policies that hospitals should never pursue.

The Post Bulletin interviewed two patients who tried to fight the bills in court, believing they were improperly charged, but neither made it to court. One of them, Meagan Davis, settled with Mayo in August, not knowing she could have qualified for free care based on her income.

“My anxiety got the better of me,” said Davis, who had visited Mayo for radiation to treat her eye cancer. “It hit me that Mayo Clinic — this big corporation — was suing me, and I could no longer handle the stress. I felt like I left with my tail between my legs.”

If patients don’t respond to a lawsuit, the hospital can seek a default judgment, meaning the patient has to pay the full amount plus court fees.

“It isn’t crippling to the hospital — hospitals could even write it off or better yet never pursue the debt in the first place,” Haynes said. “Mayo Clinic is willing to aggressively pursue this insignificant amount of money that is super significant to the people they are pursuing it from. It doesn’t make sense.”

Dale, the Mayo employee who was sued in November 2021, was one of the few patients interviewed who knew that charity care was an option — but she didn’t learn about it from Mayo. She learned about it from her oncology patients.

She applied for financial assistance, but she says she never heard back. She got a part-time job at Kohl’s for $13 an hour so she could start paying off her debt. She was later sued, and, because she didn’t go to court, her wages will be garnished until the debt is paid.

“I felt betrayed because I worked for Mayo for three years,” Dale said. “It felt like a slap in the face.”

Berneta Haynes, an attorney at the National Consumer Law Center, said that the first thing patients should do is reach out to legal aid for free legal representation. Legal aid is often based on income, but if you qualify for financial assistance at the hospital, you’ll likely qualify for legal aid.

Next, Haynes said patients should reach out to a credit counselor who can advise you on what you can do to protect yourself financially. Lutheran Social Services of Minnesota, headquartered around the state, provides free financial counseling services, as do other nonprofits.

In regards to the court summons, Haynes said the best plan of attack is to go to court. It’s normal to feel overwhelmed and stressed after being sued, but Haynes said that if patients don’t go to court it will automatically result in a default judgment, which means the judge will order you to pay in full. If you go to court, you can argue for a settlement.

“Some patients feel that if they ignore it, it will go away,” Haynes said. “But my advice is to never ignore it.”