Consumer Law & Policy Blog

Patient Challenge to Hospital Practices Under the Illinois Consumer Fraud Act Survives Motion to Dismiss, Settles

by guest contributor Alan Alop (Deputy Director, Legal Assistance Foundation of Metropolitan Chicago)

Like most hospitals in America, St. James Hospital in Chicago Heights, Illinois, is a nonprofit, charitable institution.  As a nonprofit corporation, it is exempt from paying state property, sales and income taxes and federal income tax, a status that saves the hospital millions of dollars each year. In return for its tax-exempt status, Illinois law, like many states, requires the hospital to provide free services to low-income patients, a duty known as “charity care.” While St. James Hospital does provide free treatment to some patients, in recent years the amounts provided have dwindled. According to a recent study, in 2004 St. James Hospital provided $6.6 million in charity-care services to the poor; in that same year the hospital’s tax-free status saved it $14.5 million in state and federal taxes.

Also like most hospitals, St. James significantly discounts the charges it bills to most of its patients.  Privately insured patients and patients covered by Medicaid and Medicare receive billing discounts as high as 80%.  Uninsured patients, most frequently the poor, receive no discounts and are expected to pay the full hospital bill.   

Barbara Hill is one of an estimated 45 million Americans who lack health insurance coverage. Employed as a babysitter, Ms. Hill fits within federal guidelines defining indigency.  In 2004 she received  treatment at St. James Hospital for a sprained ankle. The hospital billed Ms. Hill its full, un-discounted charge, and hired a collection agency to collect that amount.  Ms. Hill attempted to apply for a charity care write-off of the bill but the hospital ignored her two written inquiries.  She then brought an action against the hospital, challenging: (1) the hospital’s failure to provide her free charity care; and (2) the hospital’s practice of charging uninsured patients triple or quadruple what it charges insured patients for identical services.  The hospital had the action removed to federal court where, on December 20, 2006, Judge Ronald A. Guzman issued an opinion denying the hospital’s motion to dismiss.  Hill v. Sisters of St. Francis Health Services, Inc., 2006 WL 3783415 (N.D. Ill. Dec. 20, 2006).  On May 30, 2007, the parties entered into a confidential settlement agreement that addressed the plaintiff's concerns.

Which ISPs Are Spying on You?

Frustrated by incomprehensible privacy policies, Wired asked the eight largest Internet Service Providers for straight answers about what records they keep on the Internet activities of their subscribers.  Four of them responded "with a mix of timeliness and transparency."  Only one answered the question, "How long do you retain records of the IP addresses assigned to customers?"  This information can be used to track  subscribers to particular Internet posts, emails, or other activities on the Internet.

Fed Plans to Revise Credit Card Rules

By Kathleen Day
Washington Post Staff Writer
Thursday, May 24, 2007; D01

To read about how the Federal Reserve Board proposes to revise current credit card rules, view this Washington Post article.

Ninth Circuit Denies Rehearing in Exxon Valdez Oil Spill Litigation

We have previously blogged here, here, and here about the Ninth Circuit's December 2006 decision halving the punitive damages award in the Exxon Valdez oil spill litigation to $2.5 billion and Exxon's effort to obtain en banc rehearing.  Last week, 5 months after rehearing was sought, the Ninth Circuit denied the petition over two dissents, one arguing that punitive damages were not available at all under relevant maritime law principles and the other maintaining that the punitive damages award, even as reduced by the Ninth Circuit panel, was constitutionally excessive.  The en banc opinions are here.  It's on to the Supreme Court, presumably - - almost 2 decades after the Exxon Valdez ran aground.

New CL&P Feature: Monthly CPSC and NHTSA Recalls

   

The Consumer Law & Policy Blog will begin posting monthly product recall information from the Consumer Product Safety Commission and the National Highway Traffic Safety Administration.  The CPSC recalls concern a variety of consumer products and the NHTSA recalls concern motor vehicles.  We will link to the agencies' monthly recall lists for the prior month. 

    Meanwhile, acquaint yourself with the CPSC recall home page and the NHTSA recall home page.  The latter page allows consumers to track agency vehicle defect investigations and a range of other agency safety initiatives as well as vehicle recalls.

    CPSC's list of April 2007 recalls can be assessed here.  NHTSA's list of April 2007 vehicle recalls can be assessed here. We will be back soon to report on the May recalls for both agencies.

Encyclopedia Entry on Consumer Bankruptcy

Todd Zywicki's entry on "Consumer Bankruptcy" for the forthcoming Encyclopedia of Law and Society: American and Global Perspectives, can be found at http://ssrn.com/abstract=960822.  The abstract is as follows:

This is the entry for "Consumer Bankruptcy, Doctrinal
Issues In" in the Encyclopedia of Law and Society: American and
Global Perspectives. This entry provides a summary and overview
of the law and policy of consumer bankruptcy. First, it
summarizes the American bankruptcy law legal regime. Second, it
explores the competing hypotheses for the rise in bankruptcy
filings during the past three decades, contrasting the
"traditional" or "distress" model of consumer bankruptcy with the
"incentives" or economic model. Third, it describes the recent
amendments to the American consumer bankruptcy regime. Finally,
it provides a comparative view of consumer bankruptcy law by
comparing the American system and trends in American bankruptcy
law and policy with Europe and other areas of the world.

Credit Card Debt in the U.S.: An Ill-Fated Love Affair

By Brian Wolfman

Today's Washington Post contains a major article by Kathleen Day, entitled "A Highly Charged Relationship," about Americans' love for credit cards, but their vehement dislike for some of the credit card companies' practices -- practices hidden in the fine print until they spring into action.  As Day puts it, "Call it a love affair with a dark side."  Consumer complaints to federal banking regulators are about credit card companies more often than anything else.  The third paragraph of the article gives you a sense of what the article is about:

The avalanche of gripes generally boils down to objections about a half-dozen practices, according to congressional staff and consumer groups. The complaints mostly center on what consumers see as unfairly high interest rates and penalty fees; confusing policies that constantly change, almost always in the lender's favor; and near-insurmountable hurdles to getting help when a consumer falls into trouble or when a company makes a billing mistake.

After the main article, the Post includes a series of vignettes -- under the title "Mad About Credit Card Companies" -- featuring real consumers who felt victimized by various credit card practices.  Read about "over limit" fees and penalties; interest charges on the whole debt even when part of it has been paid; flat-out company billing errors (in the case discussed, Capital One harassed a dad mourning the death of a son who had left a debt of $217 -- Capital One erroneously insisted that the debt was more than 6 times greater); refusal to work with credit counselors who are trying to help the card holder; "workout plans" that don't reduce the consumer's debt; and "due dates" on days when it is literally or effectively impossible to make payment (here, the consumer paid in person at the bank on Saturday, in advance of the Sunday due date -- a date on which it was impossible to pay -- but since Saturday payments are not credited until the next business day, the consumer got hit with a late charge).

New Technologies for Marketing to Children

Several consumer groups, including the Center for Digital Democracy and the Center for Science in the Public Interest, have produced a new Report on how businesses are using new technologies to market foods and beverages to children.   Among the technologies are cell phones, instant messaging, social networking sites, blogs, games, and videos available at video web site such as YouTube.  Because parents are less likely to use some of these technologies, they are probably less aware of the marketing techniques and consequently might not discuss them with their children.  Indeed, some of the techniques seem designed to evade parental scrutiny.  A quote:

KFC used a high-pitched tone as a promotional "buzz" device for a recent "interactive advertising campaign." The MosquitoTone™ was embedded in TV commercials to launch KFC's new "Boneless Variety Bucket™." In its press release, the company explained that the popular cell phone ring tone "is too highpitched for most adults to hear because most people begin to lose the ability to hear high frequency tones starting at age 20. This is a fact not lost on young Americans who seek the sound for clandestine ring tones that don't turn the heads of nearby adults." In the TV commercial, the secret sounds were designed to attract the attention of young viewers and "drive" them to a Web site, where they could enter a contest to identify exactly where the tones could be heard in the ad, in order to win $10 "KFC gift checks" redeemable for the new chicken meal at any KFC. The company's chief marketing officer called the innovative buzz campaign "the 21st Century dinner bell."

I wonder what KFC did with the resulting list of people who could hear the cell phone ring.  The Report lists many other examples of the use of the new technologies and describes marketing techniques that I, at least, had never heard of (my favorite name was "viral video").  You have to admire the ingenuity of marketers and their ability to find new opportunities, but as the father of teenagers who use many of the technologies (I often find it hard even to use the blog-posting technology, as this posting may demonstrate), I find it anxiety-provoking. The Report calls upon the FTC and Congress to look into the matter and to develop new rules for marketing food and beverages to children.

Upcoming Conference: "Taming The Giant Corporation"

   

From June 8 to 10, in Washington, D.C., the Center for the Study of Responsive Law is sponsoring a conference entitled "Taming the Giant Corporation: A National Conference on Corporate Accountability."  The conference's home page contains an excellent synopsis of the purpose of the conference and what its planners hope to accomplish.  The agenda for the conference is here. 

 

Baroody Withdraws His Name from Consideration for Consumer Product Safety Commission

The New York Times is reporting that Michael Baroody, whom we have blogged about a handful of times, has withdrawn himself from being considered to head the Consumer Product Safety Commission:

Administration officials and Congressional leaders said that Mr. Baroody decided to withdraw after it became increasingly clear that his nomination would be rejected by the Senate Commerce, Science, and Transportation Committee. The committee was scheduled to hold a confirmation hearing on Thursday.

After he was nominated by President Bush last March, Mr. Baroody came under heavy criticism from consumer groups, as well as trial lawyers, medical doctors and firefighters. They said that Mr. Baroody’s record, and that of the association, in opposing safety regulations demonstrated that he was not qualified for the job.