Catholic Healthcare West Agrees to Settlement

A Superior Court judge has approved a settlement providing as much as $423 million in refunds and discounts to nearly 800,000 uninsured patients at Catholic Healthcare West hospitals.

The nonprofit company operates 43 hospitals in California, Nevada and Arizona. It was accused in an October 2005 lawsuit of overcharging its uninsured patients and sending aggressive collection agencies after them when they couldn’t pay.

St. Francis and St. Mary’s in San Francisco charged uninsured patients far more than those covered by Medicare, Medicaid or private insurance, the suit alleged.

While so-called differential pricing has not been ruled illegal, the suit alleged that Catholic Healthcare West’s disparities were so extreme that they were unfair to the uninsured.

The settlement was reached in June and won final approval Thursday from San Francisco Superior Court Judge Richard Kramer. Its terms include a 35 percent discount for uninsured patients with incomes of less than $250,000 a year who were treated at one of the hospitals between July 1, 2001, and Sept. 25, 2006, and 35 percent refunds for those who have already paid their bills.

One provision of the settlement requires “more compassionate collection policies” for patients who fail to pay their bills, said Kelly Dermody, a lawyer for two former patients who filed the class-action suit.

Dermody estimated the settlement was worth $423 million, but the company said the cost would probably be much lower.

“We are proud of our record of providing care to those in need, regardless of our ability to pay,” the company said in a statement. “We settled this suit to avoid the cost of lengthy litigation and focus our resources on caring for our patients.”