The Hospital of the University of Pennsylvania has been named along with more than 350 other hospitals in a series of lawsuits charging that it has failed to uphold its obligation as a charitable, nonprofit entity by treating its uninsured patients unfairly.
Because of its status as a nonprofit entity, the hospital receives millions of federal dollars annually in tax exemptions. As a condition for receiving this money, the hospital must provide free care to uninsured patients in need.
The suit alleges, however, that the Penn hospital system "has and continues to engage in a pattern and practice of charging inordinate, unreasonable and inflated prices for medical care to its uninsured patients who are all too often impoverished members of the community with little or no means to pay."
Lee Dobkin, the deputy general counsel for the University, denied any wrongdoing by the hospital, saying that the charges are "totally without merit," and that "the hospital provides an extraordinary amount of charity care."
The suit is being brought by a group of law firms led by attorney Richard Scruggs, who became famous in the 1990s while leading the charge against the tobacco industry.
The Children's Hospital of Philadelphia is one of the other hospitals named in similar lawsuits around the country.
Scruggs' goal is to reform the actions of those nonprofit hospitals that he believes not only overcharge the uninsured, but use overly aggressive tactics to obtain fees from those who are unable to pay.
Dobkin, found no merit in the claim. "We have no idea what that refers to. That's certainly not the case," he said.
Scruggs also alleges that board members of these hospitals operate them like they are for-profit organizations and harm the public by receiving undue benefits and privileges.
The lawsuit is still in its early stages, and University lawyers are still investigating the grounds on which the group is making these claims. Dobkin repeatedly stated that he believed the charges would be found baseless by a court when and if the time comes.
HUP board members do not receive any inappropriate benefits, he said.
The group of law firms would also like to see greater accountability for the hospital's budget.
"Typically, you'll see hundreds of millions of dollars in the [hospitals'] balance sheets that are unexplained," Scruggs' spokesman Robert Siegfried said.
Dobkin said that the legal claim will waste hospital money in the long and short term.
"We really think that the lawsuit is a diversion of resources that could be used to treat patients," he said.
