Hospitals take shot at opioid makers over cost of treating uninsured for addiction

Reviewed by James Ives, M.Psych. (Editor)Oct 29 2019

While thousands of cities and counties have banded together to sue opioid makers and distributors in a federal court, another group of plaintiffs has started to sue on their own: hospitals.

Hundreds of hospitals have joined in a handful of lawsuits in state courts, seeing the state-based suits as their best hope for winning meaningful settlement money.

“The expense of treating overdose and opioid-addicted patients has skyrocketed, straining the resources of hospitals throughout our state,” said Lee Bond, CEO of Singing River Health System in Mississippi in a statement. His hospital is part of a lawsuit in Mississippi.

Hospitals may discover downsides to getting involved in litigation, said Paul Keckley, an independent health analyst.

“The drug manufacturers are a soft target,” he said. But the invasive nature of litigation may generate “some unflattering attention” for hospitals, he added. They’d likely have to turn over confidential details about how they set prices, as well as their relationships with drug companies.

So, despite representing the front lines of the opioid epidemic, most hospitals have been hesitant to pile on.

Just about every emergency room has handled opioid overdoses, which cost hospitals billions of dollars a year, since so many of the patients have no insurance. But that’s just the start. There are also uninsured patients, like Traci Grimes of Nashville, who end up spending weeks being treated for serious infections related to their IV drug use.

“As soon as I got to the hospital, I had to be put on an ice bath,” Grimes said of her bout with endocarditis over the summer, when bacteria found its way to her heart. “I thought I was going to die, literally. And they said I wasn’t very far away from death.”

Grimes is in recovery from her opioid addiction but still getting her energy back after spending a month being treated through a special intravenous line to her heart at Vanderbilt University Medical Center. Most patients could be sent home with a PICC line, but not someone with a history of illicit IV drug use who could misuse it to inject other substances. Vanderbilt and other academic medical centers recognize the problem and have established special clinics to manage these complex patients.

Grimes, 37, said she’s grateful for the care she received, which included multiple procedures and treatment for pneumonia, hepatitis A and hepatitis C. But like most patients in her situation, she’s uninsured and strapped for cash.

“I can’t pay a thing. I don’t have a dime,” she said. “So they do absorb all that cost.”

Hospitals estimate treating complicated patients like Grimes costs an average of $107,000 per person, according to court documents. The total costs to U.S. hospitals in one year, 2012, exceeded $15 billion, according to a report cited in the suits. And most patients either couldn’t pay or were covered by government insurance programs.

The expense is a leading reason cited by the hospitals who've banded together in a handful of lawsuits in Tennessee, Texas, Arizona, Florida, Kentucky, Mississippi and West Virginia. These suits are separate from the consolidated federal case in Ohio that includes cities and counties around the country. But the most prominent hospitals in those states, like Vanderbilt, have opted not to join the litigation.

West Virginia University President E. Gordon Gee, who oversees the state’s largest hospital system, has been urging others to join the suits. He and former Ohio Gov. John Kasich established an organization meant to highlight the harm done to hospitals by the opioid crisis.

“I think the more hospitals we have that want to be involved in this in some way, the better off we are,” he said. “You know, there’s always safety in mass.”

By “safety,” Gee acknowledged a central concern for hospitals weighing the risk versus reward of going to court. They may have the tables turned on them by the pharmaceutical companies since, until recently, patients in the hospital were often prescribed large quantities of opioids, contributing to the epidemic.

“I suspect there are some hospitals … who are afraid that if they get into it, those who are on the defense side will point out, well, maybe hospitals were really the problem,” he said.

The lead defendant in the suits, Purdue Pharma, did not respond to requests for comment.

Gee said hospitals can claim they were victims of dubious opioid marketing.

Still, many high-profile hospitals are sitting out the lawsuits, even though they’re typically the ones that treat the most complicated and expensive patients.

Health analyst Keckley said if hospitals join the litigation, they may be forced to cough up actual totals for their opioid-related financial damages. That could force hospitals to reveal how much more they charge for some services, compared with the actual costs of providing the care.

“Hospitals basically have charged based on their own calculations and the underlying cost of delivering that care has been virtually nontransparent,” Keckley said. “Then you open a whole new can of worms.”

Big academic medical centers especially, Keckler said, have relationships with drugmakers that they may not want publicly highlighted.

Still, hospitals might benefit without having to put their names on lawsuits and exposing themselves to risk. In Oklahoma, the state won an early opioid lawsuit in August. The payout does not direct money to hospitals, per se. However, Patti Davis, president of the Oklahoma Hospital Association, said they’re happy to see some of the money was earmarked for treatment.

“When we see treatment, we get very excited because it’s our hospitals providing a lot of the treatment,” she said.

But nationally, hospitals can’t count on potential settlement money to trickle down to their bottom lines, said Don Barrett, a Mississippi litigator helping hospitals sue in state courts.

Two decades ago, when the target of litigation was Big Tobacco, Barrett was working for states. He said hospitals didn’t join in, to his surprise. And when the states won those suits and started getting paid damages, hospitals missed out. Only about a third of the money was even spent on health or tobacco control, according to one watchdog’s estimate.

“I guess they thought that the states were going to take care of them, that these local governments were going to take this money and give it to the hospitals where it would do some good,” he said. “Of course, they didn’t give them a damn penny.”

Some states did set up trust funds that might help patients in the hospital stop smoking. But many are using the money to fill potholes, pay teachers and otherwise close gaps in state budgets.

Though not detailed in the lawsuits, many of the participating hospitals are in varying levels of financial distress, and not always primarily because of the opioid epidemic. Facilities owned by Community Health Systems make up a large share of the hospitals suing in Alabama, Florida, Mississippi, Tennessee and Texas. The investor-owned hospital chain, based in Franklin, Tenn., has been struggling mostly because of an outsize debt load taken on during a rapid period of expansion.

A CHS spokesperson declined to comment, citing a policy not to talk about pending litigation.

But Barrett said he expects more hospitals to join the cause rather than relying on states to determine how settlement money is spent.

“We’re not going to allow that to happen this time,” he said. “We can’t afford to allow it to happen this time.”

This story is part of a partnership that includes Nashville Public Radio, NPR and Kaiser Health News.