Advocate Health, the nation’s third-largest nonprofit health system, has announced it will vacate more than 11,500 debt judgments against people who failed to pay their medical bills.

The move comes after more than a year of public scrutiny of the hospital group’s aggressive debt collection practices – including news articles from the Guardian and other media outlets, as well as a study by Duke University School of Law and the state treasurer of North Carolina, where the chain is headquartered.

The study, released in August 2023, found that the hospital group filed more debt lawsuits against patients between 2017 and 2022 – 2,482 – than any other hospital system in the state.

Advocate Health — which operates in North Carolina, South Carolina, Georgia and Alabama under the name Atrium Health — called the debt relief initiative a “bold step to combat medical debt.” It said it would remove all liens on the homes and other properties of indebted patients and forgive all debts associated with those liens.

The debt relief will help patients like Terry Belk, a 68-year-old used car salesman in Charlotte, North Carolina, who has been sued twice by the hospital system – including for more than $23,000 in 2005 over his late wife’s breast cancer treatment and nearly $7,000. dollars in 2010 for his own prostate cancer treatment.

His case brought national attention to the hospital group’s debt collection practices last year after the Guardian and WTBV, a Charlotte television station, reported on his ordeal. His story was highlighted again in a report by NBC News earlier this month. Days later, Atrium’s parent company, Advocate Health, announced that it would wipe out the debts of Belk and thousands of other patients.

The news “felt good, I was excited,” Belk said. “At the same time, I would still like there to be laws to prevent them from doing that,” he said. “Right now it’s Atrium’s policy. It’s a good policy, but that can change at some point.”

North Carolina State Treasurer Dale Folwell said the debt relief announcement does not relieve the responsibility of Advocate Health CEO Gene Woods and other executives to address the impact of the hospital group’s debt collection tactics.

“Repentance doesn’t just mean stopping, it means reversing course,” Folwell said. “It will be up to Gene Woods and the Board of Trustees to revisit how much harm they have caused their patients with these practices over the decades.

“The fact is that Atrium is doing this because they got caught, because of the sunshine, and because people found out months and sometimes years later that they had mortgaged their property without telling them,” Folwell added.

Responding to questions from the Guardian, an Atrium spokesman said Folwell’s comments were “neither accurate nor fair”. We are continually striving to make care more affordable and accessible for all.”

In a statement about the debt relief plan, the hospital group said its previous policy changes to reduce medical debt included a decision to stop reporting medical debt to credit bureaus and an expansion of its financial assistance program for low-income and uninsured patients.

Brad Clark, Advocate Health’s chief financial officer, said in the statement that when the chain expanded its charity care policy, it “immediately began evaluating all previously outstanding liens and determined that most of these patients would fall under our new policy.” “As the next step in our plan to make health care more affordable, we are expediting this process and removing liens placed on homes and properties to cover unpaid medical bills.”

The hospital chain said patients do not need to take any action to remove their liens. “Advocate Health is working to resolve the cases from oldest to newest,” it said. “We will contact the individuals named in the lien in due course. This may take some time as removing liens requires coordination between our attorneys and the courts in each jurisdiction.”

It is unclear whether the liens the attorney is seeking to vacate are in multiple states or primarily in North Carolina. In addition to its locations in four southern states, the company also operates as Aurora Health Care in Wisconsin and Advocate Health Care in Illinois. The chain said it would forgive liens “in all of its service areas.”

About 1 in 10 people in North Carolina have medical debt in their collection agency, according to an Urban Institute analysis. White communities and communities of color do not share the burden equally. In Mecklenburg County, where Atrium is headquartered, 12% of people in communities of color have medical debt in their collections, compared to just 5% of white communities.

“No matter how (Americans) feel about any other issue in their lives, everyone knows there is something wrong with the system” “when people are more afraid of the bill than the process,” said Folwell, the state treasurer.

Guilty judgments are particularly punishable in North Carolina, where judgments automatically result in a lien on property. This makes it impossible for debtors to sell, buy or refinance a home without paying off the lien.

In addition, Atrium instructed the lawyers to claim the maximum interest rate against the debtors – 8% APR. This means that some debtors would have paid significantly more than their original hospital bill.

Because many of the mortgages held by Atrium are more than a decade old, many debtors have already faced consequences. Medical debt is the leading cause of bankruptcies in the United States, and debt decisions greatly impact the creditworthiness of everyone involved, from landlords to employers.

“It still affected my credit,” Belk said. “I still have a lot of lingering effects from when they first did it a long time ago.” In Belk’s words, “The blood is still fresh.”

Belk — whose experiences have made him an unofficial spokesman for people struggling with crushing medical debt — said U.S. hospitals and officials need to do much more to combat the problem.

“Is it fair that we are the richest country in the world and punish people for getting sick and seeking medical care?” he asked.