UCHealth sues thousands of patients every year. But you won’t find its name on the lawsuits.

In a given year, UCHealth’s network of 14 hospitals and more than 200 clinics treats almost 3 million patients — a number equivalent to roughly half the state’s population.

From those patients, UCHealth estimates that 99.93% of bills are resolved without involving the courts.

“Our job is to stay out of the courts,” said UCHealth’s chief legal officer Jacki Cooper Melmed. “That is the very last resort.”

And yet, hundreds of new lawsuits are each month filed against UCHealth patients for debt the hospital system claims it is owed, making UCHealth among the most litigious systems in the state, according to consumer advocates.

Until now, no one outside UCHealth knew how many lawsuits the system had actually filed, though, due to the collections practice UCHealth has adopted. The hospital system “assigns” the debt to a debt collector without relinquishing ownership of the debt. The debt collector — UCHealth currently uses two and has used a third in the past — then files the lawsuits against the patients in its own name, which is often nondescript. Credit Service Company. CollectionCenter, Inc.

The debt collector gets a cut of whatever money comes from the lawsuit — Cooper Melmed did not say how much — with the rest going back to UCHealth.

Most often, no publicly available court document contains UCHealth’s name, making the system’s involvement in these suits invisible to lawmakers, to state regulators and to the public at-large.

Woods-Sullivan said she initially had no idea who was suing her.

"After I called the creditors, they told me it was University, so I went to University Hospital to try to get some help, to get some clarification," she said. “I spent two days trying to reach out to people ... just going through the process of trying to resolve the issue with the bill. I was willing to pay, but it's just so many people I have to talk to."

The amount UCHealth collects from lawsuits is about $5 million per year, according to the health system. That represents 0.07% of the net patient revenue that UCHealth reported receiving last year.

UCHealth officials argue the lawsuits are an unfortunate necessity in the health care business. Hospitals need money to continue operating, and sometimes bills go unpaid.

At a time of rising costs and budget crunches, they said they are providing more uncompensated care — which UCHealth defines as charity care that it has decided to provide for free, as well as so-called bad debt, which is care that the system wanted to be paid for but wasn’t, and shortfalls in Medicare and Medicaid payment rates. The amount was $580 million in the most recent fiscal year, a more than $200 million increase over 2019 numbers. They said the money collected annually from lawsuits is enough to pay for the salaries and benefits of approximately 60 health care workers.

Cooper Melmed, the chief legal officer, said the large number of lawsuits simply reflects the large volume of patients UCHealth sees in a year.

“I can tell you it is a common practice,” she said. “I don't think UCHealth is an outlier here. We're not an outlier in the number, and we're not an outlier in the way to go about this.”

But not all large hospital systems in Colorado choose to pursue patients this way. The second-largest hospital system in the state, for-profit HealthONE, says it does not sue patients over debt. AdventHealth and Banner Health, two other large nonprofit hospital systems operating in Colorado, also said they do not sue patients.

SCL Health, which is a nonprofit like UCHealth, had sued hundreds of patients in Colorado per year under its own name, according to an analysis of court records. But when the system merged with Intermountain Health in 2022, it stopped.

“This was done to better align with our mission,” Intermountain spokeswoman Sara Quale wrote in an email.

Debt collection lawsuits are among the most devastating products of a medical debt crisis that now burdens some 100 million people in the U.S., threatening patients’ homes, their savings, even their health. 

An investigation by KFF Health News in 2022 found that about two-thirds of hospitals across the country have policies that allow them to sue or take other legal action against patients, including garnishing wages. But in recent years, major hospital systems in other states have chosen to stop suing patients over medical debt, often following negative publicity.

One way to avoid that publicity is to sue under a debt collector’s name.

The nonprofit Pew Charitable Trusts, which has researched debt collection litigation across the country, found third-party collectors suing on behalf of creditors in Oregon and Utah.

The Sun and 9NEWS found at least two other hospital systems in Colorado — nonprofits CommonSpirit Health and Children’s Hospital Colorado — that admit to using debt collectors to file lawsuits on their behalf but not under their name. Because of this, it is unclear how often they sue patients.

Some hospitals are more transparent in their litigation. A spokesman for National Jewish Health wrote in an email that, “If a lawsuit is deemed necessary, we use our own name in all matters.” 

Cooper Melmed defended UCHealth’s use of collections vendors and the system of having them file lawsuits under their names. She said she believes there is “complete transparency” with patients about where the suits are coming from, and she said having the lawsuits in UCHealth’s name would confuse patients.

“It would make less sense, honestly, to do that because the debt at that point is assigned to the vendor,” she said. “So the real party who has control over the suit is the vendor.”

“We are not hiding anything. There is no mystery about what's going on here.”

There was a time, though, that UCHealth did use its own name in its debt lawsuits. A 9NEWS analysis of court filings found thousands of debt cases in 2018, 2019 and the early months of 2020 where UCHealth was the named plaintiff.

Cooper Melmed said UCHealth paused all debt-collection lawsuits for about six months when the COVID-19 pandemic hit. When that pause ended, UCHealth’s debt lawsuits no longer listed the hospital system as the plaintiff, according to the analysis. Cooper Melmed did not offer a clear explanation for the change, other than to reiterate that she believes suing under the debt collector’s name is less confusing to patients.

But this isn’t the only comment UCHealth officials have made about the litigation strategy.

In 2022, a UCHealth manager was deposed in a lawsuit challenging the legality of how UCHealth collects its debts. An opposing attorney asked the manager whether it benefitted UCHealth to not be named as the plaintiff in the debt lawsuits. The manager said it did.

“Why?” the attorney asked.

“It would be optically bad,” the manager responded.

“Why would it be optically bad?” the attorney pressed.

The manager responded: “It would look like UCHealth was filing these suits.”

The knock on her door came while she slept following an early morning shift at work, and Cathy Woods-Sullivan’s daughters answered fearfully. When Woods-Sullivan later asked them why they had opened the door, she said her girls, then 16 and 14, told her it was because the process server said, “I’m from the courts.”

This was in January 2019. Two-and-a-half years earlier, Woods-Sullivan’s husband of 22 years, Rodney, had died after a long battle with kidney failure. During his last years, his medical care had totaled more than $800,000, Woods-Sullivan said. And though it was covered by Medicaid, she said the bills still arrived at their house.

In the fog of grief after Rodney’s death, more medical bills arrived. Some were for one of her daughters, and one was for her, from a day in 2018 when she went to the University of Colorado Hospital ER thinking she was having a heart attack but was told it was a panic attack.

The bills seemed to swirl around her — from the hospital, from different doctors, pay this, don’t pay that.

“I was getting so many medical bills,” she said.

When she called UCHealth, she said she was told the bills would be covered. She wondered why she was even receiving bills for her own care because she had insurance and thought she had reached her deductible.

It wasn’t until she was sent a letter by one of UCHealth’s collections vendors, Credit Service Company, that she said she finally saw an itemized list of what UCHealth claimed she owed them. And even then it didn’t seem right. Three of the bills that were included in the letter were for her daughter, who Woods-Sullivan believed was covered by Medicaid at the time.

Woods-Sullivan said she twice went to University of Colorado Hospital, hoping to talk with someone who could help her receive financial assistance or come to a resolution.

“They told me there's nothing they can help me with,” she said. “It was turned over to a credit collection agency.”

After she was sued, Woods-Sullivan enlisted the help of Colorado Legal Services, a nonprofit that works with low-income Coloradans. That, alone, makes her case unique, as the vast majority of people facing medical debt lawsuits don’t have legal representation.

But once her lawsuit was settled, Woods-Sullivan did something else. She became one of the lead plaintiffs in the lawsuit against Credit Service Company that alleges that the company’s work on behalf of UCHealth violates state law.

“It is our position that if UCHealth wants to sue people for unpaid medical debts, then UCHealth has to put its name on the lawsuit,” said David Seligman, an attorney and the executive director of Towards Justice, the nonprofit legal organization that is representing the plaintiffs in the case.

Lawyers for Credit Service Company contend that once CSC has decided to initiate a lawsuit, its agreement with UCHealth says the system “irrevocably assigns all rights, title and interest” in the debt to CSC. Citing the lawsuit, a representative of CSC declined to comment for this story.

The lawsuit, which was filed in 2020 and is seeking class-action status, remains pending in Denver District Court.

Recently, Woods-Sullivan said, she was involved in a car accident with a semi truck off of Interstate 225 in Aurora. Paramedics arrived and asked whether she wanted to go to the hospital. And, though she was in pain, she said no.

“I'm scared to go to the hospital,” she said. “I'm scared of the debt and to go back through what I've been through. I never want to ever feel that way, ever again.”

UCHealth was formed in 2012, when the University of Colorado Hospital — which is overseen by a quasi-governmental entity called the University of Colorado Hospital Authority — merged with Poudre Valley Health System.

The resulting nonprofit soon began a campaign of mergers and new construction that has created a system with more available hospital beds and more revenue in Colorado than any other, according to one recent report. UCHealth’s latest merger, with Parkview Health System in Pueblo, gives it a presence in every major population center on the Front Range.

Today, UCHealth says it is the largest provider of Medicaid services in the state. 

UCHealth is also the state’s largest provider of what is known as “community benefit” — that is, positive contributions that nonprofit hospitals make to their communities in order to justify their tax-exempt status. According to UCHealth, it provided $1.2 billion worth of community benefit in the most recent fiscal year, some of that in the form of education to medical students and more than half of that in the form of care to uninsured or underinsured patients. (A recently released state report put UCHealth’s community benefit value lower, at $564 million for 2021, though that still ranks it first in the state.)

“With every patient that walks through our door, our No. 1 concern is patient care,” said Cooper Melmed, the chief legal officer.

According to UCHealth, patients receive information about prices and available financial assistance even before their scheduled visit. They then receive as many as seven financial assistance letters, four billing statements and two phone calls before the bill is sent to collectors, who then conduct their own outreach efforts.

Even if the hospital never hears from a patient, Cooper Melmed said, UCHealth also checks publicly available databases to screen them for eligibility for financial help. Cooper Melmed said if at any time during the process a patient contacts UCHealth to work out a payment solution, they should be removed from the collections process.

Dan Weaver, UCHealth’s vice president of communications, said last year’s number of lawsuits — 1,610, the smallest annual total in the last five years — is evidence that the hospital system’s practices are working to reduce bills going to the courts.

Of those who get sued, Cooper Melmed said: “We are talking about the tiniest fraction of patients that we simply cannot partner with earlier in the process.”

At least, that’s how UCHealth says it’s supposed to work.

The pickup truck zipped down Interstate 25 just north of Colorado Springs at 75 mph early one morning in January 2021.

Lorena Sanchez, her husband, her mother-in-law and her sister-in-law were on their way to the Mexican state of Zacatecas, where they planned to visit relatives and spend time at the graves of Sanchez’s parents, part of an annual tradition. The deer, she said, leaped from the shadows.

The animals collided violently with the vehicle and sent the truck into a spin. The truck’s airbags exploded open to cradle those inside the vehicle. When the truck came to a stop, Sanchez remembers thinking, “We were lucky to survive that kind of accident.”

What came next would prove far more stressful and more devastating.

When the paramedics arrived, Sanchez, who moved to the United State from Mexico decades ago and is now a U.S. citizen, said she told them she was uninsured and didn’t want to go to the hospital. But her chest hurt from where the seat belt squeezed her tight and she felt light-headed, so she relented.

At UCHealth Memorial Hospital North, doctors performed an X-ray and a CT scan, according to medical paperwork she showed The Sun and 9NEWS. She remembers the visit lasting no more than 90 minutes, though her paperwork shows a longer duration — about three hours. Regardless, with no major injuries noted, she was soon on her way.

Later that spring, she said, she received a bill for more than $24,000.

She was shocked. Sanchez, who lives in Aurora, said she drove twice to the hospital in Colorado Springs to ask whether she qualified for financial assistance or reduced charges as a self-pay patient. Eventually, she was given a phone number to call so she didn’t have to continue showing up in person.

“I called lots of times, tons of times,” she said.

Finally, in March 2022, more than a year after the accident, Sanchez received a letter from UCHealth.

“According to federal poverty guidelines and the documentation that we received, your application has been APPROVED for Charity assistance,” the letter stated.

It told Sanchez that she was entitled to a 73% discount on hospital charges. Her $24,000 bill had just become $6,000. It was still a lot of money — more than she could afford without entering into a payment plan — but it was massively less daunting.

Then, two weeks later, a new bill from UCHealth arrived in the mail, demanding $24,528.87. When she called for clarification, she was told she owed the lower amount. But the next month, another bill for the higher amount arrived. Round and around she went.

In July 2023, almost two-and-a-half years after the accident, there was a knock at her door, and on the other side stood a man serving her with a lawsuit by Credit Service Company. The amount allegedly owed: $24,528.87.

“I said there’s a misunderstanding,” she said. “There’s something going on.”

She said she made a payment on the debt in July after having been told that doing so meant she wouldn’t need to show up in court. But, when she didn’t show, the attorney for CSC filed a motion in August for default judgment against her, though now with a lower amount listed as being owed: $6,120.79, plus some court costs and attorney fees. The judge granted the motion.

When Sanchez learned of this, she said she was devastated. She filed a hand-written motion with the court, stating, “Please know that I have been sued because of (a) misunderstanding. … I apologize to you! I would like to continue making small payments, please!”

When 9NEWS and The Sun told UCHealth officials about Sanchez’s story, Cooper Melmed called it concerning.

“That's not at all what we strive for,” she said.

After questions from The Sun and 9NEWS, Weaver, the UCHealth spokesman, said Sanchez’s experience was the result of billing errors.

The hospital originally sought payment from her auto insurance carrier, which denied the claim. That put Sanchez into the “self-pay” category, but her financial assistance discount didn’t transfer with her. The hospital’s system showed that the financial assistance application had been accepted, but it didn’t apply the discount to her bill.

“We have since corrected the issues that caused those errors,” Weaver wrote.

Weaver said a UCHealth billing expert conducted a review of Sanchez’s account, noticed the error and told CSC, which caused the company to change the amount it was seeking in the lawsuit.

Today, Sanchez is still making payments — $150 a month, a rate that will see her pay off the debt around the start of 2027. She said her blood pressure and anxiety levels have skyrocketed since the accident, largely, she believes, tied to the debt and billing issues. But she refuses to go to a hospital to seek care, instead preferring to seek alternative medicine treatments in Aurora or to drive to Mexico to visit doctors there.

She said she tells friends to avoid hospitals as much as possible, “unless you can’t breathe or you are bleeding.”

She has, in short, become an example of a particular kind of health care failure: A patient who says her treatment made her sicker. A patient who believes the hospital causes more injury than the accident.

“It’s not the doctors or the nurses,” she said. “It’s the system. It’s being organized for this.”

Noam N. Levey of KFF Health News and Anna Hewson of 9NEWS contributed to this report.

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