Medical bankruptcy: A South Florida case study
By Bob LaMendola
South Florida Sun-Sentinel
June 23, 2009
Self-employed with no health insurance, Dorothy Carmona began descending into debt in 2004 when she had a stroke. Next, the housing crash ruined her title business. Then last fall she was diagnosed with aggressive lung cancer.
It all came to a head this month. With a lender about to foreclose on her Pembroke Pines townhouse and years of medical bills now making up more than half the $125,000 she owes other creditors, Carmona filed for bankruptcy. Days later she learned the cancer had worsened.
“It’s been one nightmare after another,” said Carmona, 48, a single mother whose teenage daughter lives at home. “I’m ruined. I have nothing. They tell me I have five months to live. Right now I’m in a frightened mode. I don’t know what’s going to happen to me.”
Carmona is the face of a growing national issue: Health care costs are driving people to financial ruin. The problem fuels a push to extend medical coverage to the roughly 50 million uninsured and under-insured Americans.
A Harvard University study this month found that 62 percent of U.S. bankruptcy cases in 2007 were caused by or inflamed by medical bills. That’s up from 50 percent in 2001 and 8 percent in 1981.
No one tracks the causes of South Florida bankruptcies, but court figures show the recession has sent the number of filings skyrocketing in the past year. Cases in Palm Beach County are up 57 percent this year compared with the first four months of last year; Broward County cases are up 46 percent.
“Medical debt often puts them over the edge into bankruptcy,” said Boca Raton bankruptcy attorney Les Auerbach.
Not only are uninsured patients on the hook for the entire bill, they often are charged more than patients whose insurers negotiate lower prices from hospitals and doctors. While providers usually will set up payment plans, many uninsured patients cannot dig out for years, if ever. The same outcome can hit insured people if they or family members get sick.
“They get sick, they can’t work, they lose their jobs and the medical coverage runs out. They can’t pay their mortgage and they can’t pay their doctor,” said Eric Klein, a Boca Raton attorney.
“I see it every day,” said Robert Bigge, a Wilton Manors attorney. “They have the big bills. The drugs, the tests, the [doctor visits]. These people are getting nickeled and dimed to death.”
Carmona has been juggling bills for years. Her mini-stroke in 2004 was not serious but left her with big IOUs to Memorial Hospital West and doctors, to whom she still owes $11,000, her bankruptcy filing shows.
As she struggled to keep up, she said, her credit card bills began piling up. She took out a second mortgage on her modest townhouse in Tanglewood Lakes. When the tanking economy crippled her business, she was able to find a job at a title agency. But she said she wasn’t there long enough to qualify for health coverage before the cancer struck.
She had surgery, radiation and chemotherapy. This time the bills were much larger: $47,000 from Memorial Healthcare System and thousands more from doctors. She had to go on disability, but her $1,000-a-month check makes her ineligible for Medicaid.
“I was borrowing from Peter to pay Paul and keep everything going,” Carmona said. “It just snowballed. Everything goes totally out of control and [debts] ruin your credit.”
Meanwhile, the value of her home fell, so she owes $113,000 more than it’s worth. With foreclosure days away, she filed bankruptcy so she can stay in her home while the lender goes through a few more months of legalities before she will have to leave.
How common are cases like Carmona’s?
The Harvard Medical School study examined 2,300 randomly chosen bankruptcy cases around the country. The researchers counted them as medically related if debtors said illness or medical bills forced the bankruptcy, if they had $5,000 of medical debt, if they mortgaged a house to pay medical bills or if they missed two weeks of work out sick.
South Florida bankruptcy attorneys said the study counted some people for whom medical bills are only part of the problem. They said only a fraction of their cases were directly caused by medical bills, and that the economy and housing market are the biggest reasons for bankruptcy here.
Even so, the attorneys and study co-author David Himmelstein, an associate professor and physician, agreed that a serious illness carrying a few thousand dollars of bills can push people into bankruptcy.
“The disappointment of losing my home is the hard part,” Carmona said. “I bought it as a single mom and I was very proud of it. I was there 12 years. A couple more months and I’ll have to be out of here. That will be a bad day.”
Bob LaMendola can be reached at blamendola@SunSentinel.com or 954-356-4526 or 561-243-6600, ext. 4526.
http://www.sun-sentinel.com/sfl-medical-bankruptcy-062309sbjun23,0,7306845.story