“It needs oversight”: South Carolina law allows hospitals to garnish paychecks and tax refunds to collect medical debt

CHESTER, S.C. (WBTV) – Tons of of thousands and thousands of {dollars} have been taken from South Carolinians paychecks and tax refunds by hospitals gathering on unpaid medical payments however a WBTV Investigation exhibits solely a fraction of sufferers are submitting a protest towards one of the invasive actions allowed by state legislation.

The findings of the WBTV Investigation increase extra questions on whether or not healthcare amenities are complying with state legislation to inform sufferers of garnishments and their proper to protest and whether or not extra oversight is required for this system.

Earlier reporting from WBTV revealed greater than $390 million was garnished by hospitals, medical amenities and drug rehabilitation facilities from 2018-2021.

Jim Mayhugh was a kind of sufferers and reached out to the WBTV Investigates Crew for assist.

“I bought a invoice for roughly $8000 saying they have been going to ship me the gathering,” Mayhugh stated.

Mayhugh had an unpaid invoice from Atrium due to a mix-up between the hospital and his insurance coverage. He paid the invoice however he nonetheless acquired a letter from Atrium apologizing that his South Carolina revenue tax refund is perhaps garnished anyway.

That’s precisely what occurred.

“I bought a letter from the State of South Carolina saying we despatched all of your cash to Atrium Well being,” Mayhugh stated.

In its letter, Atrium supplied Mayhugh with a telephone quantity to name to get refunded. He stated he known as quite a few occasions however nobody at Atrium ever picked up the telephone.

Atrium finally reimbursed Mayhugh for his garnished tax refund after WBTV began asking questions, however the journey Mayhugh took to get his a refund is totally divergent from how the legislation is meant to work for sufferers and debtors.

Fred Pfeil is an legal professional with South Carolina Authorized Companies and focuses on shoppers with federal tax points. He advised WBTV tax garnishments from hospitals appears to return up time and again.

“It’s insane to assume that a lot South Carolina cash goes in direction of debt,” Pfeil stated.

South Carolina has two applications that permit hospitals and authorities businesses to garnish cash from residents. ‘Setoff’ permits businesses to garnish tax refunds. ‘GEAR’ will get them entry to garnish folks’s wages and even file tax liens.

The South Carolina Division of Income and South Carolina state legislation requires hospitals utilizing Setoff to ship debtors a selected type notifying them of their capacity to file a protest towards the tax garnishment. Mayhugh stated he by no means acquired that type.

“I ought to have gotten a discover that there was one thing unsuitable within the system lengthy earlier than they went after the cash,” Mayhugh stated.

Pfeil stated lots of his shoppers aren’t receiving the correct notification both.

“They by no means obtain any kind of letter from the company that’s claiming that they’ve a debt after which, unexpectedly, they’ve a tax refund after which it’s gone,” Pfeil stated.

“Our shoppers are low revenue, so they are surely banking on that.”

New knowledge obtained by WBTV from SCDOR reveals how few folks protest medical debt garnishments and raises extra questions concerning the legally required notifications.

Since 2020 there have solely been 14 protest hearings filed by individuals who had their tax refunds garnished by way of the Setoff program. Greater than $140 million has been garnished by way of this system over that very same time.

Beaufort Memorial is likely one of the solely hospitals within the state to make the most of the GEAR program, which permits the hospital to garnish peoples’ wages. There have been 252 protests filed towards these garnishments and 66 of the hearings discovered there was no quantity owed by the debtor.

“I used to be appalled at how many individuals really received and there was no debt related to it,” Pfeil stated.

“I might think about there are others, and why are these folks not interesting? As a result of they’re doubtless not getting the notices to attraction.”

Hospitals submit unpaid payments for garnishments to the South Carolina Division of Income. Most hospital methods really contract with the South Carolina Affiliation of Counties to submit the money owed on their behalf.

SCAC receives charges from the hospitals for submitting the debt and SCDOR receives a price for gathering it.

“It seems that there’s just one aspect being heard right here and the opposite aspect appears to be thrown away or not given their due course of,” Pfeil stated.

WBTV reached out to SCDOR about their oversight of the Setoff and GEAR applications.

A spokesperson famous their oversight is restricted to what’s allowed in state legislation, which incorporates enrolling eligible businesses and gathering and adjusting money owed.

“Any further oversight can be decided by the South Carolina Basic Meeting,” the spokesperson wrote.

The Basic Meeting final up to date the Setoff Debt Assortment Act in 2003.

“I simply really feel that somebody must take duty for this and proper now, it doesn’t appear that there’s any oversight,” Pfeil stated.

When you have had your paycheck or tax refund garnished for an unpaid medical invoice the WBTV Investigates Crew needs to listen to from you. You’ll be able to e mail David at investigates@wbtv.com.

Copyright 2022 WBTV. All rights reserved.