BAMC Surprise Medical Billing: A Level 1 Nightmare

By Barry H. Beer

January 27, 2017. It had grown dark and cold outside. Julius had places to go on his Harley Electra Glide. The weather was no deterrent for the twenty-five-year-old Army veteran. As he approached the 3600 block of Commercial Avenue in San Antonio, there were no vehicles ahead or behind him. The road was his own, as he liked it. Then, seemingly out of nowhere, a Ford Mustang came from the opposite direction and suddenly turned in front of him. There was no way to avoid the impact. It was devastating.

Julius was rushed to the nearest Level 1 Trauma facility, Brooke Army Medical Center (BAMC), because the other such local facility, University Hospital, was farther away. He remained in a coma for seventeen days. He underwent multiple surgeries to reconstruct his face, skull, and shattered wrist. Countless pieces of titanium became permanent new skeletal fixtures. He was eventually discharged to live with his mother and start the agonizing process of recovery. He recalled nothing of the accident.

Suffering from disabling pain and memory loss, Julius thought the worst was behind him. It was not. Months later, in the mail, a bill arrived from BAMC. It came from BAMC’s Uniform Business Office (UBO), and it read: “Balance due: $390,900.38.” The billing notices kept coming until in September, some eight months after hospitalization, he received this notice:

This is the third and final attempt to collect your outstanding debt. Please be advised that your account balance is delinquent and referral to the US Department of Treasury is imminent. In accordance with the Debt Collection Improvement Act (DCIA) of 1996 and the Digital Accountability and Transparency Act (DATA), federal agencies are required to refer non-tax debts to the Department of Treasury within 120 days of delinquency. Neither the UBO nor the Military Treatment Facility where you received your services has the authority to grant a waiver to collect the charges related to these services. The UBO cannot assist you in obtaining a waiver and your debt cannot be placed on hold while you seek a waiver. You have the right to inspect and copy government records related to these charges and request a review of how we determine your charges; however, this request does not alleviate your financial responsibility.

Julius had no means to even begin to pay such a large debt. By the summer of 2019, he was again employed, though very much still recovering from his injuries from the accident two years earlier. On July 30, 2019, Julius received a letter from Coast Professional, Inc., entitled “Notice of Intent to Initiate Administrative Wage Garnishment Proceedings.” It read:

This notice is from Coast Professional, Inc., a private collection agency on behalf of the US Department of Treasury, Bureau of Fiscal Service. Fiscal Service, the current holder of your outstanding delinquent federal obligation, on behalf of Department of Defense, has placed your account with the agency for collection. The current balance listed above, as due and owed, may be accruing daily interest and penalties, the actual amount owed may be different than what is stated.

Julius stared for minutes at the notice from the collection agency, fixated and motionless. In the top right corner, next to the account number it read: “Current balance due: $632,307.56.” Due to penalties, costs, fees, and interest, his original principal balance had nearly doubled.

As an honorably discharged veteran, he wondered why the VA would not pay for his medical services at BAMC. He soon discovered that, because he had neglected to enroll with the VA system upon his discharge, he was not qualified to have the VA pay his bill. He was told that—other than active military or a retiree or covered family member—all other civilians were responsible for full health care billing. For BAMC billing purposes, he was a civilian. Julius had no private health insurance on his own.

The driver of the Mustang maintained only minimum insurance limits of $30,000, and the settlement tender of the injury claim did not even make a dent in Julius’s bill. Adding insult to already horrific injuries, within weeks of Coastal’s garnishment warning letter, Julius watched his paycheck being docked, with thousands of dollars quickly being stripped away. Because of fees and penalties, the balance due continued to rise, despite multiple garnishment payments. He would certainly die still owing the lion’s share of the debt, he thought to himself.

To make matters worse, the debt was destroying his credit. He was unable to move out of his mother’s house and purchase his own home, or even rent an apartment. All attempts to try to resolve the debt by contacting the Department of Treasury, BAMC, and Coast Professional, were unsuccessful. Somehow, BAMC’s bill had to be paid.

In response to an inquiry about a case with facts similar to Julius’s, a BAMC spokesperson provided the following statement to News4 in San Antonio: “We understand the billing process is a confusing and complicated process to navigate. BAMC works diligently to educate patients and family members prior to discharge to provide them with the necessary points of contact to aid in their navigation of this process. . . . BAMC UBO (Uniform Billing Office) stands by to help explain any aspect of the federal billing and collection process.”1

Numerous news reports, Facebook posts, and anecdotes of other similarly situated patients directly contradicted the foregoing assertion. Julius, for example, did not receive UBO assistance in clarifying his bill or even providing an itemized statement. He was unable to get any real assistance in navigating the billing and payment process. There certainly was no assistance in seeking an adjustment, waiver, or even a payment plan. Once the debt was transferred to the Department of Treasury for collections, it effectively became untouchable.

Coastal’s garnishment letter did include a hearing request form allowing debtors to object to the garnishment of wages by requesting a hearing. Nowhere on the form, however, was there a box to be checked in order to seek a waiver of the medical debt. The only potential grace offering was indicated in a section entitled “Garnishment amount— proposed garnishment would cause financial hardship.” The debtor was required to provide a “signed financial statement, along with copies of earnings and income records and proof of expenses” on a Treasury Department Financial Statement Form, downloadable from the internet. Based on Julius’s previous lack of success in trying to resolve the matter with the government, he decided sending in the financial form was a waste of time. Furthermore, it would only possibly halt the garnishment, not reduce or eliminate the debt.

Julius was not alone. His situation was much like that of a variety of other cases. News articles with titles like “BAMC Doctors Saved Their Lives, Now BAMC Bills Threaten Their Livelihood”; “Burn Victim Facing $98,000 in Surprise Charges”; and “America’s Most Powerful Debt Collector,” were immediately evident upon inputting the words “BAMC” and “billing” during an internet search. These news stories documented the similar plight of badly injured civilians taken to BAMC, without a choice in the matter, only to be confronted with the nightmare of enormous post-hospitalization bills.

According to an article in The Atlantic magazine, citing data from the Defense Health Agency, civilian patients taken to military hospitals reportedly owed a debt of nearly $200 million in 2018.2 Once the debt got transferred to the Treasury Department, not only were wages subject to withholding, but so were tax refunds and even Social Security checks.3 Unlike in previous years, when BAMC often exercised discretion by waiving medical billing for patients who were unable to pay, its current policy is to pursue debtor patients like Julius aggressively.

In February 2013, the Brooke Army Medical Center Facebook page posted the following notice:

As of Jan. 30, 2013, at the direction of the U.S. Army Medical Command Chief of Staff, patient medical bills less than $100,000 and more than 90 days past due will be transferred to the US Treasury Department for collection. . . . Once overdue medical bills are transferred, the hospital will no longer be able to accept payments or negotiate a repayment plan. . . . The U.S. Treasury Department will apply fees, penalties and interest to debt transferred for collection.4

In August 2014, the Inspector General of the U.S. Department of Defense issued a report entitled “Delinquent Medical Service Accounts at Brooke Army Medical Center Need Additional Management Oversight.”5 The Inspector General’s report found that BAMC and the Uniform Business Office (UBO) did not effectively manage delinquent medical services accounts.6 As a result, BAMC was deemed to have missed opportunities to collect approximately $10.4 million in delinquent payments. The report concluded that BAMC needed to immediately improve its collection efforts by taking aggressive actions to collect the delinquent debts.7

The report acknowledged that BAMC’s mission was to “promote health and provide quality, compassionate, patient-centered care, while developing health care professionals and optimizing readiness.”8 Still, the emphasis of the reporting was the urgent requirement that BAMC promptly establish procedures for management and collection of delinquent medical services accounts. The Inspector General recommended significantly increasing the dollar reimbursements for services provided, as well as making more aggressive use of the Federal Debt Administrative Wage Garnishment Tool.9

Suffering from disabling pain and memory loss, Julius thought the worst was behind him. It was not. Months later, in the mail, a bill arrived from BAMC. It came from BAMC’s Uniform Business Office (UBO), and it read: “Balance due: $390,900.38.

Unlike BAMC, non-profit and private hospitals generally must follow federal and state charity care laws when collecting medical debts from low income or uninsured patients.10 These laws instruct them to write off “unpaid debts.”11 In contrast, federal hospitals such as BAMC must use “prompt and aggressive action” to settle debts according to regulations from the Department of Defense.12

The federal government can also be more aggressive than private debt collectors, in that the Treasury Department does not need a judge’s order before garnishing wages. In an interview by Advisory.com, a BAMC spokesperson remarked: “Per federal law, [military facilities] do not have the authority to waive, compromise, or terminate any debt incurred when a civilian emergency patient is seen.”13 The BAMC spokesperson added, “BAMC bills patients once all efforts to collect from insurance companies have been exhausted”; and once a debt is transferred to the Treasury Department, “BAMC may not interfere with the collection actions.”14

Despite the fact that representatives of BAMC, the Treasury Department, and the collection company all told Julius that his $600,000-plus bill could not be waived, he later discovered that a waiver was, in fact, available. Such waiver would have saved him the added trauma of collection notices and garnishments. In 1962, Congress enacted the federal Medical Care Recovery Act (MCRA).15 This Act provided that the federal government shall have the right to recover, from third-party tortfeasors, the cost of medical care furnished by the government or at government expense, to persons injured as a result of thirdparty negligence.16 Specifically, pursuant to 42 U.S.C. § 2652(b), the government was allowed to adjust or waive medical billing as follows:

Third Party Liability for Hospital and Medical Care: Regulations

(b) Settlement, Release and Waiver of Claims. To the extent prescribed by regulations under subsection (a), the head of the department or agency of the United States concerned may (1) compromise, or settle and execute a release of, any claim which the United States has by virtue of the right established by section 2651 of this title; or (2) waive any such claim, in whole or in part, for the convenience of the Government, or if he determines that collection would result in undue hardship upon the person who suffered the injury or disease resulting in care or treatment described in section 2651 of this title.

Subsection (c) of the MCRA went even further to protect patients/debtors who had received governmental medical care for injuries caused by a third party’s negligence. It read:

(c) Damages Recoverable for Personal Injury Unaffected No action taken by the United States in connection with the rights afforded under this legislation shall operate to deny to the injured person the recovery for that portion of his damage not covered hereunder. T

he foregoing subsection required facilities such as BAMC to evaluate and consider the injured party’s other personal injury damages when deciding upon a waiver or compromise of the medical debt. This was to include: any permanent injuries incurred; pain and suffering; decreased earning power; and any medical expenses which the injured party has borne or will bear in the future.17 Further considerations were also to be made by the government in deciding whether to waive or reduce medical debt. Specifically, attorney fees and out-of-pocket costs for bringing a recovery action for the associated personal injury claim were to be taken into account.18

The MCRA clearly applied to the facts of Julius’s case. He suffered tremendous personal injury damages, caused by third-party negligence, all resulting in significant undue hardship. Even though his circumstances obviously warranted waiver of his medical debt, BAMC never offered him a waiver or a bill reduction. The availability and applicability of the MRCA was never broached by BAMC.

After watching his paycheck being garnished and fearing the loss of his upcoming tax refund, Julius finally decided to seek legal help. He ultimately sought assistance from the law firm of this author. He was desperate to end his worsening situation. A complaint seeking declaratory relief was promptly filed and served upon both the Assistant United States Attorney for the Western District of Texas and the United States Attorney in Washington, D.C. Even before the government filed an answer, the local U.S. Attorney contacted Julius’s counsel. The garnishment was halted, and the debt was immediately recalled from the Treasury Department.

After Julius’s counsel provided the government a summary outlining Julius’s financial hardship, a formal settlement was soon reached. The government asserted its right to recover the cost of medical care rendered, pursuant to a statutory lien citing 10 U.S.C. § 1079(b). Meanwhile, the Plaintiff, Julius, relied upon 42 U.S.C. § 2652(b), seeking a waiver. In return for dismissal of the Complaint, the government agreed to waive its statutory lien. Formal settlement was entered in April 2020, just before Julius would have lost his tax refund check.

Two clients of this author’s firm are currently awaiting the outcome of their pre-litigation attempts to resolve outstanding BAMC medical debts. In one instance not involving a liability claim, the civilian’s health insurance paid approximately $55,000, at in-network rate, towards a bill of $115,000. The balance billing of $60,000 was claimed by BAMC as due and owed. In a separate case, an automobile collision with an uninsured driver caused over $25,000 in medical debt. The patient is indigent and uninsured. Both clients have submitted detailed proof of financial hardship. In both cases, the threat of a declaratory judgment action and a demand for immediate recall of garnishment action was raised in early negotiations with the U.S. Attorney’s office. Fortunately, recall has occurred in both cases.

In the same months during which Julius was successful in negotiating a waiver of his outstanding BAMC bill, United States Representative Joaquin Castro, from San Antonio, proposed legislation that would allow the government to waive medical bills for civilians who were unable to pay for the cost of military medical care at facilities like BAMC.19 Representative Castro remarked, “Military trauma teams develop invaluable surgical skills and competency due to the high volume of civilian patients treated at BAMC—a number that cannot be duplicated treating only the active-duty military population. The civilian-military relationship is mutually beneficial as it saves lives, both on the battlefield and in our community.”20 Castro noted, “BAMC and University Hospital serve as the only Level 1 certified trauma centers in a twenty-two-county region in Southwest Texas, an area that covers more than 26,000 square miles and services more than 2.2 million people.”21

Through House Bill 6394, Representative Castro proposed an amendment to the National Defense Authorization Act, 10 U.S.C. § 1079 (“NDAA”), to reform billing practices, and that amendment became law in January 2021.22 Previously, 10 U.S.C. § 1079(a) and (b) read as follows:

Procedures for Charging Fees for Care Provided to Civilians; Retention and Use of Fees Collected:

(a) Requirement to Implement Procedures—The Secretary of Defense shall implement procedures under which a military medical treatment facility may charge civilians who are not covered beneficiaries (or their insurers) fees representing the costs, as determined by the Secretary, of trauma and other medical care provided to such civilians.

(b) Use of Fees Collected—A Military medical treatment facility may retain and use the amounts collected under subsection (a) for— (1) trauma consortium activities; (2) administrative, operating, and equipment costs; and (3) readiness training. Now, however, 10 U.S.C. § 1079(b) reads as follows:

(b) Waiver of Fees—The Secretary may waive a fee that would otherwise be charged under the procedures implemented under Subsection (a) to a civilian who is not a covered beneficiary if:

(1) The civilian is unable to pay for the cost of the trauma or other medical care provided to the civilian, (including any such costs remaining after the Secretary receives payment from an insurer for such care, as applicable); and (

2) The provision of such care enhances the knowledge, skills, and abilities of healthcare providers, as determined by the Secretary.

While being interviewed about the new law on a CBS Newshour broadcast, Congressman Castro stated:

Often times, folks are unconscious and not making a decision about which hospital they’re going to go to. There’s a good reason why bills for civilian patients who can’t afford to pay should be waived: this a training hospital where members of our military are trained on treating trauma . . . and so, there’s a benefit to the United States government and to the military of being able to see these patients. And yet, that really wasn’t being taken into account when people were being charged.23

Despite medical bill waivers being allowable under the 1962 Medical Care Security Act and Castro’s 2021 amendment to the NDAA, nowhere is a patient’s right to seek a debt waiver or compromise ever mentioned in the BAMC medical bill brochure currently posted online by the Department of Defense.24 In fact, it states just the opposite, repeating that: “As a military treatment facility, BAMC does not have the authority to compromise, waive, settle or suspend a debt.” Julius’s case, as well as those described in various news articles online, confirm that—to the contrary—BAMC does have authority to waive or settle and compromise civilian medical bills. This is even more true now, with the passage of the amendment to the NDAA, granting the Secretary of Defense authority to waive civilian medical debts in all cases, not just in tort cases, as was available in past legislation.

The passage of both state and federal laws in recent years has addressed some of the BAMC billing predicaments facing civilians. Earlier this year, Texas lawmakers passed Senate Bill 935, requiring that workers’ compensation insurance reimbursement rates for medical care provided at a federal military treatment facility be at the same rate provided by federal regulations.25 S.B. 935 also clarified that medical care provided at these medical facilities is exempt from certain state workers’ compensation requirements involving billing and pre-authorization.26

Additionally, in June 2021, with the passage of Texas House Bill 2365, BAMC became recognized as a participating Medicaid provider. Upon its passage, author Ray Lopez proclaimed, “H.B. 2365 will ensure that our most vulnerable population who receive trauma care from a military treatment facility will not be saddled with excessive medical debt.”27 Finally, in recent years, BAMC was also authorized to bill Medicare for civilian patients. As an added note, federal employees who have civilian emergency billing debts owed to BAMC are deemed eligible for a compromise or reduction of their bills, if income and assets meet certain thresholds, due to the inability to pay. Federal employees are eligible for the reduction once they complete a “Financial Statement of Debtor” form, found on the Department of Treasury website.28

In 2019, the “End Surprise Billing Act” was passed by the 116th Congress under H.R. 861.29 The Act, which becomes effective in 2022, places limits on unscheduled “surprise” outof-network health care charges by doctors and hospitals. It addresses expenses often resulting when medical care is received in an out-ofnetwork emergency room. The Act also places limits on so-called balance billing, in which health care providers charge plan enrollees for the balance of an out-of-network bill, when an insurance company does not pay the full amount. The new law effectively holds patients harmless from surprise bills and prohibits outof-network providers from balance billing unless they give patients 72-hour notice of their network status and an estimate of charges.

Until recently, BAMC was considered an out-of-network hospital by health insurance carriers. Still, even with in-network status, there are numerous stories and news articles describing bill processing failures by BAMC. These have included failing to file health insurance claims—either timely or at all; failing to follow up on insurance appeals procedures; and failing to provide mandatory itemized billing statements, as required by health insurance carriers. This flawed interaction between BAMC and health insurance providers has resulted in the complete failure of health insurance payment or a substantial delay in payment, culminating in the initiation of BAMC collection efforts. Finally, even when health insurance innetwork payment is received, BAMC has nevertheless balance billed, pursuing the civilian patient for charges above the lump sum payment received from health insurance companies. Other than providing documentation of the patient’s financial inability to make payment on an outstanding medical debt, there are no provisions as to which cases warrant or require a waiver, and which do not. Accordingly, there will likely be multiple cases in which ligation will need to be initiated to have the statute interpreted and applied.

Pursuant to the 2021 amendment to 10 U.S.C. § 1079(b), the Secretary of Defense “may waive a fee . . . when the civilian is unable to pay for costs of the trauma or other medical care provided.”30 This language is discretionary and does not provide any certainty of a waiver. Also, it does not, on its face, provide alternatively for acceptance by the government of a reduced payment in closure of the debt. Further, what constitutes “inability to pay” in order to be eligible for a waiver is not clear. Will the Treasury have the final word, as it does in cases where Financial Statement of Debtor forms are submitted by federal employees seeking a bill reduction? Will a local BAMC official or Assistant U.S. Attorney have authority to decide? At least as to the latter question, this author’s experience thus far has been that the local Assistant U.S. Attorney, interacting with a BAMC representative, has such authority. Unfortunately, however, it appears that only the threat of litigation prompts the negotiation process.

Coincidentally, at the time this article was drafted, the United States Army published a bulletin entitled “BAMC Launches Initiatives to Help Alleviate Billing Concerns.”31 The bulletin begins by expressing BAMC’s concern for “helping patients navigate the complex maze of medical billing,” with the hope of “alleviat[ing] billing concerns, particularly for civilian and trauma patients.”32 According to Air Force Colonel Patrick Osborne, BAMC wants its “patients to focus on the recovery, not be stressed with billing issues.”33 One so-called “new and improved billing process” is the automatic transfer of any remaining balances directly to the Treasury Department’s Centralized Receivables Service (CRS). This occurs after 120 days of insurance processing. The CRS has the ability to set up long-term payment plans or suspend collections based on “demonstrated hardship” and is not required to tack on fees and penalties generated by the Treasury Department.34

Additionally, the Army bulletin indicates that BAMC will be bringing on trained financial counselors to help patients navigate the insurance and payment processes and serve as liaisons with insurance companies. The counselors will also help determine whether uninsured patients are eligible for enrollment in programs offering payment assistance. The Army’s posting states that—while BAMC is not an authorized to enter into a contract with insurance carriers and, thus, is treated as being “out-of-network”—the law requires all insurance companies to consider federal health care facilities as “in-network” for billing purposes.35 Additionally, for billing transparency, effective January 2023, BAMC will be required to update its billing system to provide itemized patient billing statements.

The Army’s bulletin concludes by stating that BAMC is committed to ensuring “our patients are treated with empathy and compassion in every aspect of their care . . . ensuring that they receive the best possible financial counseling and education.”36 However, personal case histories from individuals such as Julius and other clients of this author, as well as multiple news stories and social media accounts, have shown this statement to be untrue. Even after having suffered a severe physical trauma that was treated at BAMC, patients still face the subsequent emotional trauma of having to try to resolve an enormous BAMC bill. Regrettably, this situation remains a Level 1 nightmare . . . at least for now.

Barry H. Beer is senior partner at Law Offices Beer & King, P.C., a primarily personal injury firm. He is a former long-time adjunct professor at St. Mary’s Law School.

ENDNOTES

1 Dillon Collier & Joshua Saunders, BAMC Threatened to Turn Over Car Crash Victim to Dept. of Treasury After Sending Her Bill for $16K (Feb. 27, 2020), News 4 San Antonio, https://www.ksat.com/news/defenders/2020/02/28/bamc-threatened-to-turn-overcar-crash-victim-to-dept-of-treasury-after-sending-her-bill-for-16k/.

2 Jared Bennet & Olgha Khazan, Olga, America’s Most Powerful Debt Collector, The Atlantic (Jan. 21, 2020), https://www.theatlantic.com/health/archive/2020/01/militaryhospitalmedicaldebt/605194.

3 Id.

4 BAMC, Late Patient Bills Will be Transferred to US Treasury, Facebook (Feb. 1, 2013), https:// www.facebook.com/BrookeArmyMedicalCenter/posts/10151385904848631.

5 Inspector General, U.S. Dept. of Defense, Delinquent Medical Service Accounts at Brooke Army Medical Center Need Additional Management Oversight (Aug. 13, 2014). https:// media.defense.gov/2014/Aug/13/2001713389/-1/-1/1/DODIG-2014-101.pdf.

6 Id.

7 Id.

8 U.S. Dept. of Defense, Delinquent Medical Service Accounts at Brooke Army Medical Center Need Additional Management Oversight (Aug. 13, 2014), https://media.defense.gov/2014/Aug/13/2001713389/1/1/1/ DODIG2014101.pdf.

9 Id.

10 Advisory Board, The Most Aggressive Debt Collector in America? (Jan. 23, 2020), https://www.advisory.com/ en/dailybriefing/2020/01/23/bamcdebt.

11 Id.

12 Id.

13 Id.

14 Id.

15 42 U.S.C. §§ 2651-53.

16 Id.

17 32 CFR § 842.144(a) (1968).

18 46 Notre Dame Law Review 259 (Jan. 1, 1997).

19 H.R. 6395, 116th Cong. (2021).

20 CBS News, Burn Victim’s $1.7 Million Medical Bill from Military Hospital is Waived (July 23, 2021), https:// www.cbsnews.com/news/burn-victim-1-7-milliondollar-medical-bill-military-hospital-waived.

21 Id.

22 H.R. 6395 (2021); see also 10 U.S.C.1079(b).

23 CBS News, Burn Victim’s $1.7 Million Medical Bill from Military Hospital is Waived (July 23, 2021), https:// www.cbsnews.com/news/burn-victim-1-7-milliondollar-medical-bill-military-hospital-waived.

24 U.S. Dept. of Defense, Understanding Your BAMC Bill, https://bamc.tricare.mil/Portals/143/documents/ Billing/UBO-billing-brochure.pdf?ver=Xv4_ eV5CZYWplcdqP7Q5Bg%3d%3d.

25 Texas S.B. 935 (2021); see also Tex. Labor Code ch. 413, subch. B, § 413.0112.

26 Id.

27 Texas House of Representatives press release, (June 17, 2021), https://house.texas.gov/news/ press-releases/?id=7505.

28 U.S. Dept. of Defense, Resources for Taxpayers (April 22, 2021), https://www.fiscal.treasury.gov/crs/resourcesfor-payers.html#financial-statement-or-debtor.

29 H.R. 861, 116th Congress (2019), 42 U.S.C. § 1395c.

30 10 U.S.C. § 1079(b)(2021).

31 Elaine Sanchez, BAMC Launches Initiatives to Help Alleviate Billing Concerns (Sept. 1, 2021), https://www. army.mil/article/249911/bamc_launches_initiatives_to_help_alleviate_billing_concerns.

32 Id.

33 Id.

34 Id.

35 Id.

36 Id.