Judge says UK should repay money to patients whose debts it 'improperly' referred to state Revenue Department for collection

A judge has ruled that the University of Kentucky "improperly used the Kentucky Department of Revenue and state tax statutes to collect unpaid bills from patients," reports Monica Kast of the Lexington Herald-Leader: "Douglas Richards, attorney for the plaintiffs, said the final amount that will have to be repaid is not yet known, but he estimated it could be upwards of $90 million."

The Revenue Department stopped collecting debts for UK HealthCare this year because the legislature passed a law that keeps it from collecting “any consumer debt owed for health care goods and services.”

Judge Thomas Wingate

Franklin Circuit Judge Thomas Wingate ruled in a class-action lawsuit filed in 2018 on behalf of more than 5,000 debtors whom UK had referred for collection. "The department added interest . . . and a 25% collection fee, taking payment from patients’ wages and tax returns to cover the bills." Kast notes.

Wingate's ruling is not the end of the controversy, which has gone on for years. In 2018, a Fayette circuit judge ruled that UK couldn't use the Revenue Department as a collection agency, on grounds that it is not part of the state executive branch. The state Supreme Court said it was.

In defending the class-action suit, UK cited state laws that executive agencies use to recover funds that were improperly paid, but those laws "only relate to collections for payments that were improperly made because of error, fraud or abuse, Wingate wrote in Monday’s ruling," Kast reports.

UK spokesman Jay Blanton said Wingate's ruling did not address a law that allows the university to refer debts to the Revenue Department, under an agreement between the two agencies.

Kast writes, "Because it is a class-action lawsuit, people who were impacted by this policy will have the option to opt in or out of the payout. The process of gathering information from people affected and returning payments to patients could take several years," according to plaintiffs' attorney Douglas Richards.

Richards told Kast, “This is just completely bad public policy and morally indefensible, because these are two of the biggest institutions in the state — UK and the Department of Revenue — and they’re punching down on people who generally make $10 to $12 an hour,” That's why they lacked the money to pay and fell behind, he said.