Atrium refunds patient after WBTV Investigation into hospitals garnishing tax refunds

Between 2018-2021, Atrium hospitals garnished more than $20.5 million worth of state income tax refunds from patients for unpaid medical bills.
Between 2018-2021, Atrium hospitals garnished more than $20.5 million worth of state income tax refunds from patients for unpaid medical bills.
Published: Apr. 7, 2022 at 5:14 PM EDT|Updated: Apr. 7, 2022 at 7:16 PM EDT
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CHARLOTTE, N.C. (WBTV) - Hospitals, rehab centers and other medical facilities have garnished more than $390 million worth of tax refunds and wages from South Carolinians since 2018.

The garnishment process allows hospitals to collect on unpaid medical bills, but a WBTV Investigation raises questions about whether debtors are told about their legal right to protest the collection.

WBTV started investigating the debt collection process after Jim Mayhugh contacted a reporter about a problem he had with an Atrium Health bill. Only after WBTV started contacting Atrium was Mayhugh given a full refund.

Related: Atrium garnishes tax refund of patient who already paid his medical bill. He’s still waiting to be compensated.

“If WBTV hadn’t got involved, I think I’d still be trying to get ahold of somebody,” Mayhugh said.

Mayhugh’s story started at the Atrium Pineville ER after his daughter was worried he had a stroke. He was discharged the next day with a clean bill of health but only months later was given the actual bill.

“I got a bill from them for roughly $8,000 saying they were going to send me to collection,” Mayhugh said.

“I called Atrium, I spoke to them, they said insurance hadn’t paid it. So, I called my insurance companies and spoke to both of them about why it wasn’t paid, and they said Atrium didn’t send them the paperwork.”

Mayhugh’s insurance ultimately paid for the bill, but he still received a letter from Atrium apologizing that his South Carolina income tax refund might be garnished anyway.

Instead of his refund, Mayhugh received a letter from the South Carolina Department of Revenue stating all $609 of his refund had been applied to his Atrium balance and he still owed more than $7,000.

Related: Recent WBTV investigations include Atrium garnishing a tax refund and more

Hospitals and government entities are able to garnish peoples’ state income tax refunds in South Carolina for unpaid debts through the “Setoff Debt” and “GEAR” programs with the South Carolina Department of Revenue.

Setoff allows entities collecting debt to garnish tax refunds while GEAR provides additional options of garnishing wages, tax liens and levying bank accounts for an additional charge to the claimant.

Mayhugh’s $609 were taken through the Setoff program.

“It’s not a tremendous amount of money, but I would like to have it back,” Mayhugh said.

Atrium’s letter instructed Mayhugh to call the hospital to fix the problem. But he says he called twice a week and couldn’t get anyone on the line.

Mayhugh’s experience raises significant questions about whether Atrium is following the proper process for garnishing tax refunds and notifying patients of their legal right to protest the claim.

SCDOR and South Carolina state law requires claimants using Setoff to send debtors a specific form notifying them of their ability to file a protest against the tax garnishment. Mayhugh said he never received that form.

“I should have gotten a notice that there was something wrong in the system long before they went after the money,” Mayhugh said.

Atrium did not respond to any of WBTV’s emails and phone calls asking questions about their use of the Setoff program.

SCDOR says it only has records of filed protests since 2020 but in that time there is no “submitted protest documentation related to Atrium Health.”

Between 2018-2021, Atrium hospitals garnished more than $20.5 million worth of state income tax refunds from patients for unpaid medical bills.

A spokesperson for SCDOR said they are not aware of any agency failing to follow the proper procedures required in Setoff.

Hospitals have garnished hundreds of millions of dollars of tax refunds and wages since 2018. Records from SCDOR show more than $390 million garnished by hospitals, medical facilities and drug rehabilitation centers in that period. That includes more than $73 million from the GEAR program that allows claimants to garnish wages.

Document: South Carolina Income Tax Garnishments

2018-2021 Top Tax Refund Garnishers

  • Spartanburg Regional Healthcare System - $82 million
  • Lexington Medical Center - $79 million
  • Greenville Hospital Authority - $52 million
  • Regional Medical Center - $39.5 million
  • Self Regional Healthcare - $22 million
  • Atrium - $20.5 million

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