South Carolinians demand repeal of program that allows garnishments of tax refunds and wages

COLUMBIA, S.C. (WBTV) - More than 150 South Carolinians have reached out to the WBTV Investigates Team about their tax refunds or paychecks being garnished to offset unpaid medical debt at hospitals. More than one-third of them said they received no advanced warning of the upcoming garnishment, as required by state law.

It’s one of the latest findings in a series of WBTV Investigations on how hospital systems are often not following the rules for a state program that allows them to garnish people’s money to pay for hospital bills.

The South Carolina Department of Revenue has two programs that allow hospitals and government agencies to garnish money from residents. ‘Setoff’ allows agencies to garnish tax refunds. ‘GEAR’ gets them access to garnish people’s wages and even file liens.

There’s no one hospital responsible. Data from the South Carolina Department of Revenue shows more than 390 million dollars garnished from South Carolinians from 2018-2021 by dozens of different hospitals.

WBTV previously spoke with attorney Fred Pfeil about the lack of accountability in the programs.

“I just feel that someone needs to take responsibility for this. And right now, it doesn’t seem that there is any oversight,” Pfiel said.

Jeff Dorcick is one of 57 people who reached out to WBTV claiming they did not receive advanced notice of the garnishment, along with the process for filing an appeal.

“I didn’t know anything about that,” Dorcick said.

Chris Smith took an ambulance to the hospital after a slip and fall left him unconscious. He is insured and says he thought he squared away with the hospital, and the ambulance service, that he was covered.

“They sent a letter saying that they’re going to take the tax refund,” Smith said.

Smith says the hospital did properly notice him he would be garnished but the ambulance service did not. So when his paycheck was hundreds of dollars lighter in the middle of the pandemic, it was a shock.

“They gave me no warning,” Smith said.

Dan Quigley’s wife went to the hospital several times because of a serious condition that led to sepsis.

“To be honest, the price was no object at that point. I thought I could lose my wife,” Quigley said.

The medical bills were astronomical even after his wife’s insurance and they went from collections to having their tax refund garnished.

“I think that when they take it out next year, that’ll probably come close to wiping and wiping out my debt,” Quigley said.

But Quigley was in the military, as is his son and four generations of his family. So, he has Tricare health insurance. It was only when Quigley took his wife to a different medical facility did he learn that Tricare could have covered his wife’s bills.

“I said, hey, look, they took Tricare here, why didn’t you? And they said, well, you never told us about it. I said, well, I’m telling you now,” Quigley said.

All three men said they’ve tried working with the hospitals to set up a payment plan but have been denied.

“I guess after two years they wanted the $3000 quicker,” Smith said.

Dorcick said the whole situation is reason enough to think twice about going to the hospital in the future.

“It does when you live in the small town of Lancaster, you have one hospital you can go to and that’s it,” Dorcick said.

WBTV previously reached out to the South Carolina Department of Revenue about the lack of oversight in the Setoff and GEAR programs. A spokesperson wrote in an email “Any additional oversight would be determined by the South Carolina General Assembly.”

“The Governor of South Carolina needs to step up. The Statehouse needs to step up and close the loophole,” Dorcick said.

“They need to fix this,” Smith said.

“South Carolina shouldn’t be a debt collector for a hospital that can’t even verify people’s insurance and don’t know what’s going on.”

“They need to work on other things in the state other than collecting debts, taking it from working people and taking their tax refund,” Smith said.

UPDATE: In an email statement first sent to sister station WRDW, a spokesperson for South Carolina Governor Henry McMaster’s office said that if hospitals can’t follow the requirements for notifying patients of garnishments, South Carolina lawmakers will need to take a closer look at the issue.

“If Amazon and the U.S. Postal Service are able to notify us the moment a package arrives on our doorstep, then a hospital shouldn’t have any problem notifying South Carolinians if their paychecks or tax refunds are going to be garnished for unpaid medical bills. And if hospitals aren’t satisfactorily making contact with these people before making this decision, then it’s something the governor believes the General Assembly should take a very close look at when they come back into session next year.”

Copyright 2022 WBTV. All rights reserved.