Editor's note: This story originally appeared in the Virginian-Pilot in September 2007.

It's hospital day in debtors' court.

The scene repeats itself several times a month in courtrooms throughout Hampton Roads. Appearing alongside landlords, car dealers and payday lenders, representatives of local hospitals show up with stacks of paperwork, suing patients for unpaid bills - thousands of them over the course of a year, with millions of dollars due.

"High-volume plaintiffs," the judges call these medical creditors.

Most of the debtors don't show up. The few who do are sent out into the hallway by the judge. They line up and wait their turn to sit at a small table and talk to the hospital representative, who generally wants to know only two things:

How much can you pay, and how often - $150 a month? How about $100?

Every hospital in Hampton Roads uses the legal process on a large scale to collect overdue bills. Every hospital in Hampton Roads is also a nonprofit institution, meaning it is exempt from federal, state and local taxes.

In theory, the tax breaks are justified by the community benefits the hospitals deliver - particularly free or discounted care for people with low incomes.

But in many cases, instead of help, a lawsuit is on the way.

Take the case of Ramon Fernandez .

Fernandez, of Norfolk, works two jobs to earn about $25,000 a year. When he couldn't pay a $4,045 bill, Sentara Healthcare sued him and garnished his wages. He was already struggling to pay the costs of a hip replacement surgery at Bon Secours DePaul Medical Center in Norfolk.

"It's a lot of pressure on a person," Fernandez said, standing in the courthouse hallway after talking to a hospital representative. "It's going to be a tight squeeze."

Since 1969, the Internal Revenue Service has not required nonprofit hospitals to provide any specific level of charity care. In 2005, the Government Accountability Office, the investigative arm of Congress, measured charity care offered by nonprofits and for-profits and found little difference between the two.

A Virginian-Pilot analysis of statistics gathered by Virginia Health Information, a nonprofit group, found that nonprofits statewide provided charity care equal to 3.3 percent of gross patient revenue in 2005. For-profits' rate was 1.9 percent.

Nonprofit hospitals' tax breaks - and the question of whether they provide enough community benefits to justify them - are under scrutiny in Washington. The IRS, the GAO and the Senate Finance Committee are all studying the issue.

"While many nonprofit hospitals do good work, too many nonprofit hospitals get big tax breaks but provide small benefits to those in need," Sen. Chuck Grassley, the Iowa Republican who has spearheaded the Finance Committee study, said in July. Nationwide, nonprofit hospitals' tax exemptions are estimated at more than $12 billion.

The committee's staff, in a working paper released that month, recommended that nonprofit hospitals be required to dedicate at least 5 percent of patient revenue to charity care. Based on The Pilot's analysis, only one of the 17 nonprofit hospitals in eastern Virginia - Bon Secours DePaul - now meets that standard.

Some advocates for the poor say the numbers are low because hospitals fail to adequately inform uninsured patients that charity care is available.

Moreover, uninsured patients who aren't savvy enough to ask for a discount are charged full retail prices, which can be up to four times as high as those paid by private and government insurers. In such cases, those least able to pay are charged the most.

Then when bills go unpaid, the hospitals use aggressive tactics to get the money : hiring collection agencies, filing lawsuits, garnishing wages and bank accounts, even getting liens on homes.

The debts are often reported to credit-rating agencies, ruining people's credit and causing a ripple effect that can lock some into run-down housing and undesirable neighborhoods. Ultimately, many are driven to bankruptcy.

Several recent studies have found that medical debt is a major factor in at least 50 percent of bankruptcy filings.

Hospital officials say that they are working hard to communicate the availability of charity care to indigent, uninsured patients and that they file lawsuits only when patients have the financial means to pay the bill.

Raymond Hartz, executive director of the Legal Aid Society of Eastern Virginia, isn't buying it.

"That's absolutely wrong," Hartz said. "I'm sure they believe that, but it's just not true."

While every hospital in Hampton Roads has a charity care program, "very few low-income, uninsured patients are ever informed of the existence of these programs," Hartz said in testimony before the Finance Committee last fall in Washington.

Hartz said he and other Legal Aid lawyers have represented dozens of indigent clients burdened by unpaid hospital debt, none of whom had been informed of the existence of charity care. And those clients are just a sliver of the thousands being sued.

"Most nonprofits aren't distinguishable from for-profits in terms of the amount of charity they give," said Nancy Kane, a professor at the Harvard School of Public Health who has argued for a higher, better-defined federal standard for nonprofit hospital tax exemptions.

Local hospital officials defend their collection practices and their tax-exempt status. They tout a variety of community services in addition to charity care - financial support of medical education and free clinics, health fairs and the like - and point out that, unlike at for-profit hospitals, all of their income after expenses is reinvested in their medical mission.

But they also say that a health care system in which 47 million people are uninsured is dysfunctional and needs to change. In interviews with The Pilot, executives of both dominant hospital groups in the region - Sentara and Bon Secours - said they believe the nation should adopt some form of universal health care coverage.

Denise Dozier, 34, a single mother of two who lives in a trailer park in Isle of Wight County, had gallbladder surgery at the nonprofit Obici Hospital in Suffolk in 2003, before Obici's acquisition by Norfolk-based Sentara in 2006.

"I told them I had no insurance," Dozier said. "I asked them if they had an indigent care fund, but they said there was nothing they could do for me."

After the surgery, she began getting bills from the hospital and letters from its lawyer. Then the hospital went to court. Obici obtained judgments totaling $17,036 in January 2004 and filed a $3,852 garnishment action in April 2004 in Suffolk General District Court.

Eventually the bills stopped coming, but the debt stayed on Dozier's credit report.

"That bill is destroying my credit," she said. "In late '04 or early '05, we were looking to buy a double-wide. They pretty much told me I couldn't finance a pack of gum.

"So now I'm a single mother with bad credit. I hate hospitals. Unless there's something hanging off me that I can't sew back on, I don't go."

At the time of the surgery, Dozier was unemployed and still married, but her husband was only working part time. Their income in 2003 was $10,377 - half the federal poverty level for a family of four.

Under Sentara's charity care policy today, a case like Dozier's should no t end up in court. Sentara says it provides free care to patients with incomes of less than 200 percent of the poverty level, plus discounts up to 60 percent at incomes between 200 and 600 percent of the poverty level. For a family of four, the current federal poverty guideline is $20,650.

Bon Secours and Chesapeake General, the area's last remaining independent general hospital, have similar policies. Bon Secours also places an annual cap on family medical bills equal to 15 percent of income that's in excess of 200 percent of the poverty level.

The burden, however, is on the patient to ask for help - and to furnish documentation of income so the hospital can determine eligibility for charity care.

"All they've got to do is call a telephone number," said Robert Broermann, chief financial officer at Sentara. "In a perfect world, 100 percent of our uninsured patients would call in. In fact, less than 10 percent do."

Sentara uses a computer program that estimates patients' income based on credit scores. If the score indicates an inability to pay, Sentara says, it doesn't sue.

"The accounts we sue are accounts where we have validated the person's income," said Andrew Weddle, a vice president at Sentara. "It's co-pays and deductibles that they've chosen not to pay. We make sure we're not going after people who're living at the Union Mission."

The hospital has an obligation to pursue those who can afford to pay, Broermann said: "We don't want to create a culture where people feel they can go ahead and stiff the hospital."

Communication is the key, said Henry Brown, interim CFO at Chesapeake General.

"When people don't cooperate, you have to sue them to get their attention," Brown said. Sometimes, he added, the result can be a lien on a patient's property.

"That's a wake-up call of last resort," he said. "Those things get done not because the hospital is mean but because they wouldn't pay or wouldn't communicate with us."

Whatever their circumstances, hospital debtors are being hauled into court in large numbers.

In at least one case, the numbers are increasing. Chesapeake General, blaming the growing number of uninsured patients, reported filing 1,465 collection lawsuits last year, up from 1,065 in 2003.

At Sentara, where executives say they are making a conscious effort to rely less on the legal system, the trend is the opposite: 2,842 lawsuits filed last year, down from 3,567 in 2003.

Bon Secours was unable to provide comparable statistics.

Some one-day examples from local courtrooms:

>> On May 3 in Chesapeake General District Court, Chesapeake General sought 65 judgments totaling $195,785.

>> On July 10 in Virginia Beach General District Court, Sentara sought 21 judgments totaling $53,304 and 24 garnishments totaling $39,168.

>> On July 19 in Norfolk General District Court, Bon Secours asked for 91 judgments totaling $248,899.

One of those Bon Secours cases was filed against Michele Banks, 41, a disabled former dump-truck driver who lives with her mother in a small bungalow in the Norview area of Norfolk.

Banks suffered food poisoning from eating spoiled food after Hurricane Isabel in 2003.

"I was scared to go to the hospital, because I didn't have insurance," she said. "But I thought I was dying."

She was treated at Bon Secours DePaul. While there, she said, a hospital representative came in, asked about her income and told her the hospital's charity care program would take care of the charges.

But then bills started coming. Finally, Bon Secours filed for a $530 judgment.

"They stuck the warrant on the front door so everybody in the neighborhood could see it," Banks said. "That's degrading."

Unable to work because of back injuries that left her walking with a cane, Banks has had no income since 2002 except for occasional help from her ex-husband and two grown children. Seemingly, that should qualify her for charity care.

"At one point we almost had to file bankruptcy because of hospital bills," she said. "You can't afford to get sick. It's ridiculous."

Asked about Banks' case, Bon Secours spokeswoman Lynne Zultanky said the hospital's charity program requires proper documentation to assess a patient's financial need.

"When patients are unable or unwilling to provide this information," she said, "we continue with our process to actively collect unpaid debts."

What's needed, local hospital officials say, is a health care system in which people like Dozier and Banks don't avoid doctors until they become desperate.

"We want people to have a medical home - a primary care physician," said Ed Gerardo, director of community health for Marriottsville, Md.-based Bon Secours. "We really want people to be part of a health program so that they're not using the emergency room - which is a very expensive form of care - for routine care.

"Our health care system as a nation now is dysfunctional. The No. 1 complaint from people who are insured is that health care is no longer affordable. One of the reasons it's no longer affordable for a lot of people is that they are subsidizing a lot of expensive care accessed by people who are uninsured.

"At the end of the day the money has to come out of somebody's pocket. So if we're going to reduce health care costs and if we're going to improve the health status of the population, in Bon Secours' opinion, we need a different kind of health system. We need a universal health system."

It's not just uninsured people who are bearing the burden of medical debt.

Ramon Fernandez, 56, has Anthem health insurance through his employer, Eastern Virginia Medical School, where he works as a janitor. To make ends meet, he also works an evening shift at the Norfolk courthouse.

His 2006 income from both jobs was $24,788.

In July 2004, he was diagnosed with high blood pressure and referred to Sentara Norfolk General Hospital for a stress test. Anthem found that he suffered from a pre-existing condition and denied coverage.

Fernandez appealed, submitting a letter from his doctor stating there was "no possibility" of a pre-existing condition. Anthem replied that the doctor's letter was too late, coming after a 15-month deadline for supporting documentation, so the denial stood.

Sentara was awarded a $4,045 judgment in August 2006 in Norfolk General District Court and in April began garnishing Fernandez's EVMS wages, taking as much as $157 out of his biweekly check. In negotiations since then, Sentara has agreed to a $100 monthly payment.

Fernandez was set back by a hip replacement operation last year, related to a childhood bout with polio that left him with a limp. He was out of work nearly five months. He has had his utilities cut off for nonpayment and is two months behind on his rent.

The hip replacement was covered by insurance, but he's still working to pay off his 20 percent co-payment. Fernandez said he has considered filing for bankruptcy but that pride has kept him from doing so.

He said he was never told about charity care or discounts.

"If that were the case," he said, "believe me, I would have taken advantage of it."

Sentara said Fernandez's case ended up in court because he didn't respond in a timely manner to repeated billings and collection calls.

"We think we were very conservative in our collection efforts," said Robert Bray, a Sentara collections lawyer. Nevertheless, Bray added, if the same case were to come up today, it wouldn't meet Sentara's new, tighter requirements for filing a lawsuit.

Researching Fernandez's case has also prompted Sentara to take a new look at its "self-pay" discount program, which applies only to uninsured patients.

Weddle, the Sentara vice president, said Sentara is now considering extending the program to cases such as this one, in which the patient is insured but the care is not covered.

To some advocates for the poor, charity care seems one of the best-kept secrets in the Virginia health system. In 2005, a team of Legal Aid lawyers did a telephone survey of 20 Virginia hospitals, asking about their charity care policies. They reported that the information was "exceedingly difficult" to obtain.

"No average patient, let alone a patient with a health problem or disability, could be expected to spend the time and energy that it took to obtain this information," the team wrote. "It is one thing to have financial aid and charity care policies in place; it is quite another to make them accessible to the public."

What patients find out at local hospitals may depend to some degree on whom they ask.

During a spot check by a Pilot reporter at Bon Secours Maryview Medical Center in Portsmouth, the receptionist went out of her way to be helpful, looking up numbers of financial counselors even though the emergency room was busy.

But there was little information at the emergency department at Bon Secours' Harbour View health center in Suffolk. There were no signs up. When the receptionist in an empty waiting room was asked if she had information for people who needed help paying their bills, she said no. She made one phone call, got no answer, then wrote down the number for the billing department.

At other local hospitals, charity care information was also uneven. Some had posters on the wall; some didn't. Most had brochures, but they were on public display in only about half of the hospitals visited.

Some states have passed laws requiring hospitals to notify patients of their charity care programs and determine eligibility for free care before filing collection lawsuits. Virginia has no such requirements.

In 2005, the latest year for which statistics are available, the 18 hospitals serving eastern Virginia reported providing $193.5 million in charity care.

When such care works the way it's supposed to, the results can be dramatic.

Clint Franklin, 51, of Chesapeake was treated for diverticulitis at Sentara Virginia Beach General Hospital in 2003. The bill for the initial surgery and several follow-up procedures came to $165,000.

Franklin had no health insurance and no income, having just been laid off from his job as a paramedic and medical equipment salesman.

"Somebody came to my room and said they wanted to see if I qualified for charity care," he said. "I said, 'By all means.'?"

As a result, he said, nearly the entire bill was written off.

"The hospital was very generous, and I'm very grateful," Franklin said. "They not only saved my life, but they also helped me out at a time when I was financially destitute."

A patchwork of government programs aimed at broadening health care coverage has emerged in recent years, but there are still gaping holes that ensnare the working poor.

Carmalita Watford, 35, of Norfolk's Broad Creek area, is a single mother of three teenagers. She is an office manager for a mental health facility but has no health insurance.

"There have been countless times I didn't take my kids to the hospital because we couldn't afford to incur that kind of debt," she said.

Still, there were times her boys had to have medical care, and as a result she was saddled with thousands of dollars in bills from Children's Hospital of The King's Daughters.

Since CHKD treats only children, far more of its patients qualify for government insurance than at other area hospitals. About half qualify for Medicaid, the federal- state health program for the indigent. But Watford's income is above the Medicaid threshold.

Last fall, a social worker at CHKD told her about FAMIS - Family Access to Medical Insurance Security, a federal- state program for uninsured children who don't qualify for Medicaid.

Her children are now covered - but the old bills, dating back to 2000, didn't go away. They were turned over to a collection agency and ruined Watford's credit rating.

She has fallen behind on her mortgage and is in danger of losing her home.

"I'd like to get my kids out of this neighborhood," she said, "but I can't, because my credit is shot."

After an inquiry from The Pilot, CHKD erased the debt from Watford's credit report. A spokesman said the hospital routinely erases old debts once a patient is enrolled in a government insurance program, but it didn't occur in Watford's case because of a bookkeeping error.

Meanwhile, Watford is still uninsured. In June, she went to Sentara Norfolk General with chest pains, fearful she was having a heart attack. Her older sister died of a heart attack at 35.

Tests so far have been inconclusive, but the bills - totaling more than $13,000 - began piling up quickly.

Watford said no one at Sentara told her about the availability of charity care. When she realized that one of her bills gave a phone number to inquire about a discount for the uninsured , she called and was told that once she submitted proof of her income, she might qualify for up to a 60 percent discount.

In fact, her 2006 income was $20,320 - just below the poverty line for a family of four. That qualifies her for a 100 percent write-off.

In the end, that's what she got.

Watford went to the Norfolk Department of Social Services, where she applied and was approved for the State/Local Hospitalization Program .

That government program is severely underfunded. The money is doled out on a first-come, first-served basis and typically runs out before mid year. The statewide need was estimated at $66.4 million last year, but the fund topped out at $12.6 million.

Nevertheless, Watford's approval for the state program convinced Sentara that she qualifies for charity care.

Michele Banks wasn't so lucky.

When Banks showed up in court in July to explain why she was having trouble paying her bill, the case was continued for further review.

She hoped that meant she would get help. Instead, when Bon Secours' lawsuit against her came up in court again on Sept. 6, the judgment was awarded. On that day alone, in that single courtroom, nearly 80 others shared Banks' fate.