Nonprofit hospitals, nursing homes and other care providers are now prohibited from placing liens on patient homes or garnishing patient wages to collect medical debts in New York.

Gov. Kathy Hochul signed the law abolishing the two tactics frequently used to satisfy judgments in medical debt lawsuits. According to Hochul’s office, more than 50,000 New Yorkers have been sued for medical debt over the past five years.

Specifically, the new legislation amends the New York Civil Practice Law and Rules by stating:

  • No liens shall be entered or enforced against a debtor’s primary residence in an action arising from medical debt and brought by a hospital licensed under Article 28 of the Public Health Law or a Health Care Professional authorized under Title 8 of the Education Law; and
  • Prohibits funds from being withheld pursuant to an income execution to satisfy judgments arising from a medical debt brought by a hospital licensed under Article 28 of the Public Health Law or a health care professional authorized under Title 8 of the Education Law.

This new law affects many health care facilities located throughout the state because the term Hospital is defined under Article 28 of the Public Health Law to include nursing homes. This legislation will make it more difficult for hospitals and nursing homes governed by Article 28 of the Public Health Law to recover on judgments they obtain against debtors arising from unpaid bills. These facilities will now be forced to seek alternative and more cumbersome means of satisfying these judgments and recovering the funds that they are owed.

In a statement on the new law, Gov. Hochul did not address how health care providers will be affected by unpaid debt.

The move comes at a time when hospitals and other health care providers are being squeezed by inflation. A September Hospital Flash Report by KaufmanHall found hospitals facing their worst financial year in decades, with operating margins cumulatively negative through the first eight months of 2022.

More related legislation may be coming. At the beginning of the year, Gov. Hochul outlined ways she intends to improve consumer’s financial health, including addressing medical debt.

Harris Beach’s Health Care Industry Team will continue monitoring the political and regulatory landscape. If you have questions, please reach out to Team Leader Roy Brietenbach at (516) 880-8378 or rbreitenbach@harrisbeach.com; or for questions related to nursing homes, Kevin W. Tompsett at 585-419-8738 or ktompsett@harrisbeach.com.