I-TEAM: S.C. residents say hospitals are deducting from their taxes, checks

Published: Sep. 26, 2022 at 6:29 PM EDT
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BAMBERG, S.C. (WRDW/WAGT) – In South Carolina, money is being taken from paychecks or tax returns, often without warning. That’s against state law.

But it’s happened to 150 people who have reached out to our sister station, WBTV, in Charlotte.

A Bamberg man told our I-TEAM he hasn’t seen a state tax return in more than a decade and never received any warning it was being taken. If true, that would be illegal.

The I-TEAM found there is severely limited oversight for the state program that allows hospitals to step in and claim your money to settle a medical debt.

Some are now calling for lawmakers to change that. We’re not just talking a few thousand dollars. We’ve found nearly $400 million was taken in medical garnishments over the last four years. And the I-TEAM found the state is profiting.

Samuel Richberg’s home is just off a rural dirt road in Bamberg.

He’s called it home for as long as he can remember. “I’ve been here all my life.”

He grew up in a hardworking family helping his dad farm since he was five. When he was older, he moved into manufacturing.

“I’ve been a working man all my life. I started at Bamberg textile mill when I was 15 years old.”

Nowadays, you’ll find him at home.

“I got kind of disabled with diabetes and being on my feet too much.”

He’s not able to work or get around very well. Money is tight for him and his family.

“I worked all my life to try and establish a good life for my grandkids and all that, but when you have bills hitting you from left to right, I’m trying to pay that.”

He’s not talking about a typical electric bill or water bill.

He means stacks of hospital bills. “As far as my knowledge goes, I have only been in the hospital maybe three times.”

That was to get his appendix removed and for his diabetes years ago at Orangeburg Regional Medical Center.

He says his insurance covered it, or at least he thought so. Richberg hasn’t received his state income taxes ever since.

“Oh, it’s been over 13 or 14 years since I’ve seen one of them… I really rely on it, but I never get it.”

The I-TEAM found Samuel’s story is one of the hundreds, maybe even thousands, in South Carolina.

State records from the South Carolina Department of Revenue show 390 million dollars have been garnished or taken from South Carolinians’ paychecks and tax refunds by hospitals, medical facilities, and drug rehab centers collecting on unpaid medical from 2018 to 2021.

We found South Carolina has two programs that allow hospitals and government agencies to garnish money from people. ‘SETOFF’ allows agencies to garnish tax refunds, and ‘GEAR’ gets them access to garnish people’s wages and even file tax liens.

“They came to my bank and took my personal money and took all of it,” adds Richberg.

The I-TEAM analyzed the data closer and found just in our area, more than $49 million has been garnished by medical facilities from 2018-2021.

The Regional Medical Center, which owns Orangeburg Regional Medical Center, accounts for $39.5 million of that.

“It feels like I can never get done paying these guys.”

The South Carolina Department of Revenue and state law requires hospitals using SETOFF or GEAR programs to send debtors a specific form notifying them of their ability to file an appeal against the tax garnishment

Richberg says his notice never came in the mail.

Over the last few months, nearly 150 people across the palmetto state have contacted our sister station in Charlotte, WBTV, to say this is happening to them, too.

“They gave me no warning,” says Chris Smith.

He said he tried to work out a payment plan with the hospital versus a garnishment but was denied.

Jeff Dorcick also says he was denied a payment plan, and along with not being warned, he also was never told about the process to file an appeal. “I didn’t know anything about that.”

A spokesperson with SCDOR says their oversight is limited to what’s allowed in state law writing in an email: “any additional oversight would be determined by the South Carolina General Assembly.”

As for Richberg, he says he feels like he’s been stolen from.

The I-TEAM followed the money and found hospitals submit unpaid bills for garnishments to the South Carolina Department of Revenue.

Most hospital systems contract with the South Carolina Association of Counties to submit the debts on their behalf.

SCAC receives fees from the hospitals for submitting the debt, and SCDOR receives a fee for collecting it. Both profit from patients.

“I’m barely trying to get through.” Samuel Richberg says he prays every day hoping for a solution to what seems like a never-ending cycle.

“I know I’m not the only one, but I’m one of the ones… I hope there’s a change about how they handle this situation.”

The I-TEAM reached out to Governor McMaster’s office to see if the Governor would consider making any changes to the programs, but we have not heard back.

The Kaiser Family Foundation recently estimated one in ten Americans owe at least $250 in medical debt, with more than three million Americans in debt of more than $10,000 to medical facilities.