I-TEAM: Lawyer challenges medical garnishment, finds programs predatory

Published: Oct. 3, 2022 at 6:45 PM EDT
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AUGUSTA, Ga. (WRDW/WAGT) - Augusta University is one of six hospitals across the region taking money from South Carolinians’ paychecks or tax refunds to settle a medical debt.

The I-TEAM found two programs that allow medical garnishments. We also found a pattern of people not being warned or told how to appeal.

Which is illegal.

The I-TEAM reached out to lawmakers to see what they’re doing.

So far, at least two lawmakers told the I-TEAM they didn’t even know this was happening until we called.

We spoke with an attorney who says he’s identified the pattern. He believes the law is being exploited. Now, he’s joining the call to action for change.

Samuel Richburg is buried in bills. He has stacks of statements from the hospital for appendicitis. To pay, he says his tax returns have been garnished or taken from him for over a decade to offset medical debt by the regional medical center.

“Oh, it’s been over 13 or 14 years since I’ve seen one of them,” he said,

The catch is he says no notice was sent to him in the mail. If true, that’s illegal.

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

At least 150 people have contacted our sister station, WBTV in Charlotte, saying hospitals have taken their state tax returns without warning.

That’s against the law in South Carolina.

“It’s atrocious.” Fredrik Pfeil is an attorney and the low-income taxpayer clinic director at South Carolina legal services in the upstate. “We help with federal income tax issues for low-income South Carolinians.”

Pfiel has dealt with both of South Carolina’s programs that allow hospitals and government agencies to garnish money from people.

‘Setoff’ allows agencies to garnish tax refunds. ‘Gear’ gets them access to garnish people’s wages and even file tax liens.

In our area, the I-TEAM found at least $50 million has been garnished by medical facilities from 2018-2021. In Barnwell, the county hospital has garnished more than $1.7 million.

In Orangeburg, $39.5 million was garnished. We found at Allendale County’s Hospital, another $4.4 million. And at three different Edgefield hospitals, a cumulative total of $3.3 million dollars was garnished.

Across the state? Nearly $400 million.

So, the I-TEAM wanted to know, who is overseeing the programs?

Pfiel says that based on what he’s found, in his opinion, it’s an honor system.

Stories like Samuel’s, where people say they were never alerted to the garnishment surprisingly come up a lot at Pfiel’s clinic.

He says from what he’s seen, this typically happens to under-resourced people who are getting no notification in the mail.

The South Carolina Department of Revenue and South Carolina state law requires hospitals using ‘Setoff’ or ‘Gear’ programs to send debtors a specific form notifying them of their ability to file a protest against the tax garnishment.

“If they don’t receive it, then they are generally first notified when their refund is offset by the Department of Revenue,” explains Pfiel.

The notices can be sent to the last known address the hospitals have. Pfeil says these patients move a lot, experience foreclosures, get evicted, or their address changes.

“A lot of times they don’t receive the notice, primarily because they’re sending them to addresses our clients no longer live at.”

Pfeil says hospitals only have to certify they sent a letter. They don’t have to provide proof of where it was sent.

“There’s no real way to know if the person received the notice and also the notice itself doesn’t have to be received by the debtor for the Department of Revenue to offset the refund… It’s absolutely insane.”

The I-TEAM found this can happen to anyone living in South Carolina who seeks care outside state lines.

Data from SCDOR shows that AU medical center has garnished more than two million dollars from South Carolinians in 2020 and 2021. “There is very minimal, if any, oversight.”

In an email, a spokesperson with SCDOR says their oversight is limited to what’s allowed in state law.

So, what can you do if your taxes or wages have been garnished? If you receive a letter in the mail, you have 30 days to appeal it.

You can find where to appeal the debt at the bottom of your notice.

Pfiel says in his experience letters like these are scarce. “I have seen maybe one or two of those letters in my career.”

If you don’t receive a letter? You have one year to appeal it after your taxes have been garnished. Pfeil says in most cases, people just accept the debt.

“They really don’t know the law and how to dispute it… They are taking money out of poor people’s hands.”

Pfeil says at the very least, hospitals should be required to send letters to the last known address they have and that SCDOR has.

“There needs to be some serious ramifications for the hospitals... I just think it’s absolutely atrocious that they have to answer to no one.”

The I-TEAM reached out to Sen. Tom Young’s office. He tells us he’s looking into the issue.

Last week, the governor’s office told us if Amazon can notify people of delivery, hospitals can do the same. And didn’t rule out addressing this through the General Assembly.