Money to shelter all homeless in the U.S. is available for collection on their behalf.

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Community Benefit Funding of Homeless Care and Shelter


Overview
More than enough money to shelter and care for the homeless is already legally obligated for that purpose. Adequate human service infrastructure exists to put that money to good use in eliminating homelessness across the entire U.S. What is missing is widespread awareness of the resource and a process to collect it.


While health care in the U.S. consumes 16% of GDP, and often costs twice as much per capita as in many other advanced countries, the outcomes, as measured by standard metrics such as life expectancy, infant mortality, etc., are usually better in those countries than in the U.S. *1  With a GDP of $16.8 trillion in 2013, the possibility that waste in health care costs insurance customers and taxpayers as much as $1.2 trillion per year is staggering. The issue here, however, is not: “where does the money go,” or “why is it wasted?” The issue here is whether or not America’s health care industry can and should already be paying for shelter and care of the entire homeless population, without any additional cost to taxpayers or increased insurance premiums.


Roughly 70% of hospitals in the U.S. are tax exempt, nonprofit corporations. *2 Although the health insurance environment is a rapidly changing landscape, many of the health insurance players are also tax exempt, nonprofit corporations. "Nonprofit hospitals receive various tax exemptions from federal, state, and local governments with the expectation that, in return, they will provide benefits to the community." *2 Those which fail to provide sufficient community benefit, such as charity, can have their tax exempt status stripped by local Superior Courts. *3

"Although nonprofit hospitals receive tax exemptions in return for providing community benefits, there is little consensus on what constitutes a community benefit or how to measure community benefits." *2  Since neither federal nor state governments have preempted the field, the question is:  Who decides what does or does not benefit the community? Where nonprofit hospitals and/or nonprofit health insurance companies claim exemption from local property taxes, locally elected bodies such as City Councils or County Boards of Supervisors are the entities which can and should make determinations as to which activities benefit the community and which do not. Certainly, the hospitals and insurance companies themselves are not entitled to make those determinations.


Charity for the homeless is a benefit owed to the community by nonprofit hospitals and insurance companies. Effectively, municipalities using local tax money to pay for homeless shelter and services are double charging their citizens, because those same citizens already pay for community benefits through their health insurance premiums. Accordingly, municipalities are obliged to endorse claims for reimbursement submitted to local hospitals by qualified local human service agencies when those agencies provide shelter and support services to the homeless at reasonable cost. *1


Shelter and care of the homeless is an existing obligation of nonprofit hospitals and insurance companies because it clearly qualifies as charity, which is a community benefit. Homeless individuals who are denied shelter due to a lack of funding for the number of facilities adequate to meet the need can sue the nonprofit hospitals and insurance companies which fail to provide a level of funding commensurate with the taxes they would pay if they were profit making corporations. The basis for the suits is straightforward: Were the hospitals and insurance companies to meet their existing charity obligation, there would be no shortage of funds, and no shortage of facilities. Thus, homeless persons denied shelter in any city or county anywhere in the U.S., where agencies were denied reimbursement from hospitals for the cost of shelter and care, can and should seek redress in the courts. Hospitals refusing to fund at the levels required can be stripped of their tax exemptions.


Of course, homeless individuals rarely have counsel. However, few activities could be more congruent with the purpose of pro bono representation by large law firms than enforcement of the charity obligation of hospitals to the homeless. Lawsuits in the course of pro bono representation should seek payment for homeless shelter and services. The law firms may choose not to seek payment or damages from hospitals for past failures or neglect.


Financial motivation for the large law firms


In representing the homeless, law firms can encourage hospitals to seek reimbursement from non­profit health insurance companies for the payments made to human service agencies providing shelter and care. Reimbursement claims should be against the Community Benefit obligation of the non­profit insurance companies, since those obligations are fundamentally the same as for the hospitals. The law firms can then focus their main legal efforts on forcing the insurance companies to pay for current care and shelter, as well as reimbursement for costs previously incurred by agencies and municipalities which have had to devote their own funds to
providing services which should have been paid for by nonprofit insurance companies in the normal course of meeting their Community Benefit obligation.

Further, the law firms can and should seek damages, and punitive payments, from whichever insurance companies have been most clearly and knowingly out of compliance with their obligations. While representation against the hospitals can be done pro bono, representation against the insurance companies can and should be done on a contingency basis, in order to provide the financial incentives necessary to undertake the extensive legal work which will be entailed in collecting the damages and punitive payments. Given a level of waste above $1 trillion per year, much of which is very likely fraudulent, the “look back” value of Community Benefit lawsuits is enormous. That value should be more than sufficient incentive to engage the law firms in pursuit of insurance companies failing to meet their public obligations. *2


In addition to providing a long term, stable, non­political source of funding to shelter and care for the homeless, the lawsuits should also assist in correction of the U.S. health care excessive cost problem via the courts rather than the Congress. By bringing the health insurance business model under scrutiny through the courts, in the context of their tax exempt nonprofit status, the role of insurance companies in health care can be examined on its merits, free of the lobbying and political influence which characterizes similar examinations undertaken by the legislative branch.


1 America’s Bitter Pill, by Steven Brill, Random House, August, 2015.
2 Congressional Budget Office, "Nonprofit Hospitals and the Provision of Community Benefits," December
2006
3 Baker Tilly  bakertilly.com  "Tax-exempt status of hospitals under the microscope" (see update below for copy of the memo)



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