Guam Memorial Hospital’s garnishment power: A taxpayer burden and policy failure

By Michael Cruz

 Guam Memorial Hospital has long struggled with financial instability, recurring deficits and persistent challenges in billing accuracy and revenue collection.

The authority to intercept personal income tax refunds was not granted recently; it was established years ago—reportedly around 2010—but its continued use deserves renewed public scrutiny given GMH’s ongoing financial and operational challenges.

I am not a lawyer. However, I believe it is reasonable—and necessary—to ask whether policies that allow the seizure of personal tax refunds, particularly in the presence of billing disputes, meet basic standards of due process, fairness and accountability.

Government action that deprives an individual of property, such as a tax refund, must satisfy basic due process protections under the Fifth and 14th Amendments. In the case of GMH, it is unclear whether the garnishment mechanism includes timely notice, a meaningful opportunity to contest the debt and independent review of billing accuracy. Given GMH’s acknowledged billing challenges, the risk of error is real.

This concern is not abstract. I am aware of one case that prompted this article. An individual’s tax refund was intercepted despite his reasonable belief—based on his own investigation—that the underlying bill had already been paid by his insurer, TRICARE. The garnishment proceeded and any potential reimbursement was reportedly delayed due to GMH cash flow constraints.

During the same hospitalization, the individual was also required to purchase his own blankets and bedding because such items were unavailable at the hospital. While a single case does not define a system, it illustrates how administrative weaknesses can translate into real hardship when enforcement tools are applied without adequate safeguards.

Federal and state governments intercept tax refunds under clear statutory authority and established procedural safeguards. The U.S. Treasury Offset Program, for example, requires advance notice, debt verification and defined appeal rights. States employ similar frameworks for child support, taxes and court-ordered obligations.

GMH, by contrast, is not a taxing authority under the Guam Code Annotated; any ability to intercept tax refunds is derivative, exercised through the Department of Revenue and Taxation on GMH’s behalf. Extending comparable enforcement power to a single public hospital, without equivalent transparency, safeguards and independent oversight, warrants careful examination.

GMH receives recurring appropriations from the legislature and executive branch to address operating shortfalls, funded by the same taxpayers whose refunds may now be intercepted. For affected individuals, this creates a reasonable perception of a duplicative financial burden: paying once through general taxation and again through direct recovery actions for disputed or unresolved bills.

Private healthcare entities on Guam, many of which also treat uninsured and indigent patients, lack access to tax refund interception and generally do not receive operating subsidies. They absorb uncompensated care through traditional collections or direct losses. Granting GMH unique enforcement authority may therefore disadvantage private providers, with implications for competition, investment and long-term healthcare capacity.

Another unresolved issue is the rate applied to bills subject to garnishment. If GMH uses full self-pay rates—often far higher than contracted insurance, Medicare, or Medicaid rates—individuals may be compelled to pay amounts exceeding what most payers remit for identical services. Transparency on this point is essential to ensure recoveries reflect reasonable and customary charges.

Providing both recurring subsidies and enhanced collection authority may unintentionally reduce the urgency to correct underlying problems in billing accuracy, revenue-cycle management and cost control, reinforcing the very inefficiencies that prompt legislative intervention.

A more balanced approach would include conditioning subsidies on measurable performance improvements, requiring independent audits, establishing clear notice and appeal processes for refund interception and clarifying the rates used for recovery actions.

Public hospitals play a vital role in caring for the community, especially the most vulnerable. That role, however, does not exempt them from standards of fairness, transparency and accountability. Policies that rely on coercive enforcement without adequate safeguards risk eroding public trust and placing additional strain on taxpayers and the broader healthcare system.

As someone who has led both public and private hospitals on Guam, I believe the question is not whether GMH should be supported, but whether that support is structured to drive reform rather than perpetuate systemic weakness.

Michael W. Cruz, MD, MBA, is a physician with experience leading both public and private hospitals on Guam, including as former Chief Medical Officer of Guam Memorial Hospital and Chief Executive Officer of Guam’s private hospital. He has served in senior public service roles on Guam.