Advertisement
Lawsuit May have Implications for Medical Collection Agencies
January 6, 2009
A recent lawsuit that targets a medical collection agency may force many healthcare collectors to alter their strategies on a state-by-state basis.
It’s not uncommon for medical debt collectors to inform patients that they are responsible for the full charges sent to the agency for collection. However, if the trend of states adopting laws to provide discounts to the uninsured continues, more agencies may have to revise their statements or they could be setting themselves up for a lawsuit similar to the one facing Audit & Adjustment Co.
The Washington-based agency is being sued, for allegedly violating the state’s charity care law as well as consumer protection and Fair Debt Collection Practices Act (FDCPA) for telling a Northwest Hospital & Medical Center patient that she owed the full amount of charges billed (“Collection Agency Sued for Allegedly Violating Charity Care Law,” Jan. 2).
Matthew Geyman, attorney for patient Anselma Andresillo, told insideARM that his client is suing the agency rather than the hospital because she believes it engaged in unfair and deceptive consumer practices.
“My client told the agency she had limited income and couldn’t pay the bill,” Geyman said. “They told her it was too late to get charity care and that she owed the full amount. That practice of the collection agency telling patients they owe the full amount of charges without regard to Washington charity care law is unfair practices.”
Geyman believes the issue of deceptive collection practices could surface in other states that have laws to ensure hospitals provide charity care or discounted care to low-income or uninsured patients. Illinois for example, recently passed a law to make sure hospitals discounts are more consistently and uniformly applied. (“New Illinois Law Could Benefit Medical Debt Recoveries for State Hospitals,” Dec. 19, 2008).
Irrespective of whether additional lawsuits are filed, the case will likely generate negative publicity for health care providers and the ARM industry, said Kaulkin Ginsberg Analyst Michael Klozotsky. It also could attract the attention of legislators in other states looking to reform their health care systems by directing their legislation at health care collections practices, he said.
Industry experts say collection agencies can be proactive. The level of involvement medical debt collectors have in determining patients' charity care or discount eligibility may depend on state laws governing agencies' responsibilities, said David Cherner, ACA International's legal counsel and legislative director of state government affairs.
Nonetheless, as states consider adopting charity care legislation to provide hospital discounts to the uninsured, medical debt collectors, hospitals and health care providers need to be more specific about how involved debt collectors become in determining and qualifying patients for charity care and hospital discounts.
"When working with a client, the debt collector needs to be aware of their responsibilities and collaborate with their client when addressing any charity care obligations," Cherner said.
The Washington-based agency is being sued, for allegedly violating the state’s charity care law as well as consumer protection and Fair Debt Collection Practices Act (FDCPA) for telling a Northwest Hospital & Medical Center patient that she owed the full amount of charges billed (“Collection Agency Sued for Allegedly Violating Charity Care Law,” Jan. 2).
Matthew Geyman, attorney for patient Anselma Andresillo, told insideARM that his client is suing the agency rather than the hospital because she believes it engaged in unfair and deceptive consumer practices.
“My client told the agency she had limited income and couldn’t pay the bill,” Geyman said. “They told her it was too late to get charity care and that she owed the full amount. That practice of the collection agency telling patients they owe the full amount of charges without regard to Washington charity care law is unfair practices.”
Geyman believes the issue of deceptive collection practices could surface in other states that have laws to ensure hospitals provide charity care or discounted care to low-income or uninsured patients. Illinois for example, recently passed a law to make sure hospitals discounts are more consistently and uniformly applied. (“New Illinois Law Could Benefit Medical Debt Recoveries for State Hospitals,” Dec. 19, 2008).
Irrespective of whether additional lawsuits are filed, the case will likely generate negative publicity for health care providers and the ARM industry, said Kaulkin Ginsberg Analyst Michael Klozotsky. It also could attract the attention of legislators in other states looking to reform their health care systems by directing their legislation at health care collections practices, he said.
Industry experts say collection agencies can be proactive. The level of involvement medical debt collectors have in determining patients' charity care or discount eligibility may depend on state laws governing agencies' responsibilities, said David Cherner, ACA International's legal counsel and legislative director of state government affairs.
Nonetheless, as states consider adopting charity care legislation to provide hospital discounts to the uninsured, medical debt collectors, hospitals and health care providers need to be more specific about how involved debt collectors become in determining and qualifying patients for charity care and hospital discounts.
"When working with a client, the debt collector needs to be aware of their responsibilities and collaborate with their client when addressing any charity care obligations," Cherner said.
Care to Comment?
(Please read our comments policy first.)
Interested in more stories like this?
Tell us what topics you're interested in and we'll keep you posted. Enter your email address below.
Tell us what topics you're interested in and we'll keep you posted. Enter your email address below.
Topics:
Companies:
Related Resources
News
Analysis
Publications
Research
Products and Services
Advertisement
Advertisement
Comments
Comment from JN on January 6, 2009 at 12:35PM EST
This is what is going to happen as more medical debt is bought and placed. In our experience, medical collections is not worth the risk or hassle because consumers do not look at medical debt as being the kind of debt that prevents you from buying a house or a car. With half of America being unisured, the entire consumer mindset is, "what's a hospital going to do, sue me?" America's ER's are full of people with the common cold, but don't have insurance so they can't go to a normal doctor. It's those people that don't pay their medical debts. Guess the way they look at it is why pay the debt if they aren't paying for insurance? They can say the agency broke the law, but what about the lady sitting around not making any attempt to pay her medical bills?? Not even $10 a month?? Prepare to see more lawsuits from patients looking to scam their way out of their medical bills. It should be the duty of the hospital to inform the patient of Charity Care, not the debt collector. Technically they broke the law, but how is a consumer debt collector supposed to know the Charity Care laws?
Comment from paybill on January 6, 2009 at 12:44PM EST
The patient in this case could have easily contacted the hospital to discuss charity options. Most any person in this situation would have called the hospital if they didn't get the answer they wanted from the agency. The agency can't adjust balances or approve charity or make a determination over the phone of who deserves charity or not. The agency's job is simple, to collect money that is due to the Client, not necessary to identify charity (assuming this is 3rd party, not 1st party collections). The agency probably isn't even paid to identify charity. To continue to tie the hands of agencies or hospitals in collecting money that is owed to them is going to continue to cause the financial stability of hospitals to decline, which in turn will continue to raise costs for everyone else. We hear excuses, valid or not, all the time from patients, most of the time they are stall tactics. Patients should have the responsibility to contact the hospital themselves to handle this issue, not sue the agency because they don't like the answer they got. If patients don't want to be held accountable for their own situation (which is becoming a tendency in our country), maybe hospitals should start paying collection agencies for discovering charity and this issue could be alleviated.
Comment from LaDonna Bohling on January 6, 2009 at 12:44PM EST
At some point the consumers need to be held accountable for their actions. I am sure the hospital sent her a bill and a final bill. Why did she let it go to collections? It goes to collections and now she is savvy enough to "lawyer up"? Most of our medical clients will work with a patient at the hospital level if they make attempts to pay.
Comment from GGT on January 6, 2009 at 1:16PM EST
I wholeheartedly agree with JN. I dont think anyone should be banking on medical collection as the new money maker, anymore than I think they should pin their hopes on IRS collections. Our industry is about to face the most daunting assault laid upon in years - possibly ever. Attacking the collector is a great populous distraction to the whole health care problem that is (at present) unsolvable, and I fully expect the next administration and congress to use this tactic like never before.
My fellow colleagues had better start accepting this and learn to deal with it. If you want proof, look no further than the new "stimulus" bill being prepared as we speak. They are going to insist on -and likely pass- cram-downs for mortages in chapter 13. Think about this for a moment people - they are going to interfere with a [usually very large] SECURED CREDITOR. We are in big, big trouble and the ACA is completely asleep at the wheel.
Comment from mgs on January 6, 2009 at 1:38PM EST
To many starving ambulance chasing lawyers, simple as that. They are at the root of the majority of the countries ills, state and federal. Personal responsibility is no longer applicable. Socialism is just around the corner.
Comment from paybill on January 6, 2009 at 2:02PM EST
The only thing I would say about GGT and JN's comments is that medical debt will probably not be overlooked like it has in the past. It might actually benefit agencies who are attempting to collect it. Lenders are no longer going to ignore issues on a credit report like they have in the past, even medical debt. Now, government involvement could certainly spell doom for our industry in many ways, not just in healthcare.
Comment from Spud on January 6, 2009 at 10:01PM EST
I personally think that it's sickening that an agency can be sued for something like this. As far as I'm concerned, if these people want charity care, then there needs to be legislation that puts the responsibility on the hospital to offer it, and if the patient STILL ignores the debt, then it should be viewed as a deliberate evasion, and should not even qualify for charity care once the account gets placed in collections. All of the sudden the woman is asking about Charity Care?? Yeah right!! She probably didn't like the collection calls, got a hold of the attorney because she wanted the calls to stop, and the attorney discovers this loophole crap.
Comment from AJ on January 7, 2009 at 4:37AM EST
There are certain State debts that are not forwarded to collection agencies and are collected by them. When it comes to these past due or delinquent bills, all of the sudden, the law changes and the burden always lay on the consumer’s side. Above average interests are added, even arrest warrants could be issued. Isn’t this an ambiguity?
Comment from JN on January 7, 2009 at 10:43AM EST
Well, I do disagree with medical debt being reported to a consumers CBR. The CBR is for credit purposes. You can't fill out a credit application at a hospital to get a loan, so medical debt shouldn't be allowed to be reported to the CBR. A heart patient can easily rack up thousands of dollars worth of debt if they need bypass surgery. That same patient could have had great credit, but now that the patient can't work, medical bills will surely start stacking up. Do you think that person's medical debt should be reported? Even though they had great credit to begin with?? No, because not paying medical debt is not a reflection on how you pay creditors. Just my opinion.
Comment from Matt on January 7, 2009 at 6:20PM EST
Now is the time that there should be a good hard look at Universal Medical Care like so many countries now have. True taxes are a little higher, but the service and research is just as good as anywhere else. The cost per person in taxes paid is less than the Medical Coverage now provided.
Comment from Edwin Johnson on January 28, 2009 at 3:29PM EST
I need to talk to a purchaser of hospital debt. I have been "brushed of" by many telephone answerers, and I cannot get through to someone to whom I can explain how to increase their profits significantly. Is this possible? Edwin B Johnson edj@ejohnsoninc.com 904-261-8885
Comment from paybill on March 31, 2009 at 11:30AM EST
JN,
while I understand what you are saying about medical debt on a credit file, I disagree. If a creditor in the future grants you credit because you "score" is good and doesn't realize you have 50K in medical debt, then they have a false sense of your ability to pay. Medical bills may be unexpected and not applied for, but they still affect your ability to pay your other creditors.
Comment from Truth on March 31, 2009 at 4:44PM EST
JN referred to:
"the lady sitting around not making any attempt to pay her medical bills?? Not even $10 a month??"
JN, very few collection agencies agree to take $10 a month. Their number one goal is to get the full amount NOW. If that's not practical, it's $300-$400 a month. If the patient screams loudly enough and the collector is feeling tired that day, the collector MIGHT (or might not) settle for $100 a month...and then send a letter a few months later demanding $250 a month. It is a never-ending battle. If you think $!0 per month is a common possibility, you are out of touch. Collectors won't even take $50 per month. This is 2009, not 1979.