Suit Charges Hospital and its Collection Unit with Violating the FDCPA

A Missouri hospital and its parent company are fighting allegations it used deceptive collections practices to collect unpaid medical bills from thousands of patients in violation of the Fair Debt Collection Practices Act.

Kansas City Attorney Derek Potts, who filed the lawsuit earlier this month on behalf of three clients, is asking that the lawsuit, filed in the Western District of the US. District Court of Missouri, be awarded class action status.

The lawsuit claims Heartland Regional Medical Center in St. Joseph deceived patients by allowing Northwest Financial Services (NFS) to collect unpaid medical bills on its behalf without informing patients that the collector and hospital are owned by the same corporation, Heartland Health, Inc. Northwest is a subsidiary of Midwestern Health Management, which also is owned by Heartland Health.

The lawsuit also claims NFS is a “fictitious” company registered with the Missouri Secretary of State to collect debts owed the hospital. But NFS misrepresents itself when contacting patients by letter or telephone by referring to the hospital as a “client.” The lawsuit says Heartland Health refers to NFS as a “department” and subject to the Heartland Code of Ethics and Heartland Policies and Procedures.’
The FDCPA forbids collectors from misleading debtors about who is collecting payment.

“The staff purposely do not reveal themselves to be related in any way to Defendant HH (Heartland Health), Defendant Heartland, Defendant Midwestern or the generally known Heartland Health, organization, thus deliberately attempting to create the false impression that they are separate and unrelated, when in fact, that is not the case,” Potts wrote in the complaint.

Heartland’s attorney, William Lynch, said his client has a duty to its paying patients to make reasonable efforts to collect from patients who do not pay their bills. He said Heartland does not believe there’s anything improper about the company attempting to collect the debt on behalf of the hospital.

“I don’t think there’s any real dispute that the debt is owed,’ Lynch said. “They are attempting to avoid payment by raising a technicality in a federal law that they allege applies.”