In April, New Mexico enacted a law targeting Health care collections; now, it’s Nevada’s turn. On June 2, 2021, Nevada’s Governor Steve Sisolak signed SB #248 into law. The new law, which goes into effect in less than one month on July 1, 2021, imposes significant new requirements and restrictions on collecting medical debt in Nevada.
The law applies to all debt for goods and services provided by medical facilities. The definitions of “medical debt” and “medical facility” are expansive. The only specific exemption from the definition of medical debt are open-end or closed-end extensions of credit made by a financial institution to a borrower, which the borrower can use at their discretion for purposes other than the purchase of goods or services provided by a healthcare facility.
60-day notification period
The law specifies that not less than 60 days before taking any action to collect a medical debt, a collection agency must send the medical debtor by registered or certified mail written notification that includes:
- The name of the facility;
- The date on which goods and services were provided;
- The principal amount of the debt;
- The name of the collection agency; and
- Information regarding whether the medical debt was assigned to the collection agency for collection; or that the collection agency has otherwise obtained the medical debt for collection.
Notably, the law also specifies that if a debtor initiates contact with a collection agency during the 60-day notification period, the collection agency cannot consider the contact to be a waiver of the collections hold; the prohibition on collection remains intact.
Disclosure requirements: Voluntary payments during the 60-day notification period
The law allows a collection agency to accept a voluntary payment from a medical debtor during the 60- day notification period, so long as:
- The debtor initiates the contact with the agency; and
- The collection agency discloses to the medical debtor that:
- A payment is not demanded or due; and
- The medical debt will not be reported to any credit bureau during the 60-day notification period.
Further, the Act states that any voluntary payment made by a medical debtor does not extend the applicable statute of limitations, is not an admission of liability, and shall not be construed as a waiver of any defense to the collection of the medical debt.
The law also prohibits collection agencies from
- Taking confessions of judgment;
- Commencing a civil action if the amount of the debt is less than $10,000.00; and
- Charging or collecting a fee of more than 5%.
If, after reading the above, you thought, “wow- I can’t really tell what my company can or cannot do, or how to implement this law in less than a month.” you wouldn’t be alone. This law is poorly drafted and extremely ambiguous; we could probably fill up an entire page listing all the ambiguities in this law, but we’ll just go with a few:
- Section 7 prohibits “taking any action to collect a medical debt” but fails to define it. Yet the same section of the law requires debt collectors to send a notice via registered or certified mail to the medical debtor, which includes the balance of the debt. Apparently, this notice is not considered “taking any action to collect a medical debt,” but the law gives us no indication as to why. Also, what happens if the medical debtor doesn’t sign for the mail? How long does the collection agency have to wait before considering their duty to provide the consumer notice discharged? Is the collection agency’s task complete on sending the letter?
- Section 7.5 requires collection agencies to provide medical debtors certain disclosures before taking a voluntary payment, which might make sense over the phone, but what does a collection agency do with a mailed-in payment? Do they send another letter? If so, why would that not be considered an "action to collect a medical debt" and how long do they have to wait before they can consider it delivered? Can a collection agency include these disclosures in the newly required 60-day notice to ensure a medical debtor receives it before making a voluntary payment, without causing the letter to lose its apparent status as not an “action to collect a medical debt”? There’s certainly no direction one way or the other in the law.
This law has so many holes that some collection agencies may choose to shut down medical collections in Nevada altogether instead of risking violating a law that doesn’t seem to tell the agencies clearly what they can or cannot do. While some people may say that’s a good thing, the small hospital, doctors, and other medical providers who depend on collecting delinquent balances to keep their doors open may disagree.
Any accounts receivable entity which is collecting debt in Nevada should discuss the law in its entirety with an attorney to determine their next steps.