Collecting Medical Debt – How Aggressive Should You Be? (Reprint)

Choice health or money. Caduceus and dollar signs on scales.Almost four years ago (2/23/2012), NL Insider published a blog titled “Collecting Medical Debt — How Aggressive Should You Be?” That blog continues to get hits every week, totaling over 2,622, with 822 of those in 2015, and 90 in January 2016. Our readers’ continued interest in this blog has prompted us to reprint it, just in case you missed it. 

We would love to get your comments! Why do you think this is our most viewed blog? What are your thoughts on collecting medical debt and how aggressive one can legally be? Comment below, or reply to us at 

A year ago, because of the interest in this subject, we published another blog titled “Collecting Medical Debt? – Consider This When You Do.” It reports on some developments in Medical Debt Collection in the 3 years since the first blog, and how these changes could affect your actions in the future. Because of the continued interest in the subject of collecting medical debt, watch for a blog about the future of collecting medical debt to appear sometime in February. 

Collecting Medical Debt – How Aggressive Should You Be? (Reprinted from 2/23/2012)

HA recent NYT article (2/13/12, pp. 1 & 17) points out that many states have wrestled with aggressive debt collection by hospitals in recent years. Like New York, several passed laws curbing hospitals’ pursuit of unpaid bills, including IL, CA, & MN. Hospitals are not legally barred from seeking judgments or liens, but must first offer an aid application, help the patient complete it, and not act while it is pending. Instead, many hospitals turn to collection agencies, and sue when that fails. The unpaid bills—typically reflecting much higher rates than what insurers pay—are then treated as the equivalent of charity care.

Collection of medical debt is a major consumer issue. A study by the Federal Reserve Board found that nearly half of all collection actions appearing on consumer credit reports are for collection of unpaid medical bills. Medical debt is different from other forms of debt, because it is usually incurred accidentally or faultlessly. People do not plan to fall ill or hurt themselves, and medical bills are often unavoidable. Medical debt is often treated with more sympathy than other kinds of debt, resulting in advice to patients that they should not try to convert it to credit card debt.

Medical debt is very difficult to collect. In a phone call on 2/16/12, Arthur Sanders, Managing Member of Mel S. Harris & Associates, LLC, reinforced the idea that medical debts have to be handled differently. He reminded me, “Many times credit card debt arises because of lifestyle, fraud, or economic issues, but unpaid medical debt most often comes from a big, unplanned bill that the debtor is unable to pay. These debtors are not usually people who have other debts.”

My call with Mr. Sanders centered on three major considerations:

  1. Law firms that collect medical debt have to “educate the client about the reality of the situation. Discussions with clients are often harder than with the debtors. Most often, hospitals and doctors give us instructions to sue, because they aren’t profitable and need to collect every penny they can. But they don’t know the situation or if there is a personal element involved with the case. We have to be specific with the client as to where the case is going. We don’t usually sue if the debtor doesn’t have resources.”
  2. Law firms have to assess the patients’ ability to pay. Collectors in Mr. Sanders’ firm first attempt to make a personal contact, to reach out to the debtors and determine their situation. Ninety percent do not return the call, but when they are able to speak to the debtor, and also through other means, they attempt to determine:
    • Does the debtor have insurance? “There may be an insurance dispute or not insurance at all.”
    • Does the debtor own property?
    • Is the debtor employed? “Indigent people should not have cases referred to our office.”
    • “Can the client show us a Social Security Disability Award letter? If so, we don’t sue. A hospital is supposed to get that information upfront. In an ideal world, we don’t get those cases unless the hospital makes a mistake.”
    • Are the medical bills the result of a workplace injury? “In such cases, Workman’s Comp is the remedy. Only bad will come of it if we don’t catch that.”
    • Were the injuries the result of an auto accident that could be covered by the other driver’s insurance?
  3. “Our people are Specifically trained in medical collections,” Sanders said “They need to know who to talk to and what questions to ask, such as, ‘What position are you in financially?’ ‘Why didn’t the insurance company pay?’ They need to have expertise in dealing with insurance carriers. They need to be aware that a medical bill that began in the ER could be the result of a work-related accident. There could be a Language issue. The skill set is different from other types of debt collection.”

Mr. Sanders concluded, “We (law offices) are a Last resort. By the time the file reaches us it has been through an agency first, or the collection department in a hospital. We don’t put medical claims on the dialer. We try to make a personal contact. If a debtor ignores our calls or we can’t find something indicating a basis for non-payment of the debt, we have to get a judgment. In New York, a judgment is good for 20 years. We still might not get paid.”

Other tips and warnings you might want to consider come from “How to Collect Payment on Medical Bills,” by Richard Morgan, an eHow Contributor:

  • Keep a copy of all correspondence relating to the payment collection attempt. If you send any correspondence, always send it through the post office via registered mail.
  • Setting up payment plans will improve your chance for successful collection.
  • Keep in mind that many people are embarrassed over not being able to pay a debt owed. Be sympathetic to the situation, but remain firm.
  • Remain calm and polite when dealing with the client. Losing your temper can result in harassment charges being filed against you, making it more difficult to collect payment on the medical bill in the future.
  • For most medical debts, there is a statute of limitations. Depending upon the state, the period of time can vary from five to 10 years. Check with your local State’s Attorney General to determine the statute of limitations for your state.

by Marti Lythgoe, Editor

Categories: Business Relationships, Debt Collection, medical debt collection, NL Insider

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