More Medical Bill/ Debt Collector Woes

Sometimes consumers do win. The Federal Trade Commission just announced a $1 million settlement with debt collection agency CAMCO (Capital Acquisitions and Management Corp.) and affiliated companies. The company was sued back in December 2004 for the kinds of abusive, illegal and deceptive debt collection practices that consumers often complain about:

Trying to collect "zombie debts" -- debts so old that they are beyond the statute of limitations and cannot appear on credit reports; and pressuring consumers to pay debts that don't even belong to them.

While the FTC doesn't get involved in individual disputes, you should complain to them about unfair debt collection or creditor practices, because they will collect those complaints and take action if they find a pattern of abuse by a particular company. They also report annually to Congress on debt collector complaints they receive, and it's important for consumers to weigh in. It just takes a moment to file a complaint at FTC.gov.

And speaking of debt collectors, one of the trickiest collection issues these days is a medical bill that ends up in collections, usually because the consumer thought the insurance company should or would pay for it. It is especially frustrating to consumers who always always pay their bills on time but wind up with damaged credit because of a small bill. And it's also unfair to consumers who are injured or ill and can't stay on top of every single little bill, to add long-term injury to their credit reports.

We've blogged on that topic here on CreditBloggers before, and now I have some more advice to pass on to you. Here is the question I received from a reader:

Peter was monitoring his credit when he discovered a collection account on his credit report. It turns out it was for medical services received in 2005. He paid his co-pay at the time of treatment and never knew that his insurance didn't pay the balances, because the Explanations of Benefits were sent to another address. (Apparently the doctor didn't bill him directly, either.) Now his credit has taken a serious hit. He also mentions the medical office that turned him over to collections won't return his phone calls.

Robert Brennan, a savvy consumer law attorney with experience in credit cases (and a website with helpful info on credit damage cases), offers this advice:

"Gerri, I've seen this in a lot of cases where the patient signs a fine-print admission form stating that he/she is fully responsible for the costs of the treatment.  First thing is, tell consumers to find that clause in the admissions forms and cross it out, replacing it with, "If my insurance does not pay, I will not be responsible for any unpaid balances other than the agreed-upon deductible."  That puts the pressure back on the doctor's office to go after the insurance company, not the patient.

Unfortunately a lot of medical insurance contracts have a fine-print clause stating that you have to dispute a denial of benefits within one year of denial, and a lot of patients do not even learn of the denial until much later.  If this is the situation, have consumers contact the state insurance commissioner, which can frequently pressure the insurer into paying.  Also, the insurance company is supposed to give notice if it's declining benefits, and if the patient did not receive the notice, this is another "arrow in the quiver" for the consumer.

If this happened to me, I simply would not pay. I'd write a letter back to the collector and the creditor telling them that I would be glad to assist them with making a claim against the insurance policy, but the treatment should have been covered by the insurance policy and therefore I'm not paying and if they persist, I would file a bad faith claim against the insurance company as well as a wrongful debt collection claim against the debt collector.  If the consumer keeps the letter professional and sincerely offers his/her assistance in making a claim against the insurance policy (documenting everything, of course), that of course makes the consumer look better later on down the road in case the consumer does need to pursue litigation.

By the way, most experienced debt collectors are very handy at making claims against an insurance policy if they think it will get the debt paid. I've seen it a lot."

Robert adds, "This is a good example of why you should (and I believe you do) advise your clients to pull their credit reports at least 3 to 4 times a year, to catch stuff like this and dispute it early. 

Remember, even if the patient has signed a financial responsibility statement, he/she can still dispute the credit reporting and have it entered on their credit reports as a disputed debt because there is a dispute--whether the insurance company should pay for it."

I'll add to Robert's comments by reiterating my earlier advice: If you have a problem with a medical collection account damaging your credit, speak up! Let us know about your experience here, and also file a complaint with the FTC. The only way the rules will change is if we all start demanding they do!

Comments

[John Ermin]

I have astronomical medical bills in the amount of $165,000 for a recent surgery. I am receiving bills from doctors all over the hospital that I have never heard of, and then the one very large hospital bill. I've heard two different accounts of what I should do. Some say make small monthly payments, others say just ignore it because each payment extends the statute of limitations, since I'm acknowledging that this debt really is mine. Should I contact the companies sending me my bills to work out a payment plan with all of them, or just ignore it and wait for however many years I need to wait for it to get off my credit?

[Gerri Detweiler]

That's a tough situation to be in John. I would recommend a few things:

1. Do not pay any bills until you can get a handle on the whole picture. You may need to hire a medical billing audit company (google medical bill audit) to determine if the bills are actually correct. They should also be able to help you negoiate.

2. If there is no way you can pay those bills, you may need to get legal advice from an attorney to find out whether you need to consider bankruptcy (visit nacba.net for a referral). I don't know what your financial situation is, but those debts are the size of a mortgage, and it may or may not be possible for you to get out from under.

3. You should not just make token payments to try to keep collectors off your back. It can revive the statute of limitations, and may not get you far anyway. Contrary to popular rumors, you can still be sued if you are making payments.

4. You do want to find a way to address all this debt or you may be sued. The statute of limitations for these debts may be longer than the time period they can be reported on your credit. A bankruptcy attorney can advise you on that as well, even if you decide not to file.

Good luck and let us know how you do.

[Bhanu]

I was in ER in March 2006. I was sent a bill with a wrong name at the old address and I was not aware of any bill until July/Aug 2006, which is when i was contacted by a collection agency. I was told that they would report it to credit bureau if I do not pay them immediately. I told them that as I was insured at that time so I would ask my insurance company to pay for this. I provided them all the information and insurance company paid them in Dec 2006/Jan 2007.

Recently I was denied credit and the reason was an adverse account on credit report and then I pulled up my credit report and was shocked to see that this bill was reported to credit bureau even before the collection company contacted me (June 2006) and they lied to me that they did not report it yet. Although its showing as Paid Collection (Paid only by the insurance company) but still its an adverse account on my credit report.

Is it right for collection company to report it and not to tell me about it?

Is there any way it can be removed from credit report?

[Linda Marushka]

I had a baby in 2003 via C Section. I had Medicaid at that time. After the delivery i was calling the hospital to make sure everyone got paid and to inform them that Medicaid is taking care of the bills (actually, i was approved while at the hospital and everyone was new and the doctor's office has a note : medicaid pending or something like waiting on medicaid number) A month after the delivery we moved but did the change of address and i gave the new address to the hospital, too. So i kept receiving the bills and all. So 3 years after that i notice on my credit report that the doctor who performed a c-section on me sent the bill to collection agency.
First, i never knew the bill was unpaid. Second, i never got a notice the doctor's office will turn it to collection agency.
The hospital was paid, the lab was paid, it is only the doctor who was not paid.
So at that time i was covered my Medicaid. Now it is too late and medicaid would not paiy an old bill like that.
I don't have money to pay the collection agency.
Can anything be done?
Thank you so much

[Tie]

I was hospitalized a year ago and the main medical bill was paid by my insurance. But there were other doctors that saw me and I didn't know about their bills until I happened to check my credit report and saw that I had about 6 bills in collections. I had moved after I got out of the hospital and I had never received the bills. I contacted the collection agency... and I set up a payment plan... but they refuse to send me a statement of my total bill. Is it fair that the doctors nor the collection agency never sent me the bills? Can these negatives be removed from my credit report if I never knew about these bills?

[Nicole Kehoe]

I have many medical bills on my credit that should have been paid by the insurance I had at the time. As I have sent all the inurance information over to the collectors they are stating that is past the time to file and they have placed these items on my credit. Is there anything that I can do?

[Medical Bill]

We can help with you outrageous medical bills. Insurance sucks, we can help
www.billmediation.com

[Annette White]

I just recieved a letter from a collection agency in Bakersfield, CA saying that I owe for ambulance company in Tulare, CA $760 plus $254 interest. I really thought that I had paid this bill long ago,since this bill happened in either 2000, or 2001. They called once about a year ago, and now I get this letter saying they want me to give permission to contact my employer to attach my wages. We live in Iowa now, and I barely make enough to survive. Isn't there a time limit on this? We'e only lived here for 5 years, and never did they contact me when I was still living in the same town in California. I don't have the money to pay for it now any way. What should I do?

i had surgery back in 2005 and i looked at my credit report and saw that i had some bills unpaid on there. but the only problem is that the address the bills were sent to was not mine it was my mothers who had insurance on me at the time. i never knew that i was getting billed 'till now. can i dispute it and get if off my credit since she was the one liable?

[Gerri]

Were you under 18 years old at the time?

[Susan]

Am I responsible for a hospital bill that was billed to my insurance when the original hospital stay was in June of 2007 and the bill was just now sent to my insurance in October of 2008? The insurance paid their portion but put the remainder on my deductible. I was under the understanding that if the hospital tried to bill for services over one year after the original date they were out of luck. Please help!

[Gerri]

Susan,

I understand it's no fun at all to get a bill like that out of the blue.

If the charges were correct, and you owed your deductible, I would encourage you to pay what you owe or work out a payment plan if possible. Hospitals wouldn't be able to stay in business if patients didn't pay their bills.

But if you can't pay the bill, or you aren't sure it is correct, then you can talk with their billing department to see if they will work with you. If you do have to work out payments, try to get them to agree in writing not to send it to collections while you keep you your end of the agreement. You don't want this to end up as a collection account on your credit report.

I am not aware of a one year statute of limitations on hospital bills, but you can certainly check with your state attorney general's office or a consumer law attorney to check that out.

The best of luck to you.