Expert: Regan Shinski - 9/18/2009

Question
As I have an HSA, I was "shopping" for a colonoscopy. I had previously called my insurance company and learned they have a cap for what they pay for the procedure.  When I requested the cost of the colonoscopy from a local medical facility (one I use for routine doctor visits) it was provided, but was comparatively high with respect to other facilities.  When I called their billing department to get a clarification on some of the line items, I mentioned that their cost was high and I would probably go elsewhere.  The woman I spoke with then informed me that there would be no cost to me.  They would discount whatever amount was over my insurance carrier's cap.  Given the circumstances, I had the procedure done there, and later received an invoice from the hospital for over $2,000--costs that were beyond my carrier's coverage.  When I called to inquire, another woman in the billing department stated that discounts were only applied prior to the hospital's billing of the insurance carrier and then only to carriers with which the hospital had a contract (mine did not).  Therefore I was stuck with paying the invoice out-of-pocket.

My decision to have the procedure done at their facility was based on information I received FROM THEM.  And it wound up costing substantially more than I would have spent had I gone somewhere else.  I feel that if they made a mistake in what they told me, they should be liable for that mistake--not me.  

Unfortunately, all I have is the quote the hospital sent ahead of time and the name of the original woman I spoke with.  The billing dept. has records regarding our correspondence (and presumably the contractual status of my carrier as I've been there in the past)--but the conversation regarding the discount and the fact there would be no out-of-pocket costs to me was just that: a conversation.  Do I have any recourse?  Could it be considered a verbal contract, allowing me to perhaps go to small claims court and get the debt rescinded?   Any other ideas?  Or am I just on the hook for the bill?

Answer
Hello Clay:

You are on track with your thinking on this.  The key is the verbal conversation.  The simple answer is you basically have three options; pay the full amount, try and settle for less, or not pay and take it to court if they continue to collect.  In this case, you really cannot really "fight it" legally until they turn it over to a collection agency.

If you pay it in full now, it will go away - obviously.

If you want to try and settle this now, obviously try the higher-ups.  You can also try the Better Business Bureau, Attorney General's office, and any other licensing (medical) group that govern them.  Often a complaint to these agencies will facilitate a zero dollar settlement.

If you want to fight it (personally, I would) there are some things you can do to prepare.  

*  Try and get applicable phone records showing your phone conversations.  Get the ones showing you calling other places to price shop.  This helps prove your point that you never would have gone there without thinking it was zero out of pocket.

*  Get/keep the quotes from other facilities showing their costs were less than what this place is billing you for.

*  If your state allows - A BIG IF, PLEASE RESEARCH - you may want to try and record a phone call with the employee that told you there would not be any out of pocket expenses.  If you get her on tape admitting the conversation, you should be ok in any defense.  You just have to know if you are a one-party or two-party notification state.  See the list here:  http://www.callcorder.com/phone-recording-law-america.htm#State Laws (Table)

*  If you receive a collection notice, don't panic.  They cannot report to the credit bureaus for at least 30 days from their initial dunning letter.  It will contain a phrase similar to "if you do not respond to this notice within 30 days we will assume the debt is valid."  RESPOND to this letter via certified mail!  It is critical you ask for "validation" under the FDCPA.  

*  At the very least - if you don't want to risk a collection on your credit - you should be able to negotiate a reduced amount at that point with the collection agency.  Personally, I would fight it even further ($0) and you can contact me at that point to discuss options, but if you want a path of lesser resistance you can settle with the collection agency in this time window without it affecting your credit.

I hope this helps!  It was not my intention to swamp you with information on such a simple question :)  Please let me know if you have any other questions or concerns.

Regan