Expert: Regan Shinski - 8/1/2010

Question
I was seen in a hospital in Utah in December of 2009. I was dishcharge under "Back Pain". After following up with my primary care doctor I was told the radiologist had read the CT (from the hospital) and determined I had kidney stones (not just back pain). About two days later, the hospital called me and said they got a urine culture back and I had E. Coli and called in a prescription. I asked about the CT and why I was discharged under back pain if the CT showed stones, the RN said she wasn't sure and would have the Doctor call me back. He never did. About two weeks later, I got an Explaination of Benefits from a previous insurance carrier denying the claim as "Member not Insured at time of service". I called the billing office and gave them my correct insurance information (although my mother had given them this when I was admitted). They billed the correct insurance in January and I received my first bill in February. I promptly contacted them and asked to be put on a payment plan as the Hospital bill was applied to my deductible. We agreed to $75.00 per month. In March my debit card information was stolen out of a gas pump in Salt Lake City (as was about 500 other accounts) and used to make large purchases in California. The policy in both Salt Lake and California were contacted as was the bank. As the bank took their sweet time to return the money to the account all my bills were put on hold. I contacted hospital billing to explain the situation. A representative said it would be okay to miss March and to call back to be put back a payment plan. I asked if I would receive a March bill, she said yes.I did not recieve another bill. On June 16th I called and asked where my bill was. I was told a bill generated on the 14th and I would recieve it shortly. I finally got a bill on the 8th of July. It was dated 06/20/10. I made a payment of $100.00 on the 19th of July. I got a letter on the 31st of July from a collection agency (dated 07/28/10) saying my account was sent over. Although the amount with collections shows the correct amount (the 100.00 seems to have been applied before the account was sent), I thought the hospital would have some legal obligation to contact me (either thru mail or phone) telling me my account was seriously delinquent and going to be sent. I didn't know they could take a payment and send me to collections within a week (had I known that, I wouldnt have paid it and tried to negotiate with the collection agency to pay a lower amount). The hospital billing department has my contact information and I called them in June, the representative didn't say anything to me about the account, or its status (just that a bill generated, although I have serious doubt she knew what she was talking about as the date she gave me and the date on the bill don't match). I have phone records to show the calls I made, but I neglected to write down anyones name - I have never had a problem with this medical group before.

Answer
Hi Ashley:

The basic point of a creditor having to notify you before turning an account over to a collection agency is NOT true.  They do not need to call you or send you anything.

However, they have to abide by contracts and that will be the key here.  The first and foremost contract is the hospital billing and admitting records.  These cases are tough and I get questions on them all the time.  Somewhere - buried in the hospital records - is likely a statement governing the billing and payments.  This is what will decide this issue.  It's further complicated by the insurance because that is also governed under a written contract.  All the other issues of payments and phone calls MAY play a part, but not as likely since a written contract (hospital admission records) cannot be modified by a verbal conversation/contract.

It pains me to say that it is possible you are facing a steep uphill climb.  It's tough because you have a good and consistent log of attempts and obviously took responsibility to try and prevent this despite the extenuating circumstances of the insurance mess-up, credit card theft and other issues.  However, it is likely you the hospital records allow them to do this without notifying you.

You have five possible options:

OPTION 1:  Check the records and see what it says about billing.  You may need to get records from them first.  If you can't find it in your records, write the hospital and ask on what grounds they turned it over to a collection agency.  It is possible they violated their own written contract by turning over to a collection agency inappropriately.  You may also want to check your state laws regarding this issue.  Some states have very consumer friendly laws regarding medical billing - California being one of them.

OPTION 2:  You can try and pursue that you had a verbal contract with the representatives to make payments and they prematurely turned it over to a collection agency.  Again, this is an uphill climb because written contracts always take priority over verbal contracts but in some cases - typically cases like this - and in some states you may have a chance.  You have to be able to prove they allowed you to make these payments and you didn't fail on your end of the bargain.

OPTION 3:  You can try and negotiate directly with the hospital and appeal to their customer service side.  This is often called a good-will approach.  Explain the situation in a concise but detailed letter.  Show you were making payments, had conversations, etc and you are dismayed they turned it over to collections as you were making progress at reducing the balance.  Send it to hospital higher-ups, not just the billing area.  Consider filing complaints with Better Business Bureau, state's attorney general office, and any medical association the hospital belongs to.

OPTION 4:  You pursue a settlement with the collection agency for a payment in exchange for deleting the account from the credit files.  Some collection agencies say they won't do this, many will, especially if they think it's the only way they are going to get money.  Make sure you have a WRITTEN agreement to do so BEFORE you send money.  

OPTION 5:  You can pursue deletion of the collection account through traditional professional credit repair techniques.

Good luck.  I hope it works out.  I hate to see people that have good records and have done the right thing in situations like this - that is half the battle and you did this pretty well.

Regan