Dangerous Debt Collectors

If you have the bad luck to find yourself taking a trip to a hospital in Minnesota, Michigan or Utah in the near future, be on the lookout for debt collectors from Accretive Health posing as hospital employees, accessing your private medical records and trying to get at your wallet while simulatenously discouraging you from taking on any additional medical treatment, regardless of whether you may actually need it to oh, say, save your life. Private collection companies like Accretive and their practices represent the quintessence of debts, legitimate or otherwise, endangering one’s physical health.

Following up on the Physical Risks of Debt presented a few days ago, in which we discussed the use of “debtors’ prisons” as a means of coercing payments, a related and just developing story was brought to my attention (h/t JoeP). It is the rather egregious story of “undercover” debt collectors who pose as the front-line staff of hospitals, including employees working in patient registration, scheduling and billing, with the full support of the hospitals that house them. This story was just broken by the New York Times on Tuesday, with Jessica Silver-Greenerg reporting:

Debt Collector Is Faulted for Tough Tactics in Hospitals

 

Hospital patients waiting in an emergency room or convalescing after surgery are being confronted by an unexpected visitor: a debt collector at bedside.

 

This and other aggressive tactics by one of the nation’s largest collectors of medical debts, Accretive Health, were revealed on Tuesday by the Minnesota attorney general, raising concerns that such practices have become common at hospitals across the country.

 

The tactics, like embedding debt collectors as employees in emergency rooms and demanding that patients pay before receiving treatment, were outlined in hundreds of company documents released by the attorney general. And they cast a spotlight on the increasingly desperate strategies among hospitals to recoup payments as their unpaid debts mount.

 

To patients, the debt collectors may look indistinguishable from hospital employees, may demand they pay outstanding bills and may discourage them from seeking emergency care at all, even using scripts like those in collection boiler rooms, according to the documents and employees interviewed by The New York Times.

 

In some cases, the company’s workers had access to health information while persuading patients to pay overdue bills, possibly in violation of federal privacy laws, the documents indicate.

 

The attorney general, Lori Swanson, also said that Accretive employees may have broken the law by not clearly identifying themselves as debt collectors.

 

Accretive Health has contracts not only with two hospitals cited in Minnesota but also with some of the largest hospital systems in the country, including Henry Ford Health System in Michigan and Intermountain Healthcare in Utah. Company executives declined to comment on Tuesday.

 

…

 

As hospitals struggle under a glut of unpaid bills, they are reaching out to companies like Accretive that specialize in collecting medical bills.

 

Hospitals have long hired outside collection agencies to pursue patients after they have left hospital facilities. But financial pressures are altering the collection landscape so that they are now letting collection firms in the front door, according to Don May, the policy adviser for the American Hospital Association, a trade group.

 

To achieve promised savings, hospitals turn over the management of their front-line staffing — like patient registration and scheduling — and their back-office collection activities.

 

Concerns are mounting that the cozy working relationships will undercut patient care and threaten privacy, said Anthony Wright, executive director of Health Access California, a consumer advocacy coalition. “The mission of these companies is in direct opposition to the supposed mission of these hospitals.”

 

…

 

Employees were told to stall patients entering the emergency room until they had agreed to pay a previous balance, according to the documents. Employees in the emergency room, for example, were told to ask incoming patients first for a credit card payment. If that failed, employees were told to say, “If you have your checkbook in your car I will be happy to wait for you,” internal documents show.

 

Employees at Accretive’s client hospitals ask patients to make “point of service” payments before they receive treatment. Until she went to Fairview for her son Maxx’s ear tube surgery in November, Marcia Newton, a stay-at-home mother in Corcoran, Minn., said she had never been asked to pay for care before receiving it. “They were really aggressive about getting that money upfront,” she said in an interview.

 

Ms. Newton was shocked to learn that the employees were debt collectors. “You really feel hoodwinked,” she said.

 

While hospital collections at Fairview increased, patient care suffered, the employees said. “Patients are harassed mercilessly,” a hospital employee told Ms. Swanson.

We are talking about a complex, multi-faceted issue here, and it’s not just the “evil” debt collectors who are to blame for all of our problems. It’s really a combination of an oppressive debt-based, for-profit system and an entitlement culture that has led many of these institutions and people into the thankless situation they are now in. On the other hand, many of these private institutions have benefitted tremendously from the promotion of this credit-entitlement complex over the years, and now they are intentionally subverting the system’s rules in a malicious way to save their own asses.

What’s important for our purposes, though, is to simply understand that there are real risks associated with any form of debt and that is why it’s generally a great idea to stay out of it. It is also important to understand what [few] rights you have when dealing with debt collectors. The primary source of protection is the Fair Debt Collection Practices Act (FDCPA), which was created “to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy“.

The FDCPA is just one means of protection from debt collectors, and will obviously be very limited in its ability to shield us from the immense power/influence of large creditor institutions and governments that bend to their will, but right now it could still provide much-needed relief for some people who are being constantly harassed for payments. So here is what the Act requires of “debt collectors” (who are defined broadly), and more information on the FDCPA can be found here on the Federal Trade Commission’s website.

Fair Debt Collection Practices Act

 

The Act requires debt collectors to do the following (among other requirements):

 

*Identify themselves and notify the consumer, in every communication, that the communication is from a debt collector, and in the initial communication that any information obtained will be used to effect collection of the debt.

 

*Give the name and address of the original creditor (company to which the debt was originally payable) upon the consumer’s written request made within 30 days of receipt of the §1692g notice;

 

*Notify the consumer of their right to dispute the debt (Section 805), in part or in full, with the debt collector. The 30-day “§1692g” notice is required to be sent by debt collectors within five days of the initial communication with the consumer, though in 2006 the definition of “initial communication” was amended to exclude “a formal pleading in a civil action” for purposes of triggering the §1692g notice,[24] complicating the matter where the debt collector is an attorney or law firm. The consumer’s receipt of this notice starts the clock running on the 30-day right to demand verification of the debt from the debt collector.

 

*Provide verification of the debt[25] If a consumer sends a written dispute or request for verification within 30 days of receiving the §1692g notice, then the debt collector must either mail the consumer the requested verification information or cease collection efforts altogether. Such asserted disputes must also be reported by the creditor to any credit bureau that reports the debt. Consumers may still dispute a debt verbally or after the thirty-day period has elapsed, but doing so waives the right to compel the debt collector to produce verification of the debt. Verification should include at a minimum the amount owed and the name and address of the original creditor.[13]

 

*File a lawsuit in a proper venue. If a debt collector chooses to file a lawsuit, it may only be in a place where the consumer lives or signed the contract[26] Note, however, that this does not prevent the debt collector from being sued in other venues for violating the Act, such as when the consumer moves outside the venue and a letter demanding payment is forwarded to the new address, even if the debt collector is unaware of such a change in residence.