Disclaimer
• The information contained herein is general
and not fact specific and is offered for
informational purposes only. You should
not act upon the information without
seeking professional counsel as this
document does not constitute legal advice.
For specific inquiries, please feel free to
contact this law firm or your legal counsel.
Outline
• FDCPA
• Statute of Limitations
• Financial Responsibility
• Issues Relating to Bankruptcy
• Court Filings
• Ways to Improve Collections Success
FDCPA
• Fair Debt Collections Practices Act
– Federal statute (15 U.S.C. 1692)
– Purpose: prevent abusive practices by third
party collectors
– Statute dictates with whom, when and how a
third party can communicate with patient-
debtors
FDCPA
• Why it is important for your practice?
– “Hotbed” for consumer litigation
– When outsourcing accounts
• Your patients
• Your practice
– Indemnification Agreements
Statute of Limitations
• Open Account
– Three (3) years [Va. Code §8.01-246(4)]
• Contract/Patient Agreement
– Five (5) years [Va. Code §8.01-246(2)]
– Needs to be executed to be enforceable
Statute of Limitations
• When does statute commence?
– Date of last payment
– Date of last services rendered
• Hypothetical
– Payment plans
– Subsequent visits
Patient Financial Agreements
• What should this contain from a legal
collections perspective?– Fully executed and dated
– Guarantor signature and printed name (if applicable)
– Attorney’s fees
– Interest
– Court costs
– Specified “no show” fees
– Insurance estimate disclaimer
Patient Financial Agreements
• Original Agreement v. Scanned Copy
– Electronic records
– Lost/Destroyed Contract Affidavits [Va. Code
§8.01-32]
• Court specific
– Electronic signatures
Financial Responsibility
• Spousal Liability• If spouse has not signed as guarantor
• Certain liability:
– Va. Code §8.01-220.2
– Emergency Medical Care
• Likely Liability
– Va. Code §55-37
– Doctrine of Necessaries
– Burden on Practice to prove non-patient spouse is the
financial supporter of family (Johnson-Willis v. Sale) and
– Married and living together at time of service
Financial Responsibility
• Spousal Liability (con’t)• “Living Together”
– Code specifies that spouses need to be living together [Va.
Code §8.01-220.2 and 55-37]
• Includes emergency admission and all follow up in-
patient care provided during the initial emergency
admission. See also Sentara Virginia Beach Gen. Hosp. v.
LeBeau, 188 F. Supp. 2d 623 (2002).
Financial Responsibility
• Minor Children and Divorced Parents
– Doctrine of Necessaries [Winchester Memorial
Hospital v. Boyce, 1984 WL 276279 at *3]
• Broadly construed by courts
– Divorced parents
• Generally both are liable in proportion to child
support obligations unless agreed to otherwise in
custody agreement [Va. Code §20-108.2]
• Signed as guarantor?
Financial Responsibility
• Deceased Patients
– Difficult to collect due to various exemptions
• Costs/Expenses of Estate Administration
• Exemptions
– Family allowance ($18,000)
– up to $15,000 of exempt property
– Homestead allowance (up to $15,000)
• Funeral Expenses
• Medical debts are lower in priority
Financial Responsibility
• Personal Injury Cases
– Medical Liens [Va. Code §8.01-66.2]
• Proceeds from personal injury settlement
– $2,500 for hospitals/ $750 for practice
• Must give notice of lien to plaintiff’s attorney [Va.
Code §8.01-66.5]
– Patient’s Responsibility
Financial Responsibility
• Worker’s Compensation Claims
– Cease all collection activities until claim has
been resolved [Va. Code §65.2-601.1]
– Statute of limitations is tolled until claim is
resolved
– No “balance billing” patient [Va. Code §65.2-714]
Issues Relating to Bankruptcy
• Personal Bankruptcies
– Chapter 7 & Chapter 13
– Proof of Claims
– Bankruptcy filing date/Automatic Stay
– 341 Hearings
– “Discharged” v. “Dismissed”
Issues Relating to Bankruptcy
• Filing a Proof of Claim
– Must be filed by practice and/or attorney
– New trend of consumer litigation
• When attaching supporting documents MUST
REDACT certain information to avoid identity theft.
Issues Relating to Bankruptcy
• Federal Rule Bankruptcy Procedure 9037:
– You can only show:• Last 4 digits of social security # or taxpayer identification #
• The year of the individual’s birth
• Minor child’s initials only
• Last 4 digits of financial account #
– Note: Other sensitive information may require
redaction as well.
Issues Relating to Bankruptcy
• Bankruptcy filing date/Automatic Stay
– Automatic Stay takes effect as soon as
bankruptcy is filed by patient-debtor
– Collection activities are prohibited on debts
stemming from services rendered prior to
bankruptcy filing date
– 11 U.S.C.A. §362
Issues Relating to Bankruptcy
• 341 Meeting of Creditors
– Chapter 13 bankruptcies
– Examination of patient-debtor by various
creditors and bankruptcy trustee regarding
his/her financial circumstances
Issues Relating to Bankruptcy
• “Discharged” v. “Dismissed”
– If bankruptcy is discharged, any debt that is
discharged in bankruptcy is no longer
collectible (bankruptcy filing deemed valid)
– If bankruptcy is dismissed, bankruptcy was
denied and disallowed by court, debts are still
collectible
Court Filings
• General District Court
– Warrant in Debt
• Venue
• Cost
– Post Judgment Remedies
• Interrogatories
• Garnishments
• Docketing Judgments – Lien
• Writ of Fieri Facias – Levy
Court Filings
• General District Court (con’t)
– Service members Civil Relief Act [Va. Code §8.01-15.2]
• Soldier’s & Sailor’s Affidavit
– Judgments
• Valid for 10 years
– If docketed, can be extended to 20 years
• Reported to credit bureaus
• If satisfied (paid), judgment needs to be released
– Notice of Satisfaction
– Release of Lien
Ways to Improve Collections
Success
• “Timing, Degree, Conviction”
• Timing:
– Timely Billing & Timely Referrals
• Be prompt when billing patient and insurance
• 60-120 days recommended time to refer files to third
party
Ways to Improve Collections
Success• Degree:
– Information is key
– Patient intake forms• Key fields to include: employment information,
emergency contact, guarantor information, cell phone numbers
• Collections language:– “Should this account become delinquent and collection becomes
necessary, the undersigned agrees to be responsible for attorney’s fees of 33 1/3%, interest at 18% per annum from the last date of payment and any and all applicable court costs.”
– Retain copies of checks
Ways to Improve Collections
Success
• Conviction:
– Defined process for managing A/R
– Make it a priority with staff
– Make sure physicians and administrators agree
on policy and approach
– Take broken promises seriously