Migliaccio & Rathod LLP is investigating whether nonprofit hospitals have improperly sold patients’ medical debts to debt-buying companies or permitted those companies to pursue collection actions without providing the financial assistance protections required by federal law.
Under the Affordable Care Act, nonprofit hospitals must maintain financial assistance programs and follow certain procedures before taking extraordinary steps to collect unpaid medical bills. These requirements also apply to many sales of medical debt. Under Section 501(r)(6) of the Internal Revenue Code, selling a patient’s medical debt generally constitutes an extraordinary collection action unless the hospital enters into a legally binding written agreement with the purchaser containing specified patient protections.
These protections include restrictions on aggressive collection activity, limitations on the amount the purchaser may collect, and procedures for adjusting or returning debt when a patient is determined to qualify for financial assistance.
Patients may not realize that their hospital debt has been transferred to a separate company. They may subsequently receive collection demands, lawsuits, or other attempts to collect the debt without understanding that they could qualify for financial assistance through the original hospital.
What Consumers May Have Experienced:
- Discovering that a hospital transferred or sold their medical debt to a separate collection company;
- Receiving collection calls, letters, or lawsuits from a company they had never previously dealt with;
- Being charged interest or additional fees after a medical debt was transferred.;
- Continuing to receive collection demands after qualifying for hospital financial assistance;
- Being pursued for a debt that should have been reduced, forgiven, or adjusted under the hospital’s financial assistance policy;
- Paying both a hospital and a separate collection company toward the same underlying medical bill;
Potential Claims May Include:
- Violations of Internal Revenue Code and related Treasury Regulations;
- Improper sale or transfer of medical debt without the required contractual safeguards;
- Failure to comply with contractual restrictions on collection activity;
- Improper collection of amounts exceeding the patient’s financial assistance-adjusted responsibility;
- FDCPA violations by debt buyers or third-party collection agencies, where applicable;
- Unfair or deceptive debt collection practices, if supported by the facts.
Signs You May Be Affected:
- Your nonprofit hospital medical debt was sold or transferred to a debt buyer;
- You received collection notices from a company other than the hospital where you received treatment;
- You were sued by a debt buyer over an unpaid hospital bill;
- You qualified for financial assistance but continued receiving collection demands for the original balance;
- You were charged interest or fees after your medical debt was transferred;
- You paid a hospital and a separate collection company for the same medical services.
If a nonprofit hospital sold or transferred your medical debt to a debt collection company, or if you were sued, charged additional fees, or pursued for payment by a debt buyer despite potentially qualifying for financial assistance, Migliaccio & Rathod LLP would like to hear from you. Please complete the contact form on this page, send us an email at [email protected], or give us a call at (202) 470-3520.