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Knowing When to Say When

Healthcare facilities in a number of states have been labeled as too aggressive for filing lawsuits to collect from individuals with unpaid medical debts (https://www.miamiherald.com/news/health-care/article239075338.html). In response, a number of those facilities have adopted new policies and procedures that bar themselves from filing lawsuits against individuals altogether. Regardless of the amount of the debt or the individual’s intention — or lack thereof — to repay it, hospitals will not sue to recover the amount they are owed.

Making the decision to file a lawsuit against a former patient with an unpaid debt is always difficult. The legal process is strained and adversarial and can cause significant hardships to those who are being sued for years after the suit is filed. But hospitals are businesses and businesses need money to keep the lights on. If a patient walks out with a huge medical bill and opts — for whatever reason — not to repay it, the hospital is then faced with a difficult decision: write off the unpaid debt and try to find additional revenue somewhere else, or sue to recover what is owed.

The reports that have labeled hospitals for being too aggressive is making the decision to deploy a legal strategy even more troublesome. Along with all the considerations listed earlier, now the decision to sue or not also puts a hospital in the middle of a public relations minefield without a map to escape.

Ultimately, the decision to sue a former patient is best made on a case-by-case basis. Trying to assess the patient’s financial situation and likelihood of being able to repay the debt are two of the key factors that need to be taken into consideration. Filing a lawsuit against someone who does not have a lot of assets and is working in a low-income job is not worth the time and effort of trying to recover that debt. But filing a lawsuit against an individual who is not considered to be low-income and may have the means to repay the debt but is not willing to do so is another situation entirely.

As with any process that is likely to be scrutinized, having a defined plan in place that lays out the steps under which an account is considered for a legal collection strategy is the best way forward and a strong defense should a reporter come knocking on your door one day. That process should include when accounts are sent to collection agencies, if unpaid debts are to be reported to credit bureaus, and whether an account is to be evaluated for a possible lawsuit.

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