MEDICAL COLLECTION ACTIVITIES BY U.S. PROVIDERS

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1 MEDICAL COLLECTION ACTIVITIES BY U.S. PROVIDERS Timothy M. Hartley, Esq. Hartley Law Offices, PLC 800 SE Third Avenue Fourth Floor Fort Lauderdale, Florida T F

2 Medical Collection Activities in the US Governed by the FDCPA Does and Don ts of U.S. Debt Collection Can call patients to collect bills; Can write to patients; Can file suit against patients within SOL Florida-Five Years on written contract California-Four Years on written contract Arizona-Six years on written contract Texas- Four years on written contract Can also file suit against insurers during these time periods if there has been an assignment of benefits of the patient s insurance policy or other contractual relationship

3 Increased Aggressiveness of Providers to Obtain Payment Lawyers, Collection Companies, Audit Companies are finding millions of dollars each season in unpaid, late paid, underpaid claims; Began with review of payments and denials of domestic claims; With advent of access to PPO agreements by foreign payors, same business model fits for foreign patient claims; No reason why U.S. providers should not and will not try to enforce the agreements through which foreign payors access discounts-they have nothing to lose.

4 Potential for Successful Collection Against Canadian Travelers If medical bills in the U.S. are not fully paid by the insurer and a balance is left, the provider is fully entitled to pursue collection of the balance from the insurer or from the patient or both; The Statute of Limitations to pursue such a debt in Florida is Five Years; Beals v. Saldanha, 2003 SCC 72 If Canadian Defendants have notice of claim and U.S. Due Process is followed, a Default judgment rendered in the U.S. is fully enforceable in Canada; Obtaining service of a U.S. lawsuit on a Canadian is easy-i do it every day.

5 Statutes Of Limitation or, the Ultimate Look Back Provision A statute of limitation is the time period during which a party may file suit for such things as an unpaid medical bill. Check the applicable statutes of limitation in the jurisdictions where your insureds travel. The Florida Statute of Limitation on an unpaid debt founded upon a written instrument, such as a hospital admission/financial agreement, is five (5) years and four (4) years for a general obligation. Fla. Stat Just when you thought you could close that file you settled two years ago, your insured is served with a lawsuit for the unpaid balance of his bill.

6 Statutes of Limitation to Sue for Breach of Contract and Related Claims Five years for breach of written contract in Florida Express Contract Assignment of Benefits Four years for Implied Contract in Florida Four Years for Unjust Enrichment Four Years for Statutory Violations Four Years for Fraud

7 Why Do Insurance Companies Get Sued? Lawyers love insurance companies who are at the eye of the perfect legal storm. They are solvent targets. There are whole bodies of law governing the interpretation of insurance policies and the actions of Insurance Companies, their agents and administrators. The Florida Insurance Code found at Chapters 624 through 651 of the Florida Statutes, is the largest single body of law under the Florida Statutes. In practice, this means that it is probably easier for a lawyer to figure out a way to sue an insurance company than just about any other kind of business. There are built in incentives to sue insurance companies as insureds are entitled to payment of their attorneys fees if they successfully sue their insurer-whole subpractices have evolved from this statutory provision. In the context of claims negotiated and paid through TPAs, PPOs and their related agreements, Insurance companies are operating through agents as principals and are legally responsible for the actions of their agents. As such, they become targets for litigation.

8 Contractual Relationship Between Insurer and Hospital The Contract under which a Hospital can claim payment from an insurer can arise in a variety of ways: Assignment of Benefits from patient to hospital; Quasi Contract or Contract Implied in Law ; implied contract n. an agreement which is found to exist based on the circumstances when to deny a contract would be unfair and/or result in unjust enrichment to one of the parties. An implied contract is distinguished from an "express contract." Express Contract or a written contract between the insurer and the provider, either directly or through a third party or intermediary; PPO agreements/network Agreements fall into this category

9 Assignments of Benefits to Medical Providers When your insured is admitted to a Hospital or receives treatment from any medical provider, he or she will sign a form called an Assignment of Benefits. The Assignment transfers to the medical provider any and all rights the insured has under his or her insurance policy thereby allowing the hospital or medical provider to step into the shoes of your insured and enforce his or her rights under the policy.

10 Fraud Fraud: A false statement made by one party with the intent to deceive or with reckless indifference to the truth of falsity of the statement, upon which another party reasonably relies who, as a result of such reliance, suffers damage. Misrepresentations as to amount or existence of coverage, access to networks, placement or existence of logos on insurance cards are all examples of actionable fraud. Any representation designed to mislead constitutes fraud. Damages for fraud claims routinely include punitive damages and may result in regulatory discipline.

11 Breach Of Contract Claims and First Party Bad Faith Now that the Hospital is your insured, it has the right to file suit for non-payment of any claims under your insured s policy, for wrongful denial of your insured s claim and for First Party Bad Faith. First Party Bad Faith is the statutory cousin of Third Party Bad Faith and allows an insured to sue his own insurance company if it fails to pay his own claim in a fair and timely manner. Because the Insurance Policy is a written contract, the applicable Florida Statute of Limitations is five (5) years to file suit for breach of a policy. The insured, or his assignee has four (4) years to file a lawsuit in Florida for any other claim arising out the policy, including First Party Bad Faith.

12 What is Bad Faith? Bad Faith is a theory of liability arising out of an insurer s obligation to treat its insured fairly and honestly. All insurance contracts, as well as any other contract entered into in the United States has an implied duty of good faith in fair dealing. Canadian law also allows for bad faith claims against insurers; this area of the law is rapidly expanding.

13 Bad Faith Can Turn A Small Policy Into A Big One Scenario: Insured has a $250, policy with his insurer who has a chance to settle a claim against its insured worth $7,000, * Demand is made on the insurer to pay its policy limits in exchange for a release from the claimant to the insured. Insurer fails to settle case and insured is sued by claimant. Claimant obtains a $7,000, judgment against insured who now has a bad faith claim against his insurance company. Insured assigns his rights to sue insurer for bad faith to claimant who settles bad faith claim against insurance company for 20 times the policy limits.

14 How Can A Travel Insurer Be Sued for Bad Faith? By failing to settle claims with medical providers on behalf of its insured when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for [his] [her] [its] [their] interests. If the insurer could and should have settled its insured s medical bills within the insured s policy limits and fails to do so, thereby placing its insured at risk of a judgment, the insurer may be forced to pay damages far above its policy limits. The insurer may also be liable for peace of mind damages (known in the U.S. as emotional distress ) as well as punitive damages.

15 The Nuts and Bolts of a Bad Faith Claim Under a typical bad faith scenario, the claimant would obtain a judgment against the insured for the full amount of the claim. The insured can then assign to the claimant the insured s bad faith action after the final judgment has been entered against the insured. The claimant and the insured will then enter into a separate agreement whereby the claimant would agree not to execute on the judgment against the insured during the pendency of the bad faith litigation.

16 How to Avoid Bad Faith The cardinal rule: treat your insured s interests with the utmost care: Do not delay in settling claims-this merely invites lawsuits against your insureds and bad faith claims against you. Once the claim is settled, obtain a written, signed settlement agreement with the medical provider specifying that the insured/patient is released from further liability. Do not rely on a medical provider s mere depositing of a unilaterally determined claims payment as settlement of a claim-unless there is a signed settlement agreement releasing the insured from further responsibility, the provider is free to sue you or your insured for the balance of the bill.

17 Open Files Are A Minefield Of Potential Liability. Hospitals and other medical providers are reviewing open accounts going back five (5) years and pursuing insurers and patients for the unpaid balances of those accounts, plus interest calculated at between 8% and 11% per year on the unpaid balance. Florida hospitals have millions of dollars in unpaid travel claims on their books. They are beginning to aggressively pursue payment of those unpaid accounts.

18 The Ultimate Responsibility Rests With The Insurer As the issuer of the policy, you, the insurer have the ultimate responsibility for the manner in which a claim is handled or paid. If your agent or TPA engages in fraud, illegal or unfair claims handling practices, you may ultimately be held liable. If an insured is sued for the unpaid balance of a bill which could have been settled within your policy limits, you will be the defendant in the bad faith action, not your TPA. When an insured or hospital files suit for breach of an insurance contract, they will name the insurer as the defendant, not your TPA.

19 Proper Settlement Procedures Will Help You Sleep Better At Night. A signed settlement agreement closing a file once and for all will prevent those calls from your insured years after you sent the claim payment telling you he has been sued for the balance of his unpaid bill.