Actions when sued for unpaid hospital bills: Rights?

Are you having trouble paying your hospital bill? Has your hospital filed a lawsuit against you? If yes, then you must be worried about your medical debt. But every problem has a solution, and this is no exception. However, to win a medical debt suit, you must be aware of your rights; otherwise you’ll never be able to defend yourself against aggressive collection practices.

These guidelines and your rights are described in a simple way, so that you can understand them easily and take the right action. If you’re still unable to deal with aggressive medical debt collection practices, then you can call call 800-530-OVLG.

When can you be sued for medical bills?

When you have unpaid bills, a hospital’s accounts department may contact you for payments. If you don't cooperate with them, there are a few measures they can take to collect payments.

  • They can assign the account to the internal collection department.
  • They can assign/sell the account to a debt collection agency.

Usually, hospitals sell unsettled accounts to a third-party collections agency when the internal collections department fails to receive payments from you. The third-party collections agency will contact you and demand payment. If you do not pay then they can file a lawsuit against you.

The hospital itself can also file a lawsuit against you. However, if your unpaid bill amount is less than a few thousand dollars, the hospital may opt not to sue simply to avoid the legal expenses associated with a suit. Attorney fees are likely to be between $200 and $400 per hour. Even if the court issues a judgment against you, the hospital is unlikely to profit off of the case because of the high cost of litigation. Even in a short case that takes only a few weeks to resolve, the attorney is more likely to show a profit on the case than the hospital.

What to do when you’re summoned to court for medical bills

First of all, the hospital should file a summons to start a court case. The hospital should send the copies of the summons to you in person or by mail.

Once you receive the summons, you should take the following steps:

  • Don’t ignore it. It’s a court document, and not acting on the summons could have significant consequences.
  • Check the summons for the deadline to respond, and read the instructions provided by the court.
  • If you get the summons in person, you generally have 20 days to answer.
  • If you get the summons by mail, you generally have 30 days to answer.
  • Follow the instructions provided to answer. Ideally, you should consult an attorney to defend you.

How to answer a summons for medical debt

You have many options when it comes to responding to the summons. You should be careful not to make claims that are not true, as they may result in you losing the case.

  • You can say that the charges are not correct
  • You can claim that you can’t afford the charges.
  • You can claim that your income is low, and the hospital didn’t provide you any financial support.
  • You can claim that you never got a notice of the debt from the hospital. Note that if that’s not true, the hospital can probably prove it.
  • You can defend yourself by saying that you were eligible for Medicaid, but you never got help from the hospital for the application.
  • You can say that the hospital asked you for additional documents and told you that the application was rejected.
  • You can claim that the hospital failed to generate a proper bill, according to your insurer. Ideally, you should provide documentation from the insurer to support that claim.

Whatever approach you take, you will likely need to appear in court for a hearing at a date or time listed in the summons.

What if you lose by default

In case you don’t file a response, then the hospital will win the case by default. That means the court will enter a default judgement against you. At that point your only option is to file an order to show cause. That means you have to face the judge and explain the whole matter and prove that:

You were not well on the day of the hearing.
You didn't receive any papers from the court or from the hospital.
You were not well on the day of the hearing.
You thought that your insurance company paid the bills.
You were not well on the day of the hearing.
You were not well on the day of the hearing.

See also: Medical debt declines: Days of financial distress are now numbered

Can you go to jail for not paying hospital bills?

When collection agencies aren't able to collect payment from you, they can take legal action against you. We have discussed that before. The big question now is can you go to jail over unpaid hospital bills?

The honest answer is 'No.'

You won't go to jail for not paying hospital bills. Medical bills are civil debts. As per the law, you can't be sent to jail for not paying medical bills.

Are there exceptions to that rule?

Unfortunately, the most accurate answer is “sort of.” In certain states like Illinois, Ohio, Missouri, and Pennsylvania, debt collectors are using a new strategy to put debtors in jail when they don’t pay hospital bills.

It works like this. When a collections agency wins a lawsuit against you, the court will order a judgment against you. The collections agency can then garnish your wages or levy your bank account. If they can’t find any income or assets to be garnished, then they can request the court to ask you to appear for a debtor's examination.

If you don't appear at the debtor’s examination, or otherwise give a proper reply, the court can issue a warrant for your arrest. If you’re arrested, you'll be put in jail, where you will most likely stay until you pay a bond. Unfortunately, the amount of the bond is usually the same as the amount of the judgment.

I should be clear about what happens in this case: you are not being jailed for unpaid bills. You’re going to jail for ignoring a court order. Doing that is always a bad idea that puts your freedom at risk. Think very hard before ignoring court orders.

How to deal with hospital bills in collection

When your hospital bills are in collection, they appear on your credit report and hurt your FICO score. This reduces your chances of qualifying for credit cards and other loans. If you’re planning to apply for a credit card or a loan, then you should take prompt steps to safeguard your credit score.

Here’s how:

  1. Read your bills properly and calculate the total balance due: Are the amounts correct? Have you been billed for the right items? Check to see if the hospital has billed the insurance company for the appropriate services (if you have insurance, of course). If they did, find out why the insurance company didn’t pay the medical bills.
  2. Ask for proper validation of debt, in writing: Verify every penny before you pay one dime to the collections agency.
  3. Settle your medical debts: Do you know that hospitals have different pricing structures? If the hospitals have charged you $1300 for bandages, (and they might!) then you can argue with them. If you don’t feel confident doing that yourself—or you would just prefer to put the task in the hands of professionals - call (800)-530-OVLG. Our attorneys work in your state and are expert in the laws governing hospital debt - and your rights. Also, they negotiate debt for a living, so they’re good partners to have in your corner. They have a track record of reducing hospital bills and lowering balances.

Many hospitals count on the lack of consumer awareness. They count on the fact that consumers don’t know what they are billed for and they take advantage of that situation. Fortunately, attorneys know the laws. So neither the hospital nor the collections agency will easily fool them. An experienced attorney can negotiate discounts on the items that have been overcharged, and it’s very common to find items that have been overcharged. Our attorneys in particular know how to negotiate medical bills in collections very well.

Can a hospital turn you away for unpaid bills?

Yes, hospitals can turn you away for unpaid medical bills. Often patients are not aware of the fact that they have unpaid bills. They assume that their insurance company has taken care of their obligations and paid the bills. But the reality is frequently different.

The next time these patients go to the hospital, they may be turned away because of their past due medical bills. That’s when they discover they have unpaid bills in collections, and will be denied medical treatment until their debts are paid.

According to a study by FINRA Investor Education Foundation, 1 in 5 people with medical insurance has unpaid hospital bills. Most of them receive collection calls. Sometimes, consumers answer those calls and resolve the debt. At other times, consumers don’t even answer those collection calls, assuming they’re spam, scammers or wrong numbers.

Medical debts are unexpected and unplanned. These are actually emergency debts. So many people argue that consumers shouldn't be turned away by the hospitals. After all, where would people go if they have an accident?

The law states that people can’t be turned away for emergency care fees. But the law doesn't specify that people can’t be turned away for unpaid hospital bills. So you can’t force a hospital on this issue.

Know your rights

(The following applies only in the state of New York.)

In New York, medical bill payment plan laws say:

  1. The deposit amount must be based on your ability to pay
  2. The amount should be included in the charges allowed under New York’s Hospital Assistance Law (HAFL).
  3. You can file a complaint if you think you have been denied care due to your inability to pay.
  4. Try to contact New York State Attorney General’s Health Care Bureau.
    • Studies have shown that uninsured patients are asked to pay more than patients who are insured. But according to HAFL, 2007, if a patient's income is below 300% of the Federal Poverty Level (FPL), then that patient should not be charged more than the hospital would charge a health insurance company.
    • You may be asked to pay before you are admitted. The pre-admission deposit is covered under HFAL, and the hospital can’t turn you away for emergency care for being unable to pay the emergency care fees.
    • If you’re unable to afford the pre-admission deposit, then you can arrange to pay a deposit, for which the hospital may demand no more than 10% of your monthly income.
    • Even if you do not carry private insurance, your hospital services may be covered by Medicaid or Supplemental Security Income (SSI). It’s possible, but difficult, to find charitable organizations that may help you with hospital bills.
    • In any case, speak to the hospital and your doctors about finding ways to reduce your costs or to have your bills paid. Also, understand that you can file a complaint if you believe your rights have been violated.

Know your rights: Hospital bill collection laws

Sometimes, collection agencies harass debtors unethically. Know your rights to avoid harassment. The Fair Debt Collection Practices Act, a federal law, prohibits collection agencies and attorneys from most types of aggressive collection practices.

If the collection agency engages in aggressive collection practices, they may be violating the law. In that case, ask them to stop the harassment by sending them a cease-and-desist letter. If the agency still harasses you, then you can file a complaint with the New York City Department of Consumer Affairs and the New York State Attorney General’s Office of Consumer Frauds and Protection.

Here are some of the things hospital collection agencies can't do:

  1. Call you before 8 am or after 9 pm.
  2. Contact you at your workplace after being informed that your employer does not approve it.
  3. Contact your family, friends, relatives, or anyone else and reveal that you owe money, or ask for any information except for your workplace and address.
  4. Threaten to harm your reputation.
  5. Threaten to deduct money from your paycheck.
  6. Threaten to sue you without the permission given by the hospital.
  7. Threaten you to seize your property.
  8. Make harassing calls after you send them a cease-and-desist letter.

Read more: What are the collection rules for medical debts?

Know your rights: Garnishment

Wage garnishment is an automatic withdrawal of your wages to pay a portion of your medical debt with each paycheck. If the hospital wins a judgment against you, and you earn more than the minimum wage, the hospital can garnish your wages. But here’s the good news:

  1. The hospital cannot garnish more than 10% of your total income.
  2. The hospital cannot garnish your wages if your weekly income is less than $240 after taxes and social security deductions.
  3. Your employer is not allowed to fire you because of garnishment.

FAQ - Medical debt collection and lawsuits

Q What happens if I don't pay my medical bills?

Ans: When you have outstanding medical bills for a long time, then hospitals may assign the debt to a collection agency. In most states, hospitals can't charge interest on medical bills. But they can send your bills to a medical debt collector, who can file a lawsuit when he is unable to get anything from you.

Q When will your medical bills be sent to collections?

Ans: When you can't pay hospital bills for several months, in spite of repeated reminders, your bills are sent to collections agencies. If hospitals have an internal collections department, then unpaid medical bills are first assigned to them. When they fail to recover debts, your bills are assigned to a third-party collection agency.

Q What happens when medical bills go to collections?

Ans: When medical bills go to collections, the debt collector reports them on your credit report, hurting your FICO score. At that point, it won’t matter if you're making minimum monthly payments; your credit report will list that the debt is in collections, and your FICO score will reflect that.

Even if you pay off bills with a medical debt settlement program, the updated account status will remain on your credit report for 7 years and 180 days from the first date of delinquency.

Q What to do if a debt collector sues you

Ans:When a medical debt collector files a lawsuit, you can take the following steps to deal with it:

  • Answer the summons within the deadline, which is usually twenty days.
  • Collect all the documents you have related to your debt.
  • Contact a medical bill lawyer to learn your options for fighting the suit.
  • File your initial response, ideally following the advice of your attorney.
  • Prepare your defense. Make sure you understand your state’s medical bill minimum payment law and debt collection laws, as well as the federal laws covering the same.
  • Have a detailed discussion with your attorney on how to win the lawsuit.

Q What should I do when I am unemployed and can't pay bills?

Ans: That’s a tough situation. Fortunately, you have a few options.

  • You can take advantage of various financial assistance programs that hospitals offer.
  • You can apply for Medicaid.
  • You can apply for charity care programs. These programs help individuals who don't qualify for Medicaid and Medicare.

Q Can you sue a hospital for overcharging?

Ans: That depends on how much you have been overcharged. If you have been overcharged by only a few hundred dollars, then the court fees make filing an expensive and impractical option. The best option in that case is to contact the hospital and ask them to correct the medical bill. If they refuse, you can consult a medical bill lawyer. Of course, if the overcharge is significantly higher than that, consulting a lawyer is a good idea anyway.

Q Can collection agencies charge interest on medical bills?

Ans: It is illegal for collection agencies to charge interest on medical bills. You never agreed to pay interest in the original contract for medical care, and medical bill collectors can’t unilaterally start charging you interest.

Q How can I find out if you have medical bills in collections?

Ans: Look at your credit report. If you find hospital bills on it, your medical bills are in collections. Debt collection agencies report delinquent debts to credit bureaus. So you’re most likely to get the contact details of the collection agency from your credit report. Of course, most collection agencies will contact you before you think to check.

Q Can medical bills hurt your credit?

Ans: Fortunately, the Consumer Financial Protection Bureau has instructed FICO to consider hospital bills differently from other types of unsecured debts. Usually, medical debt doesn’t hurt your credit score. But when you refuse to pay medical bills, they go into collections, and at that point the debts get reported to credit bureaus, which definitely hurts you.

You're more likely to find hospital bills on credit reports when they are delinquent for more than 180 days and are assigned to debt collection agencies. When you pay off your medical bills, they affect your score less.

Past due medical bills hurt your FICO score by 50 to 100 points. So, if you have past due bills in collection, try to pay them off as soon as possible.

Q Is there any way of paying hospital bills by making small payments?

Ans: Debt consolidation programs can help you pay medical bills through small monthly payments. When you enroll in these programs, debt counselors help to simplify your payments and pay medical bills over time. They also help you get rid of other charges on your bills. Know more about debt consolidation.

Q How can a medical bill lawyer help with a dispute?

Ans: An experienced medical bill lawyer should know all the rules and regulations governing medical billing and medical bill collections. If the hospital has overcharged you or given you an erroneous bill, a lawyer can help you dispute the charges. The US healthcare system is complex and difficult to navigate. A good medical bill lawyer can help you to fight for your rights.

Apart from tackling a dispute, a lawyer can help you pay off medical bills in collections. They can negotiate with collections agencies and help you to settle medical debt.

Q Can unpaid medical bills result in garnished wages?

Ans: Can hospitals garnish wages? The short and simple answer is 'yes'.

Hospitals have to obtain a judgment in order to garnish your wages. Usually, hospitals don't keep their own in-house collections agents, so in most cases, they assign the task to outside collections agencies.

A collections agency has to file a lawsuit against you in the county where the debt originated. The court will issue them a case number and a hearing date. At that point, they are required to send you a notice within 3 to 4 weeks of filing the lawsuit. If the collection agency wins the case, then the court will issue a judgment against you.

Once a judgment is issued, debt collectors have to wait fifteen days before filing the garnishment, with the declared amount and your employer's contact details. The local sheriff’s office serves the garnishment order to your employer.

Final thoughts

Remember, nobody is allowed to break the law. That includes hospitals and collections agencies. If you know your rights, you'll be better able to stand up for yourself. Stay updated and keep all your financial and medical records. And remember, before you take any major step in a fight against debt collectors, you should contact a lawyer.

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