South Fla. medical debt collectors keep getting sued for billing people they shouldn’t
More than two years after he was injured in the line of duty, Hans Maestre, a detective with the Aventura Police Department, was spending the day after Christmas in 2018 looking over his financial documents when he noticed a ding on his credit score.
Maestre, who described himself as meticulous when it comes to his finances, quickly called the credit reporting agency. He found out the hit on his score had come from an unpaid bill related to medical treatment he received for a leg injury he suffered while arresting someone in July 2016. But because Maestre had filed a workers compensation claim over the incident, he should never have received a bill.
What came next was a months-long campaign by Maestre to correct the mistake. While he was fighting the bill, Maestre, who also runs a real estate business, said he had to take out an $8,000 loan for the business and ended up getting charged 8% interest instead of the usual 6% he paid. He blamed his lowered credit rating for the higher interest rate.
Maestre decided to retain a lawyer, and the battle over his medical bill ended with a confidential settlement.
There are hundreds more like Maestre, according to South Florida consumer protection attorneys who frequently sue the debt collectors. But legal challenges so far haven’t slowed the medical debt companies down, the lawyers said, because the penalties they face under federal law aren’t high enough to interfere with their business strategy.
In recent years, medical debt collectors have grown more aggressive, experts say. Jenifer Bosco, a national consumer law attorney, said the field is “crawling with bad actors who ignore or defy the law to chase after the sick and injured for money that they do not even owe.”
The skirmishes often play out in South Florida’s federal courts. Paul Herman, a consumer protection attorney based in Delray Beach who represented Maestre, said medical debt collectors in the area are billing workers’ compensation claimants so often that it’s become the “bread and butter” of his legal practice.
“We have settled over 100 in just the last year,” Herman said. ”And we have 25 to 30 in litigation.”
Herman and his co-counsel, Joel Brown, said they have sued more than a dozen third-party debt collectors in South Florida over medical bills in the last year and a half. About 137 million Americans are struggling with medical debt, according to a report published in the Journal of General Internal Medicine last year.
In 2014, the Consumer Finance Protection Bureau published a wide-ranging study on medical debt, finding that half of all overdue debt on credit reports resulted from medical bills and that one out of every five credit reports contained overdue medical debt.
Federal law caps the amount of damages plaintiffs can recover from medical debt collectors at $1,000. And companies have decided it’s worth it to send out mass collection letters — and collect on a large percentage of them — rather than to investigate each bill to make sure it is owed, Herman said.
He explained the tactic of the debt collectors.
“If I do it 100 times — 90 times, no one bothers me,” Herman said. “Ten times, they get a lawyer, maybe I resolve a couple of them, and I get sued by one. I pay out tens of thousands of dollars [for the litigation] but now I’m collecting millions. There’s no incentive to change their tactics.”
But Herman and Brown said a ruling from October last year in the Southern District of Florida could alter that dynamic soon.
The order was handed down in the case of a client, Archie Malone, who sued a debt collection company over a collection letter demanding nearly $1,000 after he received treatment at JFK Medical Center in Palm Beach County.
The ruling by U.S. District Judge Rodolfo Ruiz, who was appointed by President Donald Trump in May 2018, could weaken one of the most common defenses debt collectors use in federal court: that they were simply relying on the information a medical provider gave them and therefore aren’t responsible for sending an erroneous collection notice.
In his order, Judge Ruiz said the debt collector was “not entitled to simply rely on the presumption that all debts referred by the medical center are validly due and owing.” The decision is currently being appealed to the 11th U.S. Circuit Court of Appeals in Atlanta.
Bosco, a staff attorney at the National Consumer Law Center who studies medical debt lawsuits, said that, too often, the center hears about debt collectors “suing patients for debts that have already been paid, suing for debts that the patient doesn’t owe, suing for debts that are past the statute of limitations, suing for debts that were already paid by charity care, attempting to collect from debtors who have filed for bankruptcy protection, demanding repayment of illegal or excessive collection fees, and more.”
She said the Malone case “might open the door for other trial courts within the Eleventh Circuit to apply the law in a way that would help consumers who are struggling with medical debt.”
Under the court’s ruling, she said, the judge held the debt collector “accountable for its sloppy practices” and wouldn’t let the company “blame the healthcare provider for its own lack of a reasonable process to confirm that the debt was valid.”
In the case of Maestre, the Aventura detective, the debt the company had tried to collect was from a CT scan he said he never had.
If he hadn’t known that any bills from the incident should have been covered by workers’ compensation, Maestre said, he probably would have assumed the bill was valid and paid it.
Maestre compared medical debt collectors to towing companies.
“They operate in the gray areas,” he said. “They can tow people and, even if they’re wrong, that person is going to pay.”
This story was originally published January 10, 2020 at 7:00 AM.
