“The Last Resort” is a saying that describes the only option left on the table. It is when everything else has failed. It is the least preferential (and in some states for healthcare collections not allowed) option. But…in our opinions, it is worth pursuing if done right and gone through a stringent well documented process as it has the ability to change the present and train a patient for the future. At Americollect, we consider legal actions for collections a “last resort” to recovery if used ethically and legally, but before you become close minded to this option, let me ask that if I promised you that I could collect 87% of accounts would it change your mind? This is the case for the subset of accounts that Americollect takes legal action on. The reason for such success in collecting these accounts comes down to the process Americollect puts in place before we ever consider sending a suit authorization to our clients.
Before we begin discussing, let’s look at what we feel is the wrong way to pursue legal.
- Legal Logo Statement – The quickest way some of our competitors increase their fees for collections is to have a healthcare provider sign a suit authorization and transfer an account to a legal law firm to send a statement to a patient. The statement/logo from the law firm is the scare tactic to try and collect the account. That letter will cost $0.60-$0.70 to send but will double the amount you pay for collection services. This is where the benefit of this statement goes away along with “scrubbing” the account for the correct patients to send this statement to. The bad publicity a hospital can receive by sending these statements to “every” patient will outweigh any recovery you will receive from it.
- Who Is Picking Your Battles – Any collector can let their emotions get the best of them and flip the work queue and sue a patient who was been disrespectful on the phone or argumentative about the service that has been provided. When you allow a collector’s emotions to get the best of them it creates the complex or competitive law suits where the cost to defend the suit against this patient will outweigh any benefit to collect the account. This is where the collector needs to be removed from the decision of which accounts are sued.
Americollect’s believes the right way to collect is for the collection agency to maintain the account and continue to be the call center while continuing to try to collect using stipulated agreements and any method possible before, during, and after the legal action occurs. This allows Americollect to control the patient experiences while the legal experts from each individual state use their expertise to take legal action. Below is our step-by-step process:
- Ridiculously Nice Collector Refers Accounts to Legal Team: Criteria for Ridiculously Nice Collector to refer an account:
- The patient will have the ability to pay, but is choosing not to pay.
- The patient will have defaulted on broken promises.
- The patient is employed and worthy of garnishment (if legally available by state).
- The collector does not believe the patient indigent or ill.
- The patient is not highly disputing the bill or quality of services.
- The patient owns property.
- The patient has a minimum balance of $500.
- Legal Team Pre-Possible Suit Process: During this process, a more detailed check is done before we send our clients a suit authorization.
- Minimum length of time listed based on Section 501(r)(6) IRS issued Notice 2011-52 to prevent extraordinary collection activities occurring before 240 days from the date of the first post discharged statement.
- Bankruptcy scrub.
- Formal employment verification.
- Check if the spouse can also be included in the suit.
- Active duty military at any point of account.
- Credit score is checked for above the median.
- Valuation of home is checked for above the median.
- Child support payment check is completed.
- Suit authorization requested from our client.
- Americollect matches subsequent referrals with the same defendant before suit.
- Legal Team Summons Steps: Once we get the signed suit authorization back, the following steps are completed to send a created packet over to the selected attorney’s office.
- Documents signed suit authorization
- Second verification of Step 2 -Pre-Legal Steps.
- Final employment verification.
- Sends to attorney for validation letter.
- Creates, images, and prints itemized statement.
- Redacts itemized statement.
- Follows return date for entry of judgment.
- Process the account and all information to attorney of choice with a full reconciliation of all accounts to ensure timely filling of lawsuit.
- Post Judgment Steps: Once the judgment is entered, the following steps are completed.
- The judgment is docketed as a lien in the county in which the judgment is taken.
- If the patient has not called to set up a payment arrangement, a garnishment is filed against their wages.
- Extended garnishments are sent to patients to sign. This saves them additional court costs.
- Garnish bank accounts if needed.
The right way to use legal action results in 87% success for Americollect to collect the account. The bigger success is the ability to reeducate patients about the priority to pay their medical bills. Medical has regularly been found as one of the last bills patients will pay. While we don’t like to use legal action, we do feel there is a benefit to use it as a “last resort”.