New Jersey bankruptcy Article

What you need to know about medical debt and your health insurance

Tuesday, January 02, 2007

MEDICAL DEBTS - MY INSURANCE WAS SUPPOSED TO PAY THAT

A large portion of my debt collection practice is made up of the collection of past due medical bills. Unfortunately, the vast majority of the people I end up suing for past due medical bills are not the large numbers of uninsured about which congress is constantly concerned. They are people who actually have health care insurance, but their insurance has denied the claim or failed to pay. Despite any number of modern myths, this is the bottom line everywhere in the United States when you go to the doctor's office, you will be asked to sign a Patient Financial Responsibility document, which in layman's terms says you are responsible for your own bill whether you have insurance or not.

When you go to the doctor, the doctor provides you services and you areresponsible for paying for those services. You may have a contract of insurance, but that is a contract between you, as the insured, and the insurance company. It is not a contractual relationship between the doctor and the insurance company. The doctor's office files your insurance claim as a courtesy to you. Even your policy of medical insurance will state that you, and not your doctor's office, are responsible for filing the claim. So the first great truth that every patient must understand in today's modern world is that they are first and foremost responsible for payment of the doctor and hospital bills, even if they have insurance.

The second myth widely held by the public today is that unless you receive a bill from a doctor's office, you don't owe them anything. I cannot tell you the number of times I hear during the day "well, they never sent me a bill." A bill or a dunning letter is not a pre-requisite to establishing or enforcing a contractual debt. The instant the service is performed, the debt is incurred and is owed. The mere fact that you don't have to pay the full bill when you leave the doctor's office or are discharged from hospital is a courtesy to you. That is not a courtesy that you can take advantage of by not paying. This leads me to the second great truth of the modern world of medical bills and insurance. It is entirely the patient's responsibility to keep track of whether or not their insurance company has paid a claim or not. This is a difficult truth for many busy self-absorbed, distracted Americans to take to heart. What it essentially boils down to is that if you go to the doctor and you do not receive an EOB (Explanation of Benefits) from your insurance company showing where they have paid that doctor, you need to pick up the telephone and call your insurance company and find out why they have not. Likewise, if you receive an EOB showing that your insurance company has denied a claim, you need to file a dispute in writing with your insurance company and do everything necessary to appeal that decision and have the claim paid. If you do not, more than likely, you will not receive a bill from the physician's office, but rather you will receive a collection letter from a collection agency stating that your bad debt has been turned over for collection. The doctor's office will not fight with your insurance company to make them pay your bill for you.

The third hard truth of the modern world of medical billing and medical insurance is that if you drop the ball, you have to pay. The reason for this is what is known in legal and insurance circles as "timely filing." All insurance companies have in their policies a requirement that a claim be timely filed, and that phrase is defined in each individual policy as a specific period of time. The standard is ninety (90) days; however, there may be variations. What this means is that if you have services at a physician's office or hospital, and no claim is filed within that 90 days, the insurance company is relieved of their contractual obligation to pay your medical bill. This is a horrible trap for the unaware consumer. If you go to the doctor and the doctor's office fails to file your insurance claim through their own negligence or oversight and 90 days passes, and you receive a letter from a collection agency saying you owe a doctor's bill, then you owe a doctor's bill. I reference you to cold hard truth number 2; it is your responsibility to make sure your insurance company pays your medical bills. If you go to the doctor and you don't receive an EOB within 90 days, you must contact the doctor's office and find out if they have filed the claim and your insurance company and find out why they have not processed the claim. If you fail to do so, then you will be contractually responsible for full payment of that bill, even if you had valid insurance at the time of the treatment.

Now, I know as you read this you are saying to yourself, "that's not fair." Well, I hope by now you have learned as an adult that life simply is not fair and if you intend to stand before a judge in opposition to a suit I filed and plead the "it ain't fair" defense, then be prepared for the Judge to agree with you and summarily rule against you.

The fourth truth of the modern world of medical insurance and medical bills is that your wife's bills are your bills; your children's bills are your bills, regardless of whether you knew about them or authorized them. In most states, a spouse in a marriage is responsible for his or her spouse's medical bills. This normally comes up where the service or treatment was provided before a divorce and the now ex-spouse is being sued for his hated former companion's medical bills. Regardless of divorce, in most states, a mother or father is responsible for the medical bills and debts of their minor children, regardless of the circumstances. This most frequently arises where the ex-wife takes the child to the doctor without telling her ex-husband and runs up a large medical bill and does not pay. Then the ex-husband, who never knew anything about the bill, that has the better job, is sued. I realize this once again falls under the heading of life is not fair. However, it is perfectly legal and if you have a good divorce lawyer when you are divorced, your Marital Dissolution Agreement should allow you to recover those funds or at least one half of those funds from your ex-spouse. Your Marital Dissolution Agreement should also have a provision that requires both parties to notify the other party of any medical treatment and to provide medical bills and records within a certain period of time. Failure to do so may get a former spouse cited for contempt in Divorce Court. All of that, though, has no effect on the collection of the medical bill.

Now having painted a very dismal picture for the common patient, I will provide the one sword the patient can pick up and fight with. In today's modern medical insurance world, the vast majority of insurance policies are in fact not insurance policies, but Preferred Providers Organizations or Health Maintenance Organizations or some other alphabetic variation of a PPO or HMO. In order to be a member of the "network," the healthcare provider (i.e., your doctor) must sign a contract with the insurance company agreeing to provide his or her services at a certain rate for network members. This usually represents a discount from what the man on the street would receive. More importantly, these agreements often contain contractual requirements that the medical services provider submit the claim to the PPO and not take action against the member (i.e. you). If a doctor's office drops the ball and does not file a claim and then files suit against you, that PPO or HMO agreement may be used in your defense.

In conclusion, when and if a medical debt collection attorney sues you, do not expect to pick up the telephone and call his office and tell him "but I had insurance" and have everything be made alright.