Medical Debt and Seniors: How Consumer Law Can Help
Americans are living longer, in part due to dramatic advances in medical care.
One of the costs of longer life expectancies is that someone has to pay for
this medical care. While access to quality medical care is essential for seniors
and should be a universal right, it can leave them saddled with unmanageable
medical debt. Consumer law remedies are critical in helping seniors avoid financial
ruin due to overwhelming medical bills.
Medical debt issues are critical
for many older Americans, especially low- and moderate-income seniors. One out
of seven older Americans has reported that paying medical bills was either "very
difficult" or used up all their savings.1 While
many do have access to health insurance to pay for the bills, there are still
gaps in the systems that burden seniors with substantial health care debt. Advocates
representing elder clients with large medical bills should know that they have
a range of powerful consumer tools at their disposal. There are a number of
legal and non-legal strategies, including:
Informal advocacy and negotiation.
Finding outside sources of funds to pay the medical debt.
Debt prioritization strategies.
Bankruptcy.
Potential affirmative claims under federal and state fair debt collection
practices acts, state consumer protection acts, and other state laws.
If the client is sued over a medical debt, raising consumer-related defenses.
This Consumer Concerns provides a quick overview of some of these strategies.
It summarizes information available in the National Consumer Law Center's legal
practice package entitled "In
Sickness and In Debt: Using Consumer Law to Help Elders Facing Overwhelming
Medical Bills." (2001). To order a copy of this publication, use the
order form at the end of this Consumer Concerns, or call the National Consumer
Law Center at 617-542-9595.
A. STRATEGIES FOR DEALING WITH
MEDICAL BILLS BEFORE A CLIENT IS SUED
There are several ways to assist
seniors facing medical debt who are not yet facing collections lawsuits, including:
1. Informal Advocacy/Negotiation
Negotiating with hospitals or medical
providers is an underutilized but often effective strategy in dealing with medical
debt. Even a pre-litigation request to a hospital or medical provider for a
reduction in the amount allegedly owed can lead to surprisingly good results.
Hospital and providers' willingness to reduce bills is largely due to a phenomenon
in health care pricing called "cost-shifting." Cost-shifting results
when hospitals and other medical providers concede huge discounts to third-party
payers such as HMOs and Medicare/Medicaid. Because of these discounts, the providers
attempt to shift many of their costs onto the shoulders of "self-payers"
(i.e., the uninsured or underinsured.) The shocking consequence is that a medical
provider/creditor may charge a low income, uninsured patient two or three times
what it accepts as payment from private insurers. Practitioners should find
out whether a medical creditor is engaged in cost-shifting, and if so, what
discounts it is giving to various payers. This knowledge can be used to attempt
to extract concessions for clients.
Another avenue for informal advocacy is to use any appeals processes available
to the client. For example, Medicare beneficiaries are statutorily entitled
to an appeal process, whether they are in original Medicare or a Medicare HMO.2
Many states also have a managed care ombuds office to resolve disputes over
HMO coverage. In addition, many HMOs have their own internal patient appeals
processes.
2. Find Other Sources To Pay The Bill
Another effective method to deal
with medical debt is to find someone else to pay for it. Be sure that your elderly
client applies for any assistance programs to which she is entitled. This may
include government or private programs, such as:
3. Counseling Your Client About
Whether And When To Pay Medical Bills
It is important when counseling clients
who have large medical bills to look at their overall financial pictures. Sometimes
clients simply cannot afford to pay medical bills and all their other bills.
In that case, it is important to make sure that clients do not forego payment
of higher priority bills, such as mortgages or car loans, in order to pay medical
bills. Medical bills are unsecured debt, and as such usually should not take
priority over secured debt or essential expenses such as food and utilities.
However, the priority of a medical debt does depend on each individual client's
circumstances and may need to take non-financial factors into account, such
as ability to obtain future care from a certain facility to which the client
owes a debt.
Clients should understand that they
should never move medical bills up in priority because of debt collection harassment.
Advise clients against converting unsecured debt into secured debt by, for example,
taking out a second mortgage to pay for medical bills. More information about
how to prioritize bill payment is available in NCLC's publication Surviving
Debt (3rd ed. 1999), available by calling NCLC's publication department at (617)
542-9595.
4. Bankruptcy
Bankruptcy can be an important method
to address overwhelming medical debt. A recent, well-publicized study showed
that about one-third of personal bankruptcies involve significant medical debt,
and the financial consequences of medical problems are responsible for over
45% of bankruptcies in the U.S.3 Extensive information
about bankruptcy practice is available in National Consumer Law Center, Consumer
Bankruptcy Law and Practice (6th ed. 2000) and in Surviving Debt.
5. Affirmative claims
Sometimes a client will have affirmative
claims against a creditor or collection agency collecting on a medical debt.
Affirmative claims may arise from the manner in which the client's agreement
to pay the medical bills was obtained or from overreaching collection methods.
An affirmative lawsuit might involve claims under:
Federal Fair Debt Collection Practices Act (FDCPA). The FDCPA provides
a useful remedy if your client is being harassed by a third-party debt collector
over medical bills. In addition to prohibiting harassment and deceptive collection
practices, the FDCPA includes restrictions on how and when a debt collector
is permitted to communicate with a consumer.
State Fair Debt Collection Statutes. The most suitable remedies for
health collection harassment are often state remedies. Most states have their
own debt collection statutes. Many of these state statutes apply to both creditors
and collection agencies, and thus would apply to collection activities conducted
by a hospital or other medical provider.
State UDAP Statutes. State unfair or deceptive acts or practices
statutes (UDAP) are often the most powerful remedies for overreaching collection
behavior, especially by medical creditors. Every state and the District of
Columbia has one of these statutes, which are consumer protections acts of
broad applicability. UDAP statutes have many advantages, because they can
be used to challenge a wide range of abusive behavior that may or may not
violate another state or federal law. In addition, state UDAP statutes often
proscribe unfair or deceptive debt collection tactics. Many UDAP statutes
allow private actions for violations of other state or federal laws.
Other State And Common Law Remedies. There are a number of other
state and common law remedies applicable to medical debt collection, such
as:
- the tort of intentional infliction of emotional distress - invasion of privacy
- limitations on collection fees - unconscionability
B. IF YOUR CLIENT HAS BEEN SUED
Practitioners defending consumers
sued over medical debt have a number of viable defenses. Aggressive advocacy
can often result in very favorable outcomes. Medical debt collectors are accustomed
to obtaining default judgments, and are not used to being forced to put on a
case. Thus, they often cannot meet their burden of proof. Practitioners should
not be discouraged into thinking that nothing can be done for a client faced
with catastrophic medical bills.
A medical bill collections plaintiff
may sue under various theories, each with different elements and different burdens
of proof. The burdens of proof may also differ from state to state. For a summary
of the theories used by medical creditors/collectors and potential defenses
with respect to those theories, see NCLC's publication, "In Sickness and
In Debt: Using Consumer Law to Help Elders Facing Overwhelming Medical Bills."
(2001).
C. ADDITIONAL RESOURCES
Books and Articles
Alan Alop, Defending Hospital
Collection Cases, National Center on Poverty Law (2001) (also included in
NCLC's Consumer Law Pleadings on CD-ROM (2001)).
Deanne Loonin and Elizabeth Renuart,
Less Than Six Degrees of Separation: Consumer Law Connections to Your Practice,
Parts I and II, 31 Clearinghouse Rev. 584 (March/April 1998), 32 Clearinghouse
Rev. 3 (May/June 1998).
National Consumer Law Center, Fair
Debt Collection (4th ed. 2000 and Supp.)
National Consumer Law Center, Surviving
Debt (3d ed. 1999).
Pat Palmer, Shock Treatment: Don't
Let Your Hospital Bill Make You Sick, Modern Maturity (May/June 2001).
Claudia Schlosberg, Immigrant
Access to Health Benefits: A Resource Manual, The Access Project (2000)
The Access Project, The Free Care Safety Net (February 1999).
American Bar Association Commission
on Legal Problems of the Elderly 740 15th St., NW Washington, D.C. 20005-1022
(202) 662-8690 www.abanet.org/elderly
Center for Health Care Rights
520 S. Lafayette Park Pl., Suite 214 Los Angeles, CA 90057 (213) 383-4519 www.healthcarerights.org
Center for Medicare Advocacy
P.O. Box 350 Willimantic, CT 06226 (860) 456-7790 and 1101 Vermont Ave., NW
Suite 1001 Washington, D.C. 20005 (202) 216-0028 www.medicareadvocacy.org
Center for Medicare and Medicaid Services (formerly Health Care Financing
Administration) 7500 Security Boulevard Baltimore, MD 21244 (800) MEDICARE www.hcfa.govwww.medicare.gov (U.S. government official
site for Medicare information)
Community Catalyst 30 Winter Street, 10th Floor Boston, MA 02108 (617)
338-6035 www.communitycatalyst.org
Medicare Rights Center 1460
Broadway, 11th Fl. New York, NY 10036 (212) 869-3850 www.medicarerights.org
National Academy of Elder Law
Attorneys 1604 N. Country Club Rd. Tucson, AZ 85716 (520) 881-4005 www.naela.org
National Association of Consumer
Advocates 1730 Rhode Island Ave., NW, Suite 805 Washington, D.C. 20036 (202)
452-1989 www.naca.net
National Consumer Law Center
77 Summer St., 10th Fl. Boston, MA 02110 (617) 542-8010; Publications: (617)
542-9595 and 1629 K St., NW, Suite 600 Washington, D.C. 20006 (202) 986-6060
National Center on Poverty Law
205 W. Monroe St. Chicago, IL 60606 (312) 263-3830 www.povertylaw.org
National Senior Citizens Law Center
1101 14th St., NW, Suite 400 Washington, D.C. 20005 (202) 289-6976 www.nsclc.org
The Access Project 30 Winter
Street, Suite 930 Boston, MA 02108 (617) 654-9911 www.accessproject.org
This brochure was
supported in part by a grant from the Administration on Aging, Department of
Health and Human Services, Washington, D.C. 20201. Grantees undertaking projects
under government sponsorship are encouraged to express freely their findings
and conclusions. Points of views or opinions do not, therefore, necessarily
represent official Administration on Aging policy.
____________________________
1 Cathy
Schoen, et al., Medicaid Beneficiaries: A Population at Risk, Commonwealth Fund
(1998), available at www.cmwf.org.
2 The Medicare
Rights Center (www.medicarerights.org) and the American Association of Retired
Persons (AARP, see www.aarp.org) both have publications on Medicare appeals.
3 Melissa
B. Jacoby, Teresa A. Sullivan, and Elizabeth Warren, Rethinking the Debates
over Health Care Financing: Evidence from the Bankruptcy Courts," 76 New
York University Law Review 375 (May 2001).
November 2001.
NOTE: This Consumer Concerns reflects the current law only. There are likely
to be changes after this publication that advocates should keep careful track
of.
