Watch Out for Undercover Hospital Debt Collectors

Aggressive debt collectors that hound patients at the hospital may violate the FDCPA.

When you find yourself in the hospital, the last thing you should have to deal with is a bill collector. Unfortunately, such is the case with many patients at hospitals across the country. This article explains how debt collection practices have seeped into medical care, what you should watch for, and what is being done about it.

(To learn more about illegal debt collection practices, visit our  Debt Collectors & Collection Agencies  topic area.)

Abusive Hospital Debt Collection Tactics

If you are uninsured or owe prior medical debts, you may be exposed to aggressive debt collection tactics by the same hospital that is supposed to be treating you. Rising complaints from hospital patients reveal a pattern of abusive practices by medical debt collectors who:

  • disguise or hold themselves out as hospital employees

  • demand that patients pay outstanding medical bills before they can receive medical treatment

  • discourage patients from going to the emergency room, and

  • gain unauthorized access to patients' medical information and use that information to extract payments on medical bills.

These types of  practices are troublesome because they potentially violate not only federal and state debt collection laws, but also patient privacy rules under the  federal Health Information Portability and Accountability Act (HIPAA). For more information on HIPAA's privacy rules, go to the HIPAA website established by the federal Department of Health and Human Services, at  or see Nolo's article  The Health Information Portability and Accountability Act.

State and Federal Debt Collection Violations

Hospitals frequently turn over their unpaid medical accounts to third party bill collectors. They often allow those debt collectors to take part in patient medical intake procedures. Once embedded, they will attempt to extract money from the ill or injured patient, sometimes even pressuring the patient to hand over a credit card or make a payment up front. This practice is commonly called “back office debt collection.”

When a hospital debt collector becomes too aggressively involved in your medical intake or admission to a hospital, your rights under the Federal Fair Debt Collection Practices Act may be violated. Under the FDCPA, a communication from a debt collector must meaningfully disclose the identity of the debt collector and provide what is called a “mini-Miranda” warning. At a minimum, when a hospital debt collector communicates with you, he or she must:

  • identify that he or she is a debt collector (at a minimum provide his or her name, employer, and telephone number)

  • state that the communication is an attempt to collect a debt, and

  • state that any information obtained will be used for that purpose.

The debt collector may have violated the FDCPA if he or she:

  • looks indistinguishable from any other hospital employee
  • does not provide you with the “mini-Miranda” warning
  • otherwise acts under the guise of taking or processing your medical information
  • attempts to interfere with your medical treatment, or
  • threatens to withhold medical treatment over an unpaid medical bill.

Under the FDCPA, you also have the right to written validation or verification of the medical debt before a debt collector may continue to contact you. If a medical debt collector essentially puts you on the spot at the hospital, especially during a medical emergency, it may have unlawfully circumvented this verification obligation to you.

Possible Exception if the Debt Collector Is a Hospital Employee

If the hospital debt collector is an employee of the hospital and the medical debt that you owe belongs to that hospital, then there might not be a violation of the FDCPA. That is because the FDCPA only applies to third party debt collectors, not the creditors themselves. However, the hospital may have violated the debt collection laws of your state, especially if those laws extend to creditors.

(To learn more about illegal debt collection practices and the FDCPA, see the  Illegal Debt Collection Practices  topic.)

New Regulations Forthcoming

In June 2012, the Department of Treasury issued new proposed regulations to curb these emergency room bill collection practices, at least by those in hospitals providing charitable medical care. The new regulations will require not-for-profit hospitals to:

  • establish a financial assistance policy for patients who cannot afford to pay for medical care
  • clearly and plainly communicate that financial assistance policy to you before you are discharged
  • provide a clear and plain explanation of the financial assistance policy with the first three medical bills it sends you following the discharge
  • allow you up to 240 days after the first medical bill to apply for financial assistance, and refrain from debt collection during this 240 day period, and
  • provide emergency medical care to you, and without discriminating against you based on your inability to pay.

For more information on the status of those regulations, some of which have already gone into effect as part of the Affordable Care Act, please visit the U.S. Department of the Treasury,  Treasury Notes Blog.  

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