Medical debt collection in Indiana is a unique kind of debt collection in several ways. One of the things I see in medical debt collection that I don’t see in other types of collection cases is a hospital or surgery center collecting debts not only for itself but also for other service providers like facility-based physicians.
To illustrate, say Ms. Consumer has outpatient surgery at the Acme Surgery Center (“ASC”). Prior to the surgery, ASC has Ms. Consumer sign an agreement to be responsible for medical charges that are not covered by insurance. After the surgery, ASC bills Ms. Consumer’s insurance for all the care provided, including that by ASC itself for the facilities, drugs and nursing care, but also for the doctor performing the surgery (who is with the Hip and Knee Medical Group) and the anesthesiologist (Dr. Jane Doe). Insurance of course does not pay all of the charges and then ASC sends Ms. Consumer a bill – in this case for a deductible amount owed to Dr. Doe. Ms. Consumer begins making payments but apparently not fast enough so ASC refers the account to Collection Attorney. Collection Attorney files a lawsuit on behalf of ASC or Dr. Doe against Ms. Consumer for not only the unpaid medical bills but also attorney fees.
Collection Attorney may have violated the Fair Debt Collection Practices Act (“FDCPA”). Actually, there may be several different violations but the one I want to focus on here has to do with the request for attorney fees. Attorney fees in this situation are generally only available if the agreement between the parties provides for them. Here, the agreement Ms. Consumer signed was with ASC. The agreement provides for the potential recovery of attorney fees, but there is no agreement between Ms. Consumer and Dr. Doe so attorney fees are not recoverable for the collection of a debt owed to Dr. Doe.
The recent case of Deca Financial Services, LLC v. Tina Gray from the Indiana Court Appeals (dated June 20, 2014) addresses this. The court found that attorney fees were not properly awarded where Tina Gray signed an agreement with Dupont Hospital that provided for the recovery of collection attorney fees, but there was no such agreement between Ms. Gray and Emergency Medicine of Indiana, PC. Since the debt collector, Deca, was an assignee of Emergency Medicine, Deca could not recover attorney fees.