(c) 2018 Jon L Gelman, All Rights Reserved.

Friday, February 17, 2012

Collecting Unpaid Medical Bills in Workers Compensation

Guest Blog by Jon Rehm of the Nebraska bar

Editorial note: 
Medical bills now account for almost 70% of the total of workers' compensation benefits paid, and the collection of those unpaid medical bills has exploded into a cottage business creating enormous procedural and substantive issues. Workers' Compensation courts throughout the country are struggling to establish mechanisms to handle disposition of these issues concerns both justly and effectively.
Recently, the Federal government took action to help resolve the problems of collection and credit agencies and their interaction with injured workers. While the struggle continues to play out, Attorney Jon Rehm of the Nebraska bar has provided an insight as to the concerns and opportunities available to resolve these issues.
Jon L. Gelman

Federal oversight of collection, credit agencies could benefit civil plaintiffs
By Jon Rehm

Consumer Financial Protection Bureau (CFPB) director Richard Cordray announced today that collection agencies could be subject to federal oversight by the newly-created bureau. This is good news for people who have lost their jobs because of a personal injury, a work injury and/or a wrongful termination. Loss of a job goes hand in hand with financial insecurity and mental and emotional distress. Any new federal regulations could give victims of injuries and wrongful terminations a bit more piece of mind if their attorneys are diligent in applying the potential new regulations.

One pro-debtor idea that has been discussed as a regulation would be heightened documentation standards for filing collections suits. This would be a preemption argument. The Roberts Court and the Federal Courts generally favor preemption. Plaintiffs lawyers, especially the class action bar, hates preemption. I think most plaintiff’s lawyers would be wary of federal intervention in state courts. But if the Supreme Court favors preemption it makes sense for attorneys who advocate for debtors to use whatever tools are available.

According to the New York Times article, the oversight will cover the 150 biggest collection firms that comprise about 2/3rds of the market share of the collections industry. But even if an over-aggressive collection agency is not covered by the new regulations, Nebraska lawyers defending collection cases for plaintiff’s in injury and employment cases have other remedies such as the option of removing collection actions from county court into district court in order to seek injunctive relief. Lawyers in other states should also check their jurisdictional statutes to see how they can use equitable remedies in collection defense.

The CFPB also announced a proposal of credit reporting agencies. I heard a speaker at the recent AAJ Winter Convention in Phoenix mention that insurers will run credit checks of plaintiff’s firms during litigation in order to gain more leverage in settlement negotiations. If that is true it would stand to reason that insurers and employers would run credit checks on the plaintiffs themselves. Such a tactic would likely run afoul of the Fair Credit Reporting Act and possibly create another cause of action. One practice pointer to counter such tactics would be to include questions about credit checks in written discovery.

County judge orders work comp collections case removed to District Court
by Jon Rehm

This afternoon a County Court judge sustained my motion to transfer a collections case from a workers comp related medical bill to District Court in order for me to ask for injunctive relief. You can read the reasoning behind my motion and why it helps debtors by reading my post from yesterday. In short, District and County Court’s have concurrent jurisdiction in civil cases under $45,000 in Nebraska. County courts do not have general equitable jurisdiction but District Courts do. In a previous hearing, the County Court determined I didn’t have a statutory or case law basis to dispute the right for a provider to collect on medical bills in a disputed workers compensation case. Since I had no legal remedy, I asked for the right to transfer to District Court to pursue an injunction against collecting the unpaid medical bill. Since equitable relief is not available in County Court, the court has no choice but to remove the case to District Court under Neb. Rev. Stat. 25-2706. I also argued that denying my client the chance to pursue available equitable relief would be a due process violation. In granting the motion, the Judge commented that moving the case to District Court would not prejudice the creditor because they still had the right to a trial in District Court.

The threat of injunctive relief in a work comp related collections case gives injured workers more leverage in their negotiations with bill collectors. Hopefully more advocates for injured workers will use this tool to protect their clients.

Jon Rehm  practices in Lincoln, Nebraska (Rehm, Bennett & Moore, PC, LLO). He concentrates his practice on representing injured workers and their families. He hold a  degree in journalism from Northwestern University(B.S.) and a law degree from Nebraska College of Law(J.D.).  Jon is a member of the Nebraska State Bar Association, the Nebraska Association of Trial Attorneys and the Workplace Injury Law Advocacy Group.Related articles