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Collection Actions: 9.4.3.23 New Mexico

New Mexico’s Surprise Billing Protection Act became effective on January 1, 2020, and provides that disputed bills are to be reimbursed at a “surprise bill reimbursement rate” set at the sixtieth percentile of the typical allowed commercial insurance reimbursement rate.812

New Mexico’s Patients’ Debt Collection Protection Act applies to both nonprofit and for-profit large health care providers, as well as debt collectors and debt buyers.813

Collection Actions: 9.4.3.24 New York

New York’s medical debtor protection law prohibits discriminatory pricing by hospitals that receive state charity care funding.820 New York’s Hospital Financial Assistance Law requires hospitals to adopt a financial aid application and a policy that must follow certain guidelines.

Collection Actions: 9.4.3.25 North Carolina

North Carolina requires hospitals to publicize their financial assistance policies.838 Hospitals must also require their debt collection contractors or debt buyers to inform patients of such policies when engaging in collection activities.839

Collection Actions: 9.4.3.26 North Dakota

North Dakota law governs a health care provider’s ability to impose late payment charges on medical bills.847 A bill is not considered delinquent until ninety days after services have been rendered and forty-five days after a bill has been issued.848 North Dakota also limits the late charge to 1% per month and, for hospitals, the late charge must not to exceed twenty-five dollars per month.849 The provider must send monthly or periodic statements i

Collection Actions: 9.4.3.27 Ohio

Ohio forbids execution on the primary residence for health care debts during the lifetime of the debtor and certain specified dependents.851 A lien may be created that may be foreclosed only after the residence ceases to be occupied by the protected persons.

Collection Actions: 9.4.3.28 Oklahoma

Oklahoma requires hospitals to establish a discount program for hospital charges for qualified self-pay patients who have household incomes of up to 300% of the federal poverty guidelines.

Collection Actions: 9.4.3.29 Rhode Island

Rhode Island law provides that hospitals must provide free charity care for patients whose annual income is less than 200% of the federal poverty level and “partial charity care”—that is, a discount less than 100%—to patients and guarantors whose annual income is between 200% and 300% of the federal poverty level, taking into consideration family unit size.

Collection Actions: 9.4.3.30 South Carolina

South Carolina’s Medically Indigent Assistance Program provides financial assistance for certain state residents with incomes at or below 200% of the federal poverty level.856

South Carolina hospitals are permitted to garnish state tax refunds or wages to collect medical debts.857 Consumers may file complaints with the state’s Department of Revenue.858

Collection Actions: 9.4.3.31 Tennessee

Tennessee law provides that a health care facility is prohibited from requiring an uninsured patient to pay for services in an amount that exceeds 175% of the hospital’s cost to provide the services.859 However, Tennessee courts have held that there is no private right of action under this statute.860

Tennessee hospitals also must develop a statement of charity care policies and post it so that it is accessible to the public.861

Collection Actions: 9.4.3.32 Texas

In Texas, nonprofit hospitals must provide charity care within certain minimum guidelines established by the state.862 Hospital billing policies must provide itemized bills for patients and must indicate when charity care has been applied to the charges.863 Certain hospital emergency departments and other emergency facilities are prohibited from demanding or charging an “unconscionable price” for emergency services, though the law does not provide a private right of action.

Collection Actions: 9.4.3.33 Utah

Utah requires health care providers to refrain from sending any unpaid patient bills to collections or reporting them to a credit reporting agency without following a new notification requirement. The law provides that, after the time has expired for an insurer to determine its obligation to pay a claim without penalty (or once Medicare determines its liability for a claim), a health care provider is permitted to send the required notice to the patient.

Collection Actions: 9.4.3.34 Vermont

In 2022, Vermont passed a state law establishing guidelines for financial assistance policies, and adopted consumer protections applicable to medical debt.871 The financial assistance provisions apply to large health care facilities, which includes hospitals, outpatient facilities that are affiliated with hospitals, and ambulatory surgical centers. Protections under the law are available to Vermont residents—a definition that extends to any individual who resides, works, or attends school in the state, regardless of immigration status.

Collection Actions: 9.4.3.35 Virginia

Virginia prohibits health care providers from collecting any debts arising from medical treatment, or referring those debts to a collector, if a claim has been made for workers’ compensation874 or compensation for crime victims.875 Virginia health care providers must give patients an itemized description of charges upon request.876

Collection Actions: 9.4.3.36 Washington

Washington state law mandates that hospitals must develop charity care policies that provide for a sliding scale of discounts for low-income patients.877 Eligible patients—or “indigent persons”—are those who meet the financial qualifications for charity care and have exhausted any insurance coverage or other third-party coverage.878 For certain hospitals within large health care systems, the charity care policies must at a minimum provide free care for patients whose incomes are not more than 30

Collection Actions: 9.4.3.38 Wisconsin

Wisconsin directs hospitals to create and file annual uncompensated health care service plans with total numbers of patients receiving uncompensated care. The state had previously reached a settlement with hospitals, requiring them to provide financial assistance.895

Collection Actions: 9.4.4.2 Legal Challenges Under State Loan Broker and Other Laws

Hospitals that steer patients toward lenders may be violating state laws that regulate loan brokers. Loan brokers may have to obtain a license from state banking departments, which presumably many health care providers have not done.918 A few states also cap the loan rates that can be charged for brokered loans.919 Doctors, dentists, or for-profit hospitals that act as loan brokers may also violate state credit services organizations laws.920

Collection Actions: 9.5.1 Introduction

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.963 Defending a consumer against a collection suit is important because once a default judgment has entered, the creditor will have potent remedies at its disposal, such as wage garnishments and bank account seizures.

Collection Actions: 9.5.3 Open Account or On Account Actions

The action for “on account” or “open account” allows the collector to prove in one action a series of charges and payments, resulting in a balance due, instead of having to bring a separate action for each individual charge.977 In most states, an “on account” or “open account” cause of action does not apply when the medical debt arises from a one-time transaction because at the time there was no expectation of ongoing transactions.978

Collection Actions: 9.5.4.1 Generally

If the provider brings a breach of contract claim, an essential element of the cause of action is proof of the contract applicable to the consumer and proof that the consumer has assented to that contract.986 Hospitals often base their contract claims on agreements contained in admission forms, which often ask the patient to agree to a statement that says nothing more than “I am financially responsible for services that are not covered by my health insurance plan.”987 The provider must submit th