DURHAM Betsy Stevens was pleased with her medical care at Duke Eye Center in July 2010. She was disgusted with the hospital’s business operations.
Duke submitted the wrong code to her insurance company, which denied her claim. For six months, Stevens tried to get Duke to fix its error, sending repeated letters and emails. The chair of the Duke Eye Center sent her a letter of apology in November 2010, promising to make things right.
That same month, Duke sent her case to a collection agency, Absolute Collection Service, which reported Stevens in March to the national credit agencies, spoiling her credit rating.
“The arrogance and insouciance shown by the Duke business office is downright appalling,” Stevens, a business professor who lives in Alamance County, wrote in a complaint to the state Attorney General. “… There are a number of others in this same situation, poor, elderly or perhaps lacking the education it takes to challenge an institution like Duke.”
While some hospitals in the Charlotte area sue thousands of patients, many hospitals elsewhere depend on collection agencies.
Hospitals seldom report patients to credit agencies, but their collection agencies do: 52 percent of cases reported to credit agencies involve unpaid medical bills.
One key reason many hospitals have turned to collection agencies: It’s cheaper.
“The reason we outsource is that it is more costly to do it ourselves,” said Kenneth Morris, chief financial officer at Duke Hospital.
Confusing the consumer
Adam Linker, a policy analyst at the Health Access Coalition in Raleigh, says medical debt differs from all other consumer debt and shouldn’t be treated like money owed on a flat-screen television.
“I don’t think medical debt should go on credit reports, period,” he said. “People aren’t going into medical treatment because they have extra money and think it’s a fun thing to do.”
In letters to state agencies, consumers complain about being caught in a vortex of dunning letters and harassing phone calls. They have complained that collection agencies harass the innocent, or continue to pursue patients who have paid their bills.
In the Triangle area, many hospitals have turned to Raleigh-based Absolute Collection Service.
Hospital officials at UNC Health Care, Duke, Rex Healthcare and WakeMed say they are pleased with Absolute Collection. At UNC and Rex, hospital officials say they were unaware of any complaints about the company.
Files at the state Attorney General’s Office tell a different story. At least 169 consumer complaints have been filed about Absolute over the past five years, second in collection complaints only to a national agency. The Better Business Bureau has 101 complaints on file; it says all were resolved favorably and gives Absolute an A+ rating.
Those complaints represent a tiny fraction of the hundreds of thousands of accounts the company processed in that period, said Ken Perkins, the company’s legal counsel.
Perkins acknowledged that collection agencies won’t ever win popularity contests, but said Absolute trains its employees to be courteous and professional.
“We really try to help patients resolve their bills,” Perkins said. “You don’t get this work from major hospital groups by being a jerk on the phone. Hospitals want to retain their patients.”
The founder and owner of the company, Raleigh native Harry Scott Jr., has done well for himself since he started the company in 1989 shortly after graduating from UNC. He owns a beach house valued at $1.7 million in a gated community in Hilton Head, S.C., and is part-owner of a NASCAR team.
Problems after paying
Diane Russell’s run-in with Absolute started in 2008, after her husband Jerry was treated at Moore Regional Hospital in Pinehurst. Russell received bills from the hospital and from the emergency room doctors. Jerry Russell had experienced serious medical conditions over the preceding years, and Diane Russell requested financial assistance. The couple had no insurance.
The hospital reduced her bill by 80 percent, and Russell paid it. Russell made the same request to the emergency room doctors, but did not get a response.
In the fall of 2008, Absolute began demanding that Russell pay the $501 doctor bill. After four months of phone calls and letters from Absolute, Russell wrote a check to the doctors for the entire bill.
Absolute did not let up, sending letters each month. Each time, Diane Russell called the collection agency to tell it she had paid the bill. Each letter escalated the language: “We are dismayed by your inaction,” Absolute wrote in February 2009.
On March 31, Absolute wrote that it would report the past-due debt to the national credit bureaus and the information would stain her credit rating for seven years.
Fed up, Russell called the Better Business Bureau, which forwarded her complaint to Absolute. The next day, Absolute told the Better Business Bureau that Russell had been correct all along. The bill had been paid for more than three months.
When Russell sued, Absolute declined to settle. The company said that it wasn’t its duty to check a patient’s claim that a bill was paid. It relies on a list from the hospital.
The case went to trial in federal court in Greensboro in April of last year. Suzanne Begnoche, one of Russell’s lawyers, said she believes this is the only case that has gone to trial in North Carolina under the federal Fair Debt Collections Practices Act.
The jury found for Russell on all counts and imposed the maximum penalties allowed. The jury found that Absolute had used unfair threats or coercion; fraudulent, deceptive or misleading representations; and unfair practices.
The jury awarded Russell $37,501. Absolute is contesting the verdict.
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