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Huge medical debt question (1st time poster)


carsearch1982
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I will make the question short and to the point as I can. Hoping to get some good advice.
I acquired roughly $100,000 medical debt a little over a year ago ( 2 week stay in hospital almost died) insurance ended up sending me a check (long story) instead of sending it to the hospital. Fast forward down the road apparently my medical debt got charged off and sold to a credit collection company.
My options are
*Pay the bill $100,000 and be broke and barely able to survive
*wait to get contacted by the debt collection agency and if they wont settle for a heavily discounted (70% or more) lump sum, I'm debating about not paying and letting it be in collections until statute of limitations run out.
 
Also I needed to add that it wasn't 1 check that was sent to me for the total amount it was a multiple of checks different amounts throughout about 6 months of time. As well as I was supposed to get a lump sum payment for an additional insurance coverage package that would be paid out to me if I was hit with a freak illness, which they never ended up paying out. As well as for almost 9 + months when I would call the hospital to check out what the total bill I owed they didn't have a record for it and it didn't show up in there system until may of 2018 ( I was in the hospital in feb of 2017) So it isnt as simple as I just received 1 check and was suppose to pay it that day to the hospital. It became a very unclear and weird situation of what monies was owed to me, confusion on how much the total bill was, as well as them having no record of a bill til much later.
 
Please advise me what you would do in my situation.
P.s my credit is already shot (younger years) and I own no property.
 
Thanks in advance.
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4 hours ago, carsearch1982 said:

insurance ended up sending me a check (long story) instead of sending it to the hospital.

There are a couple of carriers that do this.  Why I am not sure but it is your responsibility to see to it that the bills is paid when you get the check.  Typically you just forward it to the provider it is intended for.

4 hours ago, carsearch1982 said:

wait to get contacted by the debt collection agency and if they wont settle for a heavily discounted (70% or more) lump sum

They cannot settle it for less.  Once you used your insurance you are bound by the terms of the policy.  They cannot give you another discount beyond the contracted rates or it is illegal rebating.

4 hours ago, carsearch1982 said:

I needed to add that it wasn't 1 check that was sent to me for the total amount it was a multiple of checks different amounts throughout about 6 months of time.

And you kept ALL of them for yourself instead of paying the providers?  You should consider this could be theft by conversion.

4 hours ago, carsearch1982 said:

Please advise me what you would do in my situation.

Speak to a qualified bankruptcy attorney on whether you qualify for Chapter 7 and who can also advise if you are at risk of criminal charges for converting those checks intended for the providers for personal use.

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I'm willing to pay the debt. I have the majority of the money. The problem is they wont take 1 penny less then the full amount.  I even said I would give them like 70 or 80 percent of the full amount and make payments/or arrangements to pay the remaining portion. They said no (the hospital)  and then charged off the debt  and sold it to a junk debt buyer. Now what do I do? I have them reporting on my credit report, and now the hospital charged off my debt and sold it to a junk debt buyer?

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So you wrote out a check to the hospital for the amount that the insurance company sent you and they sent your check back to you uncashed? I really doubt that. That is the first thing I would do and I bet you that even if it is not a full payment, the hospital will accept that check. By sending to the hospital that amount, you can stop the conversion issue.

As for the rest, I don't know what the amount is after insurance got done but realize that SOL only applied IF they do not sue you and win a judgement and for $100,000, they are going to sue you and being sure that the hospital has records, they will win. You do have a few options including coming up with a decent payment plan or Chapter 7. In all those cases though, you will still have to pay to the hospital what the insurance company sent you.

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2 hours ago, WhoCares1000 said:

So you wrote out a check to the hospital for the amount that the insurance company sent you and they sent your check back to you uncashed?

That's not how I read it. It looks like the insurance sent the checks, he deposited them, still has 70% of it, and the hospital is saying 'no' that they won't accept that as settlement in full. 

Of course they will take whatever he sends in and apply it to the balance. They will just come after him for the rest. 

I would 'do the right thing' and send the hospital what you have and then file Chapter 7, if you qualify. You can't keep the $70k through a BK anyway, so you might as well give it to the entity it was intended for. 

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Yes you are correct Harry. I called them every few months asking if my final amount came in. For the first 6 months they told me just call back and check in on the debt there was no record of a final amount owed. So when I did that, I told them hey I used a little of it on paying other medical bills that accrued during the time as well as paying some other bills while I was on disability  when I was transitioning from the hospital back to my job. I said can I pay you what I got now (roughly 70 percent) and then  set up some kind of payment plan for the rest?

They told me no they cant make payment plans til the 98,000 was paid then the remaining balance ( I think another 6,000 or so)  can be paid in payments. Problem was I didn't have the full 98,000 and they flat out told me we cant do it. Fast forward they wrote my debt off and sold it to a 3rd party debt collector. I spoke to them, and they said I can pay off the amount but no matter what they cant take the debt off my credit report. Plus I heard even when you pay off a collection agency they been known to still sell your debt to others and it causes another headache with dealing with another agency after you paid the first off? Not sure if thats true?

 

So long story short, I'm basically looking at  A) paying off the debt to the 3rd debt collector and them not fixing this issue on my credit report and on top of that worried they wont honor not re-selling my debt after I paid them. Which would be pointless for me to of paid them in that case.  b) keep the money tucked away in an account, hope debt collector doesn't sue before statute of limitations run out and then my credit will still be dinged but I will of at least not paid them all this money for nothing being resolved. But at the same time how does this money sitting in the account work in regards to claiming it and IRS purposes?

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Just to add to that Harry if I end up paying back the money why even file bankruptcy? To me it makes no sense to give back the money and still have my credit hurt and having to still deal with debt collectors. If I'm going to have this on my record and have to deal with the hassle of the debt collectors might as well not pay them? And should I put the money into some kind of retirement account or something that draws interest while it sits?

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9 hours ago, carsearch1982 said:

The problem is they wont take 1 penny less then the full amount.

I even said I would give them like 70 or 80 percent of the full amount and make payments/or arrangements to pay the remaining portion.

1 hour ago, carsearch1982 said:

I called them every few months asking if my final amount came in. For the first 6 months they told me just call back and check in on the debt there was no record of a final amount owed. So when I did that, I told them hey I used a little of it on paying other medical bills that accrued during the time as well as paying some other bills while I was on disability  when I was transitioning from the hospital back to my job.

 

They LEGALLY can't.  It is illegal rebating and violates the terms of their contract with your insurance carrier.  

How it works (using generic numbers):  patient goes to the hospital and the provider(s) bill the carrier $100,000 for the care received.  The contracted amount to be paid is $50,000 by the carrier and the 20% out of pocket by the covered member (patient) which is $10,000 (20% of the $50,000).  The carrier sends a check or multiple checks based on the providers involved and the patient is supposed to forward that check to the provider and pay their out of pocket portion that is due according to the Estimation of Benefits (EOB).

You had NO legal right to convert those payments to the hospital to pay other providers or support yourself.  You really should have read your policy.  When those checks come in you are supposed to immediately send them to the provider regardless if the final accounting is done.  It can take over 6 months when that much care is involved to get a final total and full accounting of insurance benefits.  That is why under the new FICO rules they cannot report medical debt for at least 6 months.

1 hour ago, carsearch1982 said:

They told me no they cant make payment plans til the 98,000 was paid then the remaining balance ( I think another 6,000 or so)  can be paid in payments. Problem was I didn't have the full 98,000 and they flat out told me we cant do it.

Because when you were mailed those checks they were notified by the carrier so they could expect payment from you.  When you didn't immediately send them to the hospital you defaulted.  Worse you stole the money for your own use.

1 hour ago, carsearch1982 said:

Just to add to that Harry if I end up paying back the money why even file bankruptcy?

My guess is if you file BK you have to disclose where that $70k came from and the trustee will give the money to the hospital as it is contractually a payment to them not YOU. 

1 hour ago, carsearch1982 said:

To me it makes no sense to give back the money and still have my credit hurt and having to still deal with debt collectors.

Your credit is already trashed.

1 hour ago, carsearch1982 said:

If I'm going to have this on my record and have to deal with the hassle of the debt collectors might as well not pay them?

If you file BK you don't deal with the creditors anymore they are legally prevented from doing so.  If you pay the debt in full for what is contractually owed there is nothing for them to sell and even if they did do it you have a record of paying it and a solid gold defense.

1 hour ago, carsearch1982 said:

And should I put the money into some kind of retirement account or something that draws interest while it sits?

No.  That money does not belong to YOU.  You don't seem to understand it or don't care.  This is why providers HATE the carriers that do this with the payments.  Too many patients are like you and simply keep the money and stiff the providers for all the care they gave.  My hospital gives 60 days for the patient to turn over the check(s) and if they are not received simply sued and includes a claim of fraud.  Sadly it is sometimes the only way to get patients to pay for their services.

If you do file BK the trustee can undo that fraudulent transfer to the retirement account anyway as it is a direct attempt to hide the asset and convert it for your own purposes.  Definitely not allowed in BK.

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So what do I do with this money? I either can pay the 3rd party debt collection company. which they will I'm sure take a much lower lump some like they always say if you pay right then. Say just for nubmers they say give us 30,000 right now and were done? Then what happens to me and the remaning money? 

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Just now, carsearch1982 said:

So what do I do with this money?

PAY THE PROVIDERS.

1 minute ago, carsearch1982 said:

I either can pay the 3rd party debt collection company. which they will I'm sure take a much lower lump some like they always say if you pay right then.

First are you certain the debt was actually sold and is not just placed with a collection agency?  While some providers do sell debts it is still fairly rare.

If it is only in collections not sold they will not take less.

2 minutes ago, carsearch1982 said:

Say just for nubmers they say give us 30,000 right now and were done? Then what happens to me and the remaning money?

I am not even going to answer that.  I may vomit.  It disgusts me that you actually are going to keep this money for your own profit while the people who saved your life get nothing.  That you can even consider is reprehensible.  Perhaps one of the professional deadbeats will come along and advise you on how to do that.  They live for these opportunities.

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I think were confused on an issue. I tried to pay this money back multiple times to the hospital when they owned the debt. They flat out denied me paying it saying if it wasnt for the full amount they wouldnt accept it. I wanted to pay them the 70,000 dollars and then work out payments for the other 20,000 or so.  The other 20,000 or so got paid to the first hospitals bills that I transfered from. So now if I did what your saying and paid the providers it would make no sense cuz not only would I give the hospital that money but then collection agency would be still after me wanting to collect that money too. So your saying I should pay the hospital and the debt collection company? Basically you want me to double pay?

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OK, I want to get this straight. There were 2 providers, provider A and provider B. You owed provider A $20,000 that was not covered by insurance and you owed provider B $104,000 which the insurance company sent you $98,000 in checks to pay provider B. However, rather than send the money to Provider B (and even if there was not a final accounting, I bet if you sent the checks to Provider B, they would have cashed them and set that balance in your account to offset the charges), you sent some of it to Provider A and then used some of it for personal expenses.

If there is anything wrong with the above statement, please let us know now because that is the understanding of the situation that I (and possibly others) have.

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I first was rushed into emergency room in a different hospital and where they performed services and that was my normal insurance place that was "in my network" after getting further advice I went to another different hospital to have this procedure (that I was told I was going to need) done. Thats when the whole 2 week stay at the new (hospital b) starts. All this time shortly after I'm getting issued checks from insurance company as both hospital a and hospital b are charging or at leasting some how sending it into insurance. After spending 2 weeks in the hospital and about another 2 weeks or recovering back at a family memebers thats when I noticed the checks were coming in and the first hopsital was starting to send out bills which I paid. Which is where the 98,000 to about 70,000 something is down to now. As well as medication, and months of going in and getting tons of tests done after leaving the hospital keep racking up more costs. Now no matter if I paid off everything from the start I was going to still be responsible for about an extra 6,000 to 8,000 on top of the 98,000 that was paid out. 

So hopefully thats a littler more clearer.

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provider a I think got paid around 20,000 or so after all was said and done that was the first hospital. Hospital b is the one that charged me off and sent me to collections. And the end of the day a total of 108,000 was my total bill for both hospitals at the end.  IN which insurance paid out about 98,000 dollars and the remaining 8,000 or so was suppose to come out of my pocket. And with checks usually it would come with attached piece of paper that would say a hospital and how much they were paying out of that portion. USUALLY.  A few of the checks were confusing and didn't distinguish that. I was done paying hospital a  when I had the remaining 70,000 or so left over and was going to pay that to hospital b and then work out some kind of agreement to pay the remaining 30,000 or so off to them when I could. Problem is hospital b wouldnt accept that they told me all or nothing. I didnt have the full amount (the 20,000 paid to hospital a plus on top of that the 8,000 dollars that I was going to cover out of my own pocket that my insurance wouldnt pay.) That's when they charged me off and sent it to collections.

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8 minutes ago, carsearch1982 said:

A few of the checks were confusing and didn't distinguish that.

Which is when you contact your insurance carrier and clarify what they are for.

9 minutes ago, carsearch1982 said:

I had the remaining 70,000 or so left over and was going to pay that to hospital b and then work out some kind of agreement to pay the remaining 30,000 or so off to them when I could. Problem is hospital b wouldnt accept that they told me all or nothing.

If hospital B knew you were sent a check for $98,000 intended for them they were well within their right to demand that $98,000.  I guarantee you that if you walked into the billing office or mailed a check for $98,000 there is NO WAY they refuse it or send it back. AFTER you paid that $98k the insurance company sent you they would have negotiated on the balance.

11 minutes ago, carsearch1982 said:

I didnt have the full amount (the 20,000 paid to hospital a plus on top of that the 8,000 dollars that I was going to cover out of my own pocket that my insurance wouldnt pay.)

The mistake you made was diverting some of Hospital B's money to pay Hospital A in full.  I have no idea how you are going to undo this now.

Regardless:  you were given money by your carrier to pay the providers.  You have a LEGAL, ethical and moral obligation to do so.

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I'm confused. I was in both hospitals for the same emergency I just chose to go to hospital b because of the better doctors for that specific need. So its not like this was 2 different issues.  How would you of advised paying these bills from both hospitals? Since it was at the same time regarding the same incident.  Only differnce is I went to hospital a first so there bills came in sooner. But my insurance company wrote out checks that they knew both hospitals provided. The insurance company knew I went to 2 hospitals. Either way in the end I was going to be short no matter what to pay the overall hospital bill. Either by being short 20,000 on 1 hospital and 8,000 on another or 28,000 short on 1. Either way I did not have enough money EVEN IF I SENT EVERY PENNY to both hospitals that I got from insurance it would of never been enough. With how much I had to come out of pocket. And the only reason I'm in this situation is because 2 times in 2 weeks the guy in charge of billing told me flat out I could not send in partial payment it had to be 98,000 or they wouldnt accept it. IF they would of accepted it and let me work out an arrangement for the rest I wouldnt be here in this forum asking this.

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44 minutes ago, carsearch1982 said:

So now if I did what your saying and paid the providers it would make no sense cuz not only would I give the hospital that money but then collection agency would be still after me wanting to collect that money too. So your saying I should pay the hospital and the debt collection company? Basically you want me to double pay?

NO.

"Charged off" is an accounting term and does not affect your side of this in anyway.  It merely allows the hospital to classify debts that are no longer considered assets.

You still have not answered the question on whether the account is merely IN collections or was SOLD outright.

IF it was actually sold then the hospital is no longer involved and cannot accept any money from you.  They are out of the picture.  Whether you pay the debt buyer is your call and I am not going to address that.

IF it is only IN COLLECTIONS then you can pay the collector because they will forward the money to the hospital.  Sometimes you can still pay they hospital but it all depends on their contract with the collector they hired. If the contract states once the account is placed the hospital cannot circumvent them and take payment you have to deal with the collector.  If it doesn't say that then it is possible the hospital would accept payment.  It still may be possible to negotiate a payment plan on the balance with a large lump sum payment first but given how long this has played out and the charge off the chances are much smaller.

For future reference you lost your leverage when you got sent a LOT of money and simply held on to it.  The burden is on the patient to ensure payments are made, those checks are forwarded to the providers and when you attempted to keep the money and pay less you REALLY muffed it up bad.  The hospital is NOT required to wait until you sort it out so you have to stay on top of it if you don't want to end up in collections or court.  When checks come in you verify who the carrier intends it for and SEND IT.  THEN deal with the balances once the carrier payment is sent.  IF you mark it as "payment from carrier" the hospital won't turn it down.

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See, this is not making sense. If the total was $108,000 and $20,000 went to Provider A, then that leave $88,000 for provider B. If you had $78,000 left over ($98,000 - $20,000) then you should not owe Provider B $30,000 after sending them $70,000, you should owe them $18,000. I have a feeling that you used some of the checks meant for Provider B to pay provider A and that is the conversion @Clydesmom is talking about (along with the insurance funds you used on yourself). I think you need to sit down and figure out what happened and it may take a couple of days to get things straight. A good Excel spreadsheet will help with that. You may also have to call each provider and the insurance company to work this out.

Regardless of the above, here is what happened. When you obtained services from Provider A and Provider B, they probably asked for your insurance information which you gave to them and they providers submitted the claims for you. Because of the way medical billing is done, both providers probably submitted more than one claim and each check probably corresponded to the claim submitted. Once the checks were mailed out, the provider's billing department was notified that you were given the checks and that they should expect payment from you. As @clydesmom said, because you got the contract discount through the insurance company, they cannot and will not give you any other discounts and if you converted some of the payments, they have full right to expect those payments from you not discounted so I doubt the collector will deal.

As for the collector, I am not sure about California law but here in Minnesota, most medical providers do not sell their debts because of the rules surrounding the Consent Decree on medical billing all providers signed with the MN Attorney General. I would bet that California is similar in that regards. This means that the provider probably still owns the debt and simply hired a 3rd party collector to collect. No sale happened. Even if a sale did happen, if you pay of the debt and they sell it again, as long as you have the evidence that you made the payment, you can tell the new collector to go away and if they sue you, you not only have a rock solid defense, you can get a payday. I doubt this is the case. I think the provider still owns the debt. As for paying both, that is not what @clydesmom was suggesting. She was suggesting that you either pay the provider directly or the collector.

As for your credit report, FICO changed the scoring algorithm years ago to account for a paid charge-off vs an unpaid one. This is technically your fault for not keeping track of things properly and thinking you could get a discount. Chalk it up to stupid tax and pay your bill and move on.

Finally, The SOL only comes into play if they do not sue you and even then, they they claim fraud (which is possible in this case), the SOL is a year longer. If they do sue you (especially if the provider does so because they still own the debt), they will probably win and once they get a judgement, the SOL on an judgement is 10 years and is renewable for the rest of your life.

 

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3 minutes ago, carsearch1982 said:

And the only reason I'm in this situation is because 2 times in 2 weeks the guy in charge of billing told me flat out I could not send in partial payment it had to be 98,000 or they wouldnt accept it. IF they would of accepted it and let me work out an arrangement for the rest I wouldnt be here in this forum asking this.

You NEVER take the work of the customer service drone who answers the phone.  Talk to the billing supervisor or manager.  NO manager in their right mind turns down a five figure check.  If that fails get a Patient Advocate to help you.

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 Not sure it was kind of a blur as I was recovering. But I do remember multiple times calling in requesting to pay or get an idea how much my bill was. With them telling me the info wasn't in the system and to keep calling back in so and so amount of time. Maybe because there a large company? Not sure but that's how it happened. Now how can I check if it was charged off or just in collections?

Quote

 

 

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6 minutes ago, carsearch1982 said:

How would you of advised paying these bills from both hospitals?

Hospital A billed $X amount.  Carrier says here is check for $24,000 and I owe Hospital A $6,000.  I mail Hospital A the check with enclosed letter stating here is the payment from my carrier.  Whom should I contact to make payment arrangements for the balance?

Hospital B:  same scenario.  

You mail this within 72 hours of receiving the checks.  NOT months later.  

8 minutes ago, carsearch1982 said:

But my insurance company wrote out checks that they knew both hospitals provided. The insurance company knew I went to 2 hospitals.

Even though it is the same illness/incident both hospitals get paid.  That doesn't change.

9 minutes ago, carsearch1982 said:

Either way in the end I was going to be short no matter what to pay the overall hospital bill.

Most patients are but had you paid them the checks the carrier sent you had leverage to negotiate a payment plan.  Holding on to the money for months and then asking for an illegal rebate killed that option.

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Ok will do. So just to sum it up. What's the best outcome out of this? What's the worst that can come out of this? And what happens if I settle this debt "if" it's in just collections status and not wrote off by hospital and I pay a smaller amount thats owed and theres a reamining leftover due to the smaller agreed price? What happens with that money/ taxes paid on that money?

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4 minutes ago, carsearch1982 said:

With them telling me the info wasn't in the system and to keep calling back in so and so amount of time. Maybe because there a large company? Not sure but that's how it happened.

The issue got clouded as far as billing because you had a lot of care after discharge.  The burden is on you to keep track and stay on top of it.  Even if it wasn't in their system when the carrier mailed you checks you knew they were not yours to keep regardless of how confused you were about who got what.

6 minutes ago, carsearch1982 said:

Now how can I check if it was charged off or just in collections?

Call the hospital and ask for the billing manager.  Tell him/her you are trying to settle this matter. If they tell you it was sold and they cannot help then you know.  If they say it is with Big Bad Wolf Medical Collections ask if it has been sold or just placed.  If you plead insurance ignorance in a polite way i.e. "I am so sorry I didn't understand what all these checks were for and I want to clear this up...." they might meet you and worth this out.  DO NOT focus on the credit reports up front.  Tha tis the least of your worries.

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I think what confuses this more is it wasn't just like a total amount liek hospital a's bill was 20,000 dollars please pay. It was ongoing. Like this month there might be 2 billable tests or services that they charged me for. When I got that I paid it off with the first hospital since the hospital services matched what the check amount and description was. Where as hospital B never sent me any bill or called or any kind of payment mention ever written or phone call for at least 12 months. That's when I got the first phone call that I spoke to  you about.

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