On March 19, the Washington State Attorney General (AG) obtained an order from the King County Superior Court providing that a debt collection agency must pay civil penalties for allegedly failing to comply with the Washington Collection Agency Act and Consumer Protection Act when collecting medical debts, specifically by failing to provide the required disclosures in its consumer communications. The court found that the debt collection agency sent 82,729 debt collection notices to medical debtors without the necessary disclosures, which included notification of the debtor’s right to request the original or redacted account number assigned to the debt, the date of last payment, and an itemized statement. The notices also did not inform the debtor that the debtor may be eligible for charity care from the hospital or provided contact information for the hospital. According to the AG’s Office, the collection agency “unlawfully collected payments from … patients without providing critical information about their rights when faced with medical debt. By excluding the legally required disclosures about financial assistance in its collection letters, [the collection agency] created barriers that kept patients who likely qualified for financial assistance from learning about and accessing help with their hospital bills.”
The court ordered a civil penalty of $10 per violation for the debt collection agency’s 82,729 alleged violations of the state Consumer Protection Act, totaling $827,290. Additionally, the court ordered the debt collection agency to reimburse the AG’s office for the costs of bringing the case, which is estimated to exceed $400,000 and to update its practices to comply with Washington law. In determining the civil penalty amount, the court found, among other things, that the debt collection agency acted in bad faith by “fail[ing] to take basic compliance steps,” and “fail[ing] to obtain the correct license … maintain an office in the state, and … include the mandatory disclosures on medical and hospital debt.”
As previously covered by InfoBytes, the AG successfully sued the nonprofit health system in early February, entering a consent decree pursuant to which the health system must pay $158 million in patient refunds, debt forgiveness, and AG costs.
