COLLECTION OF MEDICAL DEBT
Collection of Medical Debt from Patients The Minnesota Legislature enacted new laws governing the collection of medical debt from patients that became effective on October 1, 2024.
1. Minn. Statutes sections 62J.805 – 62J.808 set forth requirements applicable to “health care providers” with regard to the collection of medical debt.
2. Minn. Statutes sections 332C.01 – 332C.05 set forth requirements applicable to “collecting parties” with regard to the collection of medical debt.
It appears these statutes are intended to work in tandem to apply to both health care providers and those entities employed by providers to pursue collection of medical debt from patients.
TO WHOM AND WHEN DO THESE LAWS APPLY
The term “health care providers” is defined at Minn. Stat. § 62J.805, subd. 4 to include: “(1) any health professional who is licensed or registered by the State of Minnesota to provide health treatment and services within the professional’s scope of practice, (2) a group practice, or (3) a hospital.” This term includes doctors of chiropractic.
The term “collecting party” is defined at Minn. Stat. § 332C.01, subd. 2 to include: “a party engaged in collecting medical debt. Collecting party does not include parties when complying with a court order or statutory obligation to garnish or levy a debtor’s property, including banks, credit unions, public officers, and garnishees.” This term includes doctors of chiropractic when they pursue collection of medical debt on their own, and to any entity a doctor of chiropractic employs to pursue collection of medical debt on their behalf. It is important to remember that providers may be held ethically and legally responsible for any violations committed by any entity the provider employs to pursue collection of a medical debt on their behalf.
The term “debtor” is defined at Minn. Stat. § 332C.01, subd. 3 to include: “a person obligated or alleged to be obligated to pay any debt.” Obviously, this term includes any patient who is obligated or alleged to be obligated to pay any medical debt but also applies to persons legally responsible for the medical debts of the patient such as parents, legal guardians, etc. This term probably does not apply to insurers.
The term “medical debt” is defined at Minn. Stat. § 332C.01, subd. 4 to include: “(a) [D]ebt incurred primarily for medically necessary health treatment or services. Medical debt includes debt charged to a credit card or other credit instrument, on or after October 1, 2024, under an open-end or closed-end credit plan offered specifically to pay for health treatment or services. (b) Medical debt does not include:
(1) debt charged to a credit card or other credit instrument, under an open-end or closed- end credit plan, that is not offered specifically to pay for health treatment or services;
(2) services provided by a veterinarian;
(3) services provided by a dentist; or
(4) debt charged to a home equity line of credit.”
Note: It appears that if a patient pays with a standard credit card (Visa, Mastercard, American Express, etc.) or any other “credit instrument” that is not a credit card offered by banks or other lending institutions specifically to pay for health treatment or services, then those charges are not considered “medical debt” for the purposes of these statutes. However, if a patient pays using a credit card or other “credit instrument” that is offered by banks or other lending institutions specifically to pay for health treatment or services (like an HSA card), then the charges are considered “medical debt.” The implications ofthis distinction are not immediately apparent.
The term “medically necessary health treatment or services” is defined at Minn. Stat. § 62J.805, subd. 7 to include any treatment or services that are:
“(1) safe and effective;
(2) not experimental or investigational, except as provided in Code of Federal Regulations, title 42, section 411.15(o);
(3) furnished in accordance with acceptable medical standards of medical practice to diagnose or treat the patient’s condition, or to improve the function of a malformed body member;
(4) furnished in a setting appropriate to the patient’s medical need and condition;,
(5) ordered and furnished by qualified personnel;
(6) meets, but does not exceed, the patient’s medical need; and
(7) is at least as beneficial as an existing and available medically appropriate alternative.”
Note: Presumably any treatment that a doctor of chiropractic provides to a patient for which the patient is charged would be considered by the doctor of chiropractic to be “medically necessary” treatment or services. Charging a patient for chiropractic treatment or services that are not “medically necessary” would probably be a violation of Minn. Stat.§ 148.10, subd. 1 (e) which defines unprofessional conduct to include: “performing unnecessary services;” “charging a patient an unconscionable fee or charging for services not rendered;” “directly or indirectly engaging in threatening, dishonest, or misleading fee collection techniques;” and “perpetrating fraud upon patients.” The implications oflimiting the applicability of these statutes to the provision of “medically necessary health treatment and services” are not immediately apparent.
REQUIREMENTS APPLICABLE TO PROVIDERS UNDER 62J.805 – 808.
I. Providers cannot refuse to treat patients just because they or a member of their family or household have an unpaid bill.
Minn. Stat.§ 62J.807 (a) provides: “A health care provider must not deny medically necessary health treatment or services to a patient or any member of the patient’s family or household because of current or previous outstanding medical debt owed by the patient or any member of the patient’s family or household to the health care provider, regardless of whether the health treatment or service may be available from another health care provider.”
This arguably is the most onerous provision of the new statutes from the perspective of providers: providers are now legally obligated to continue treating patients who owe them money.
However, Minn. Stat.§ 621.807 (b) provides: “As a condition of providing medically necessary health treatment or services in the circumstances described in paragraph (a), a health care provider may require the patient to enroll in a payment plan for the outstanding medical debt owed to the health care provider. The payment plan must be reasonable and must take into account any information disclosed by the patient regarding the patient’s ability to pay. Before entering into the payment plan, a health care provider must notify the patient that if the patient is unable to make all or part of the agreed-upon installment payments, the patient must communicate the patient’s situation to the health care provider and must pay an amount the patient can afford.”
Notably, subdivision (b) does not specify what, if any, steps the provider may take if the patient fails to comply with the terms of the payment plan. Presumably, the provider would be allowed to refuse to provide additional treatment to any patient who fails to pay the agreed-upon installment payments, or at least an amount the patient can afford, but that is not expressly made clear in the statute. It is conceivable that these statutes may be interpreted to prohibit providers from denying treatment to a patient even if the patient fails to pay the agreed-upon installment payments or an amount the patient can afford. One option may be for a provider to agree to render ongoing treatment to a patient who owes them money for past treatment, but only if the patient pays cash on the date of service (preferably before the treatment is performed).
II. Communicating medical debt collection policies to patients.
Minn. Stat. § 621.806, subd. 1 provides: “A health care provider must make available to the public the health care provider’s policy for collecting medical debt from patients. The policy must be made available by:
(1) clearly posting the policy on the health care provider’s website or, for health professionals, on the website of the health clinic, group practice, or hospital at which the health professional is employed or under contract; and
(2) providing a copy of the policy to any individual who requests the policy.”
Minn. Stat. § 621.806, subd. 2 explains what information must be provided: “A policy made available under this section must at least specify the procedures followed by the health care provider to: (1) communicate with patients about the medical debt owed and collecting medical debt; (2) refer medical debt to a collection agency or law firm for collection; and (3) identify medical debt as uncollectible or satisfied, and ending collection activities.”
The debt collection policy must be posted on the provider’s website and the provider must be able to furnish a copy to any individual who requests a copy. Providers are not required to post a copy in their office or automatically provide a copy to new or existing patients (although it may not be a bad idea to include a copy with the standard intake documents providers give to new patients and have them sign).
III. Correction of billing errors.
Minn. Stat. § 62J.805, subd. 2 defines the term “billing error” as: “[A]n error in a bill from a health care provider to a patient for health treatment or services that affects the amount owed by the patient according to that bill. Billing error includes but is not limited to: (1) miscoding a health treatment or service, (2) an error in determining whether a health treatment or service is covered under the patient’s health plan, or (3) an error in determining the cost-sharing owed by the patient.”
Minn. Stat.§ 62J.808 subd. 2(a) provides: “If a health care provider or health plan company determines or receives notice from a patient or other person that a bill from the health care provider to a patient for health treatment or services may contain one or more billing errors, the health care provider or health plan company must notify the patient: (1) of the potential billing error; (2) that the health care provider or health plan company must review the bill and correct any billing errors found; and (3) that while the review is being conducted, the health care provider must not bill the patient for any health treatment or service subject to review for potential billing errors.”
Minn. Stat. § 62J.808 subd. 2(b) provides: “The notice required under this subdivision must be transmitted to the patient within 30 days after the date the health care provider or health plan company determines or receives notice that the patient’s bill may contain one or more billing errors.”
Minn. Stat.§ 62J.808, subd. l(a) provides: “If a health care provider or health plan company determines or receives notice from a patient or other person that a bill from the health care provider to a patient for health treatment or services may contain one or more billing errors, the health care provider or health plan company must review the bill and correct any billing errors found. While the review is being conducted, the health care provider must not bill the patient for any health treatment or service subject to review for potential billing errors. A health care provider may bill the patient for the health treatment and services that were reviewed for potential billing errors under this subdivision only after the review is complete, any billing errors are corrected, and a notice of completed review required under subdivision 3 is transmitted to the patient.”
Note that the prohibition against billing the patient applies only to those services being reviewed. Patients can be billed for prior or current treatment not under review. Minn. Stat. § 62J.808 subd. 3 provides: “When a health care provider or health plan company completes a review of a bill for potential billing errors, the health care provider or health plan company must (1) notify the patient that the review is complete, (2) explain in detail how any identified billing errors were corrected or explain in detail why the health care provider or health plan company did not modify the bill as requested by the patient or other person, and (3) include applicable coding guidelines, references to health records, and other relevant information. This 4 notice must be transmitted to the patient within 30 days after the date the health care provider or health plan company completes the review.” Minn. Stat. § 62J.808, subd. l(b) provides: “If, after completing the review under paragraph (a) and correcting any billing errors, a health care provider or health plan company determines the patient overpaid the health care provider under the bill, the health care provider must, within 30 days after completing the review, refund to the patient the amount the patient overpaid under the bill.” REQUIREMENTS APPLICABLE TO “COLLECTING PARTIES” UNDER 332C.0l – 332C.05 I. Medical debt may not be reported to credit bureaus. Minn. Stat. § 332C.03(a) provides: “A collecting party is prohibited from reporting medical debt to a consumer reporting agency.” II. Debt collection requirements and prohibitions. Minn. Stat. § 332C.02 sets forth requirements that must be followed by “collecting parties.” It is important to remember that providers can be held ethically and legally responsible for violations committed by entities employed to pursue collection of medical debt on their behalf. Minn. Stat. § 332C.02 provides: “A collecting party must not: (1) In a collection letter, publication, invoice or any oral or written communication, threaten wage garnishment or legal suit by a particular lawyer, unless the collecting party has actually retained the lawyer to do so; (2) Use or employ sheriffs or any other officer authorized to serve legal papers in connection with collecting a claim, except when performing the sheriffs or other officer’s legally authorized duties; (3) Use or threaten to use methods of collection that violate Minnesota law; (4) Furnish legal advice to debtors or represent that the collecting party is competent or able to furnish legal advice to debtors; (5) Communicate with debtors in a misleading or deceptive manner by falsely using the stationery of a lawyer, forms or instruments which only lawyers are authorized to prepare, or instruments which simulate the form and appearance of judicial process; (6) Publish or cause to be published any list of debtors, use shame cards or shame automobiles, advertise or threaten to advertise for sale any claim as a means of forcing payment of the claim, or use similar devices or methods of intimidation; 5 (7) Operate under a name or in a manner which falsely implies the collecting party is a branch of or associated with any department of federal, state, county, or local government or an agency thereof; (8) Transact business or hold the collecting party out as a debt settlement company, debt management company, debt adjuster, or any person who settles, adjusts, prorates, pools, liquidates, or pays the indebtedness of a debtor, unless there is no charge to the debtor, or the pooling or liquidation is done pursuant to court order or under the supervision of a creditor’s committee; (9) Unless an exemption in the law exists, violate Code of Federal Regulations, title 12, part 1006, while attempting to collect on any account, bill, or other indebtedness. For purposes of this section, Public Law 95-109 and Code of Federal Regulations, title 12, part 1006, apply to collecting parties other than health care providers collecting medical debt in the health care provider’s own name; (10) Communicate with a debtor about medical debt by use of an automatic telephone dialing system or an artificial or prerecorded voice after the debtor expressly informs the collecting party to cease communication utilizing an automatic telephone dialing system or an artificial or prerecorded voice. For purposes of this clause, an automatic telephone dialing system or an artificial or prerecorded voice includes but is not limited to (i) artificial intelligence chat bots, and (ii) the usage of the term under the Telephone Consumer Protection Act, United States Code, title 47, section 227(b)(l)(A); (11) In collection letters or publications, or in any oral or written communication, imply or suggest that medically necessary health treatment or services are denied as a result of a medical debt; (12) When a debtor has a listed telephone number, enlist the aid of a neighbor or third party to request that the debtor contact the collecting party, except a person who resides with the debtor or a third party with whom the debtor has authorized with the collecting party to place the request. This clause does not apply to a call-back message left at the debtor’s place of employment which is limited solely to the collecting party’s telephone number and name; (13) When attempting to collect a medical debt, fail to provide the debtor with the full name of the collecting party, as registered with the secretary of state; (14) Fail to return any amount of overpayment from a debtor to the debtor or to the state of Minnesota pursuant to the requirements of chapter 345; (15) Accept currency or coin as payment for a medical debt without issuing an original receipt to the debtor and maintaining a duplicate receipt in the debtor’s payment records; (16) Except for court costs for filing a civil action with the court and service of process, attempt to collect any interest, fee, charge, or expense incidental to the charge-off obligation from a 6 debtor unless the amount is expressly authorized by the agreement creating the medical debt or is otherwise permitted by law; (17) Falsify any documents with the intent to deceive; (18) When initially contacting a Minnesota debtor by mail to collect a medical debt, fail to include a disclosure on the contact notice, in a type size or font which is equal to or larger than the largest other type of type size or font used in the text of the notice, that includes and identifies the Office of the Minnesota Attorney General’s general telephone number, and states: “You have the right to hire your own attorney to represent you in this matter.”; (19) Commence legal action to collect a medical debt outside the limitations period set forth in section 541.053; (20) Report to a credit reporting agency any medical debt that the collecting party knows or should know is or was originally owed to a health care provider, as defined in section 62J.805, subdivision 4; or (21) Challenge a debtor’s claim of exemption to garnishment or levy in a manner that is baseless, frivolous, or otherwise in bad faith.” III. Enforcement of debt collection prohibitions and damages payable by providers and collecting parties for violations. Minn. Stat. § 332C.04 provides: “(a) A debtor who successfully defends against a claim for payment of medical debt that is alleged by a collecting party must be awarded the debtor’s costs and a reasonable attorney fee, as determined by the court, incurred to defend against the collecting party’s claim for debt payment. (b) For purposes of this section, a resolution mutually agreed upon by the debtor and collecting party is not a successful defense subject to an additional award of an attorney fee.” In other words, if a provider sues a patient for a medical debt, the claim does not settle but goes to trial, and the judge or jury decides that the patient does not owe the medical debt claimed by the provider, the provider must be required by the court to pay the reasonable costs and attorney fees incurred by the patient defending against the provider’s claim for payment. Minn. Stat.§ 332C.05(a) provides: “The attorney general may enforce this chapter under section 8.31.” Minn. Stat.§ 332C.05(b) provides: “A collecting party that violates this chapter is strictly liable to the debtor in question for the sum of: (1) actual damage sustained by the debtor as a result of the violation; (2) additional damages as the court may allow, but not exceeding $1,000 per violation; and (3) in the case of any successful action to enforce the foregoing, the costs of the action, together with a reasonable attorney fee as determined by the court.” 7 Minn. Stat. § 332C.05(c) provides: “A collecting party that willfully and maliciously violates this chapter is strictly liable to the debtor for three times the sums allowable under paragraph (b), clauses (1) and (2).” Minn. Stat. § 332C.05(d) provides in relevant part: “The dollar amount limit under paragraph (b), clause (2), changes on July 1 of each even-numbered year in an amount equal to changes made in the Consumer Price Index, compiled by the United States Bureau of Labor Statistics.” Minn. Stat. § 332C.05(g) provides: “A collecting party must not be held liable in any action brought under this section if the collecting party shows by a preponderance of evidence that the violation: (1) was not intentional and resulted from a bona fide error made notwithstanding the maintenance of procedures reasonably adopted to avoid any bona fide error; or (2) was the result of inaccurate or incorrect information provided to the collecting party by a health care provider as defined in section 621.805, subdivision 4; a health carrier as defined in section 62A.011, subdivision 2; or another collecting party currently or previously engaged in collection of the medical debt in question.” SPOUSES ARE NO LONGER LIABLE FOR MEDICAL DEBT Minn. Stat. § 519.05(a) previously provided that spouses who live together were jointly and severally liable for medical debt relating to necessary medical services provided to either spouse. This provision was repealed effective October 1, 2024. WORKERS’ COMPENSATION PATIENTS Providers are prohibited from collecting or attempting to collect their charges from any patient who claims the condition for which the treatment is provided was the result of a work-related injury. This is true even if the patient’s claim for workers’ compensation benefits is being disputed by the employer or the WC insurer. Minn. Stat.§ 176.136, subd. 2a provides for “penalties, costs, and expenses for improper collection or attempts to collect payment for medical services from an employee.” Providers can be fined up to $1,000 for “each contact made in person or by United States mail, telephone, text, email, or any other type of contact seeking payment” with a patient who claims their treatment relates to a work-related injury. The penalty can be up to $2,000 per contact if the provider accepts any level of payment from the employee, engages a collection agency or other third party to collect from the employee, files a claim in conciliation court, attaches the employee’s tax refund, or submits a report to a credit agency.
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