An all too common problem that drives Doctors crazy involves a bit of larceny. The insurance plan has approved the medical services, the Physician then renders them the insurance company pays the bill but the Doctor is not paid because the patient has cashed the insurance check and kept the funds.
What can the medical provider do?
The answer is plenty. Suit can be instituted against the patient and his or her spouse if married. In these suits the patient has no defense as the medical services were rendered and the patient kept funds he or she was not entitled to.
In most cases answers are not filed and default judgement is obtained.
If a patient files an answer, I will subpoena a copy of the endorsed check from the Insurance provider and then file a motion for summary judgement. This is a motion in which I, as the Physician's attorney, will state to the Court that there are no facts in dispute- the situation being the Doctor rendered the services, the patient endorsed the insurance check, a copy of which is attached to the motion and kept the funds. I ask the Court for judgement against the patient in the amount of the Physician's bill. Judges very quickly grant judgement under these circumstances.
In one recent case the patient hired an attorney who filed an answer 'claiming he wasn't provided proper medical care." I subpoenaed a copy of the indorsed check from the insurance company and advised the attorney that if the services owed were inadequate, the check should have been returned which it was not. I then filed a motion for summary judgement. Needless to say judgement was entered for the Doctor and the Judge had no sympathy for the patient.
Once judgement is obtained, the endorsement on the back of the subpoenaed check serves another purpose- it tells me where the patient banks and I can then levy and execute on that bank account. Also most patients job information is obtained by the Doctor when the insurance information is taken and salaries can be garnished.
If a patient filed Chapter 7- Bankruptcy which is the format to discharge all debts, a formal complaint may be filed in the Bankruptcy Court objecting to discharge of the debt to the amount of the insurance check. So If a Doctor's bill is $10,000.00 and the insurance check is $6,000.00, a formal complaint will object to discharging the $6,000.00 kept by the patient. In Chapter 13- Bankruptcy which involves not discharge but a re-payment plan, there is no right to oppose bankruptcy.
In conclusion when the patient keeps the check, Doctors do not have to take it lying down or gnash their teeth. There are legal remedies which can force the patient to pay up.
Tips to successful collections: Foresight For the Creditors
As long as people engage in business whether for the sale of goods or the sale of services, there will be collection cases. A large number of debtors who do not pay are not the poor, but rather the "deadbeats" who can afford to pay but choose not to. When creditors come to see me about such cases, I always point out that a judgment against such debtors is only as good as the assets that are collectable. How do creditors learn about debtor's assets?
If you are giving credit to a business have the customer fill out a credit application Form listing credit references including banking institutions. The reason for this that if the customer has to be sued and judgment entered, its bank account being known can be seized by the creditor's attorney. If the customer is a corporation, try to get a personal guarantee by a corporate office. This way, if the corporation goes bankrupt you can proceed against the guarantor. Make sure you photocopy the checks you receive from the customer so that you confirm its banking institution or notice a change down the road in banks.
If you are giving a really large credit line, demand a UCC-1 lien be filed against the business' property and have a search done to see if there are previous liens filed. If business assets are sold as a result of a judgment, the first UCC-1 lien holder has the first rights to the proceeds of sale.
If you are giving professional services such as Doctor or Dentist or an Accountant, make sure your new patient fills out an information sheet listing the name and address of the patient and spouse with their job addresses and telephone numbers. If the patient is a child, both parents should be listed. This is because spouses are liable for the necessary medical and dental debts of each other and parents for their children. If someone not in those categories says "I'll pay the bill," have them sign a written guarantee as oral guarantees are worthless. You can always tell your patient you need the spouse's work telephone in case of emergencies. The importance of the job information is that a salary can be garnished after a judgment is obtained. Make sure you photocopy checks you receive so you know where they bank.
If you are a painter, house contractor, roofer, etc, you have in addition to the above another right. If the customer does not pay your bill, you have within several months of completion, depending on which state, the right to file a mechanics lien against the premises giving you priority over any mortgage.
What happens if you already have a debtor but you didn't make a copy of that first check. They paid but now will not pay the balance? Relax-every banking transaction is required to be photocopied by Federal Law. Just go to your bank and tell them the date you deposited the check, the amount and who it was from and they will send you a copy for a nominal cost.
Most of your debtors will pay and you will never have to use this information but for those few who will not, you will be aimed and ready to give your collection attorney the necessary information needed to collect a judgment.
The Spouse is Liable for Medical and Dental Necessities
Often the Physician confronts the following situation. The patient owes the money on a bill but is unemployed while the spouse has a good job. Luckily for the doctor the laws of New Jersey and New York allow the spouse to be sued for the medical and/or dental services along with the patient. The law recognizes that a spouse is equally responsible with the patient for medical and dental necessities. This way once a judgment is obtained against both of them, the salary of the working spouse can be garnishment.