collections
Get
Delinquent Patients to Pay Up
Small
claims court may prove a better options for collecting from some patients.
DORTHEANNE
J. ROBERTS, O.D. & ANDREW S. GURWOOD, O.D.
Now
more than ever, maximizing practice income demands that we put some efforts into
collecting professional fees. Not allowing patients to have unpaid balances sets
an important tone. It demonstrates that our professional services are valuable and
nonnegotiable. Every once in a while, we all violate our "no billing" policy for
some reason and a patient ends up with a balance due. In most of these cases, simply
sending a bill to the patient's home will result in full payment.
Unfortunately, there will be those who opt to ignore the bill
and repeated requests for payment. Frustrated by chronic bill-ignorers, we decided
to employ a new system of recovering these fees. So when patients don't respond
to reminders, our next step is small claims court. It's not as complicated as it
sounds and it's very effective.
Why not collections?
Many O.D.s use collections agencies to try to recover these payments.
Collections agencies work well in some situations, but have significant shortcomings.
For one thing, the threat of poor or ruined credit is not a deterrent to the person
who habitually refuses to pay his bills. While collections companies offer their
service for a small charge (20% of the total amount), they are often ineffective
because they are easy to ignore (by just hanging up the phone) or dodge (caller
ID). Generally, in cases where the perpetrator is an experienced bill-dodger, these
agencies do not take violators to court.
STEP ONE:
Before you file
Prior to taking any patient to court, a thoughtful practitioner
will give him or her not only notice that a payment is due, but also a notice that
explains what will happen next if the request for payment is ignored. We mail a
bill once a month for three months. Once 100 days has passed without any contact
from the patient to explain extenuating circumstances, we send a more serious notice.
This letter explains that the patient now has 30 days in which to make payment-in-full,
or we will turn the matter over to the local small claims court. The patient is
instructed he or she will then be responsible for all fees associated with the court.
More often than not, this process alone gets you what you want: an opening for dialogue.
Once a patient expresses a desire to amicably resolve the issue, things usually
proceed to a satisfactory end.
When a patient continues on the path of negligence, our policy
is to call him the night before turning the matter over to the court, to allow him
one last chance to choose an amicable solution over litigation. Often, if contact
can be established, patients opt for the simpler resolution. This is always the
best circumstance. Consider taking the patient to court only as a last resort. It
has the potential to cost money, time away from the office and generate lasting
ill will.
STEP TWO:
Filing the case
Now that the patient has exhausted all warnings, we turn the bill
over to small claims court. The particulars of this process may vary from state
to state (and even jurisdiction to jurisdiction), so you'll have to do some homework
first.
According to one system, the court at which you file the grievance
must be the same township where the infraction occurred. This can be confusing for
individuals who live in one county and work in another. You can locate the appropriate
court by placing a call to the local area directory assistance and asking for the
township/city District Small Claims Court.
Once you've located the appropriate court, inform them that you
are a doctor who would like to file a grievance against a patient who has chosen
not to pay his or her bill. This will start the process and the procurement of the
proper form(s). While forms from different jurisdictions may vary, they all require
a description of what has occurred and why the plaintiff (you) is taking the defendant
(patient) to court.
Since the patient will receive a copy of this form, make sure
that your description is adequately detailed without being verbose. Include the
date and time when the service occurred, the nature and description of the service
(without any examination data), the code under which you billed the visit, the amount
charged, the amount owed, whether the patient or his insurance company made a partial
payment, the dates and times that bills were sent and any other dates/times that
phone calls were made to the patient along with descriptions of any conversations.
Finally, include the phrase, "to date, the patient has made no attempt to reconcile
the bill."
Because optometrists typically deal with bills of less than $500,
the fees necessary to file the case are small (again, it varies from location to
location). For example, the fees the court charges in my area total $60.50. Once
the plaintiff has paid this, he or she will owe the delinquent fees as well any
additional court fees.
Typically, a portion of the court fee is designed to cover postal
expenses. This fee cannot be awarded by a verdict of the judge. The plaintiff can
add it to the total debt so long as the matter is settled out-of-court. If the matter
goes to trial and a verdict is rendered, than the court will deduct the amount designated
on the item line as "postage" from the settlement. It may be possible to assess
a "processing fee" to recover this amount (repeated use of certified mail is expensive).
And in most cases, by the time the gavel hits the desk, you can capture 100% of
the monies owed and invested.
STEP 3:
The proceedings
Once you've paid the fees and the court processes the request,
it will assign a date to hear the case. It will notify all parties of the date and
time via standard mail or e-mail. The court date is usually within 30 days of filing.
If the date/time is unsatisfactory, you can ask the court to reschedule the hearing.
Don't delay in making this request; the court also has to notify the defendant of
the change.
Occasionally you'll encounter individuals who refuse to take or
pick-up their mail. In these cases, you will have the option of paying an additional
fee (also recoverable) to have a constable of the court personally deliver the document
to the defendant.
Once the patient receives notice, they have three options.
1. They may opt to settle the claim by making payment to the filer
directly. If the defendant decides to exercise this option, the plaintiff, upon
accepting the full amount owed (including all expenditures in fees and fines) should
provide proof of payment to the patient so that he or she may submit this proof
to the court.
2. The patient may file a counterclaim against the plaintiff.
Since small claims courts only serve to recover money or property from an individual,
the patient can only file a counter suit if he or she wishes to recover money or
property owed him or her. The defendant cannot attempt to launch a counterclaim
contending malpractice. This underscores the necessity of running the business aspect
of the practice properly with good record keeping.
3. The patient may choose not to show up for the court date.
In
this case, remarkably, the court will show mercy, waiting 10 to 15 minutes for the
defendant's arrival. If the patient is a no-show, the judge can rule in favor of
the plaintiff and fine the defendant for all fees, minus the predetermined postage
charge. In other jurisdictions, you may have to file a Default Judgment form in
order for the judge to rule in your favor. Interestingly, if it's the plaintiff
who does not show (in these scenarios, that's you) the judge will dismiss the case
and you will not have the ability to file again.
STEP 4:
The red tape
You should contact the court to get full instructions and to be
clear as to whom the court considers a proper representative for the practice. In
some instances the plaintiff need not appear, and instead send an appropriate stand-in.
We advise caution if you take this course, as the person representing the plaintiff
must be knowledgeable of all the events and records of the case. A one-page, typed,
bulleted list of the talking points of the case is an excellent method of organizing
the argument. You don't need a lawyer for these sorts of proceedings; in fact, you
may need the court's permission to have a lawyer present.
When the proceedings begin, the plaintiff will be allowed to speak
first in the form of a prepared statement or, if preferred, explain the facts extemporaneously.
Be careful to avoid opinion or hyperbole. You can ask the judge for permission to
present witnesses (a staff member who can recall the date the defendant was seen)
to support the claims if necessary. The court will ask the plaintiff to prove the
defendant was actually seen on the date in question. The written and dated examination
form or receipt containing the patient's handwriting is a superlative record of
proof. Next, the court will request all of the significant records of fact: bills
sent, phone calls notifying the patient of the financial obligation to your office,
receipts, explanation of benefits forms, cancelled checks or any other supporting
evidence. Organization and documentation are the key elements to a slam–dunk.
There is no defense for not paying for services rendered or being negligent in bill
payment.
When you, the plaintiff, have finished presenting your case, the
defendant gets his or her turn. After both parties have finished and all questions
have been answered, the judge will deliberate and then decide who wins the case,
along with how much money or property the winner should receive.
STEP 5:
Collecting
Once the court has decided in your favor, it will notify the defendant
in writing of the new amount he or she owes the practice. In most jurisdictions
the defendant has 30 days to make payment. He or she must pay the plaintiff, not
the court, and it's the responsibility of the plaintiff to complete the collection
and document closure. To facilitate action, you can send a registered letter or
make a phone call to remind the delinquent payer he or she can pay by credit card
over the phone or mail a check to the practice.
If 30 days pass and you don't receive the monies due, you must
contact the court, as it is responsible for enabling enforcement of the verdict.
An additional fee is often required but is 100% recoverable. If you know where the
defendant banks (indicated on his or her check, for instance), some courts will
allow garnishment of wages directly from his or her bank account. If this is not
an option, you can place a lien on the defendant's property. Just file the appropriate
paper work with the court. All fees — less a second postal allowance —
are assimilated into the total debt. Persons living in an apartment make the lien
option difficult, but in this case, you can pay to have a constable of the court
seize some of the defendant's personal property.
In the event that the patient lives in a different jurisdiction
than the court, the case may need to be transferred to the patient's jurisdiction
for enforcement. This is also associated with a processing fee, which is then added
to the total the patient owes. This step may require an additional personal appearance
or an appearance by the practices' representative at that courthouse.
When necessary, enforcement of the verdict is carried out by court
constables. These individuals appear at the residence of the defendant and have
warrants that allow them inside the domicile to view the defendant's personal assets.
If the defendant refuses the constable access, he or she has the authority to force
entry into the home. Once inside, the constable will mark items of value for public
auction until he or she is satisfied that what will be sold will recover the full
amount of the total debt. The patient may stop the process at any time by making
full payment to the plaintiff and having the plaintiff terminate the matter with
the court.
After the constable visits, the court sends a notification to
the plaintiff via traditional mail with the date of the public auction. Depending
on the regulations, the court may require the plaintiff or his or her assigned representatives
to attend the auction. Since the events of the court and the auction are part of
the public record, members of the community who read the local paper will be aware
of the sale of property. Also, traditionally, the courthouse will post a list of
items for sale alongside the date, time and location of the auction. After the auction,
the court totals what has been raised and cuts a check to the plaintiff for the
total owed.
The process of taking a patient to court does seem, on paper,
to be rather convoluted. Actually, it's a rather simple process that requires more
of a time commitment than money or effort. While debts may range from very small
to significant, it's the sum total of the parts that has the potential to inflict
harm to your practice and reputation. While some people who neglect to pay their
bills do so due to emergency situations, many of them are skilled, chronic violators.
Letting the infraction pass encourages them to tell others that you're an easy mark
and to continue perpetrating the same fraud.
Many of us are comfortable with the easy approach of sending bills
to collection agencies; however, utilizing the court system is clearly a more reliable
method. The threat of "going to court" may prompt settlement sooner rather than
later.
Dr.
Gurwood is an Associate Professor
of Clinical Sciences at Pennsylvania College of Optometry's Eye Institute of Philadelphia.
Dr. Roberts is in practice at Berks Family
Eyecare in Wernersville, Pa.
Optometric Management, Issue: October 2006