Article Date: 10/1/2006

Get Delinquent Patients to Pay Up

Small claims court may prove a better options for collecting from some patients.

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