What to Do If Your Medical Bills Go to Collection

This is a follow up to the guest post from two weeks ago, which you can read here. Thanks, Don, for your work on this.

When your medical bills go to collection.

As a rule, you do not want you medical accounts to go to collection. However, it is my experience that even if you are an honest person who pays your bills, you will sometimes have accounts that get sent/sold to bill collectors.

Collection is a pain, and it is unpleasant. But the threat of collection is no reason to pay a bill that is not genuinely your responsibility.

Two kinds of collectors.

There may be more than two kinds of debt collection, but I do know that there are at least two different kinds of collectors.

Our local hospital once sent one of our accounts to collection, and I was bracing for all of the headaches that that may entail. But apparently the hospital system simply has a centralized collection branch. So although they called it “collections,” I was effectively still working with the hospital, and they were working with me to get my insurance claims appealed and paid (and eventually my claims were).

The other kind of debt collection that we have experienced is what I would call the external collection agency. This is the kind of company people think of when they use the word “collections.” In my experience, these people are less fun to work with, and dealing with them takes more skill. You can easily make mistakes. I did.

Collections is a new game.

I usually describe the insurance game as having three players, the provider (i.e. the doctor or hospital), you, and the insurance company. I recommend forming a coalition with the provider, against the insurance company, to get your bills paid.

When your account is sold to an external collector, this no longer works, or at least it becomes more difficult. By law, there are very few people that a debt collector can legally talk to. This keeps them from harassing you by calling family members, coworkers, etc. It also means they can’t help you with your insurance claims. They won’t even have the relevant information.

Unfortunately, if you are talking to a collector, it means your provider has sold your account (probably for pennies on the dollar). They essentially see this account as finished, beyond resolution, and this disrupts your coalition. They can still help you to get your insurance claims resolved, but their incentive to do so is substantially less. You may really need to be persistent to get their assistance.

This is why you’d prefer to keep your account out of collections in the first place. Be nice to the billing people (at your hospital or doctor’s office).

When the collectors call.

I went back to my journal to remind me how my most problematic collection experience went. Although I didn’t realize at the time, this was my first relevant entry, and it kind of describes my experience overall:

Someone keeps calling me. It is clear that they want to talk to me, but they never leave a message. I play my answering machine, and it’s always, “Mr. Bindner. …. Mr. Bindner …. Mr. Bindner ….” Unfortunately it always seems to happen when I am not around, so my mystery caller is having some rotten luck. They probably think I am avoiding them.

I wonder about it though. If they were honest and really wanted to get a hold of me, you would think they would leave a message. Telemarketers don’t even bother talking to answering machines, and the political parties just leave recorded messages. The woman sounds too old for me, so I doubt she’s looking for a date.

From the very start, I had a feeling that subtle dishonesty lurked within the collectors I worked with.

A week later, they finally got hold of me, and the conversation was relatively pleasant, nicer than I would have expected a conversation with a collector to be. I was quite surprised to hear from them at all, because the bill in question went to collections over a billing error (I had no idea that our wheelchair company was sending bills to some black hole address).

The woman who called wanted me to give her a credit card number over the phone and pay the bill in full. I refused on principle, since I only give my card number for transactions I initiate, but I expressed willingness to pay my part (that is, the 20% copay portion of the bill).

I mailed a check the next day, to the address she gave me. As things turned out, that was a mistake (for two reasons).

The check is in the mail.

Two weeks later, the collection woman called again, still wanting their money. She was not nice. She was not pleasant. And she did not believe that I had mailed their payment two weeks before. I stood my ground, and said I would check with my bank to see if the check had cleared.

You try to honestly tell a collector that, “The check is in the mail.” See just how far that takes you.

I did check with the bank, and they told me that a lot of checks and other mail had been lost recently in a mail truck fire, and mine was probably with them. (I know. If this were not a true story, I would never believe it either.) This left me with a dilemma, what if they were wrong, but in the end I wrote a second check. And I included specific directions to the collection agency that this check was sent to replace a lost check and that under no circumstances was a double payment to be applied to my account.

The bank assured me that I would be able to prevent the first check from being paid if it should appear (unlikely, but I kept tabs of my account online to be sure). In truth, I should have paid the $20 and just put a stop payment on the lost check right away. It would have saved me trouble.

Double jeopardy.

Guess who applied two payments to my account despite explicit directions not to? You guessed it, the original check was cashed one day after the replacement check. It was not so easy to get the bank to reject the ‘lost’ check, not as easy as they led me to believe, but after I talked to a few managers and explained what I had been told, they found a way. It probably helps that I bank in a small town and know everyone.

I suspect from the collector’s point of view it looked like a check that bounced for insufficient funds. They said as much the next time we talked. Needless to say, the conversation over that “bounced” check was not very pleasant.
I held my ground. I had paid my portion, and I was working on my insurance appeals. I told them as much, but they were not happy. They must have really hated me. At one point, I actually asked the representative, “Why are you so angry?” She ended the conversation shortly after that and transferred me to a ‘manager.’

When the collectors become the collectees.

In the ultimate irony, when my bill was finally cleared through the insurance appeals process it was paid at 100%. I had used up my out-of-pocket limit in other ways, so while it was true that I did owe 20% in coinsurance at the time of the bill, I did not by the time the bill was actually processed. That means that the check that I had sent to the collectors was an over payment. They owed me money.

If possible, I believe trying to collect from the collection agency was worse than having them try to collect from me. It is one of the few times I mentioned attorneys on the phone (and where I learned that you should only mention attorneys in writing).

In the end, it was a fight, but I eventually received a check from the collection agency for the amount of my overpayment, and my account was finally square. I have not had contact with them or the provider since.


1. Tape your telephone calls. Talking to a collector is stressful. They aren’t nice, because nice people don’t get bills collected successfully. They are intimidating and mean. This means they will sometimes say one thing, and you’ll hear something different (because you are under stress). You need the ability to review conversations on tape to catch everything.

For example, in one conversation I stood firm and said I would make no payments until after my insurance appeals were resolved. The agent said, “Fine! Then write your letter and be done with it.” It wasn’t until I reviewed the tape that I understood that sentence. At the time I thought it was about my appeal letters to the insurance company, but she meant my appeal letter to the collection agency.

2. Read the Fair Debt Collection Practices Act. This is the law that governs and frames your relationship with the collection agency, and the Federal Trade Commission publishes a booklet on the act here.

You will learn, for example, that you can notify a debt collector in writing and ask for all subsequent communication to be performed in writing. You can make them quit calling you, and they have to comply. This is what that sentence on my tape recorder was about!

I suspect the whole process would have been smoother if I had informed the collectors right up front that they must contact me in writing. When I reviewed my tapes, I realized that they were full of miscommunications. There were things that the agent said and I didn’t understand, and there were things that I said that she didn’t understand.

3. Verify that they have your correct address, and ask them for their correspondence address. Then ask for a (written) itemized account of the bill, and follow up with a letter in writing.

There was a lot of confusion about my account. The mailing address the collectors got from the medical provider was bogus–that is how my account landed in collections in the first place–and it was months before I knew that. As far as the provider or the collectors could tell, I was ignoring them. In truth, I didn’t get notices of anything.

And technically I had three different accounts with the collector, one for each piece of medical equipment we received, even though we received them all on the same day during the same visit and I had a single receipt. On the phone, I would talk to collection agents about “my account” but I found out later that they would sometimes perceive that language as “account one” and other times it was “account two” or “account three”. It was not until later in the process that I learned that we were miscommunicating regularly over this issue. An itemization would really have helped.

4. Do not pay an account until it has been properly discounted by your insurance company and applied to your deductible or coinsurance.

I was eager to demonstrate that I was a “good guy.” I’m not a dead beat, and I don’t renege on my bills. I have good credit, and I wanted to preserve that. In the end, that was a huge mistake.

Collectors do not care about your reputation. They care about getting their money collected. That is the beginning, middle, and end of their job. As far as I can tell, paying part of the bill did no positive good, and it caused me many problems later when my insurance appeal was successful.

5. Do not pay by check.

Not everyone will agree with this I suppose. But I could have saved myself a fair amount of headache if I had paid by credit card instead of check. If I were to owe a collector for a legitimate account in the future, I would use a credit card and I would do it over the phone.

Bank of America has one of those credit card number generators, which they call “Shop Safe.” I would generate a new (one-time-use) card number, good for a month only and I would set the limit to be the amount I owe the collector. No lost checks, and no way to apply more than the appropriate charge to my card.

To this day, I don’t know if my check actually was delayed in the mail, lost temporarily at the collector, or just held deceptively to get a second payment from me. I suspect one of the first two, since my it seems in the nature of collectors to cash checks with utmost speed. But I’ve always had a lingering sense of underlying dishonesty about the whole process….

6. Do not give up.

In the end, I prevailed. I got our insurance company to accept our appeal. And I got a collection agency to cut me a check. How many people can say that? Know the law and stick to your guns, and I’d bet most people can do ok.

It won’t be fun. But mean people work at collection agencies. Maybe nice people do too, but I’m pretty sure that mean people gravitate to that kind of work–because they are good at it. Mean people should be thwarted.

Pay your legitimate bills. I believe in that. But I also believe that if your bill is bogus, if it is not your responsibility, then you should not pay it. I don’t care how mean the person on the other end of the phone is.

7. Check your credit report.

In my case, there were no marks against my credit. To my knowledge, there never were, but there may have been temporary notations that were lifted when my account was resolved.

But no matter what, if you have done your part to get your insurance appeals filed, and if you have paid your part (when the time comes and the appeals are ultimately approved or denied), then you should insist on a clean credit report.

3 thoughts on “What to Do If Your Medical Bills Go to Collection”

  1. Great write-up Don! From my experience, everyone should follow #4 if nothing else. It is much easier to tell the provider to wait until insurance has processed the claim, than to make a payment and realize that you over paid.

    I have YET to find a provider that actually went out of their way to refund me an overpayment. It always required me detecting the error and calling, and calling, and calling to get my money refunded.

  2. Full disclosure:
    I am a 1st party debt collector. The prepaid debit card is a good idea. When someone says the will mail a check, they are lying 9 times out of 10. A debit card shows committment and goodwill. This is a perfect move to ask for a discount. If you are unable to pay the balance, you can settle. You may also negotiate removal of collection fees. AIG just tagged 5000 in legal fees onto my buddy’s home equity loan. You might even talk them into noting fee removal as paid in full on your credit.
    If creditors abuse you and violate FDCPA, you should sue them. There is an excellent article on people who sue collectors for supplemental income. I’m at work and can’t look it up, but its about “Credit terrorists.”
    Definite props to you, Don, for understanding where the collector is coming from. To know their incentive structure and what they are used to can enable you to come to a mutually beneficial arrangement.

  3. I actually think one of the biggest things is making sure the addresses are correct.

    The equipment company sent my bills to oblivion. According to law, the debt collector was supposed to make certain notifications to me (which I learned about when I read the FDCPA). As far as I know they were mailed to oblivion as well.

    I probably would never have gotten to collections if the address hadn’t been entered wrong by some computer operator at the equipment company. But in any event, if I had corrected the address during the first call from the collector and gotten my required-by-law notifications, I would not have made so many mistakes.

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