Credit WWYD - Medical collections as the result of insurance fraud and ERISA violations?

[Shellie]

My dh's former employer sold us group health insurance 1/1/06 through 6/30/06. We paid $1300 per month (you read that right...over $7500 total!) and they did not pay any medical claims during the period we were "insured." Many times during that period, our pharmacy coverage wouldn't go through and I paid hundreds monthly (that we really could not afford!) for my diabetic meds and supplies.

As soon as we realized they were not paying claims and that this wasn't going away (it was a self-funded plan that they never funded) my dh got another job and we changed insurance.

During this entire time I was pregnant, high-risk, seeing an expensive perinatologist (with plan approval) and was insulin-dependent.

By the time we switched to our new insurance July of 2006, over $30k in unpaid medical bills had accrued. The company shut its doors, went bankrupt and within a few months, the parent company was gone too.

ALL of these medical bills have been sent to collections--all the creditors claim that it is our responsibility. We have sent letters to all explaining the situation. We offered to make payments. We were told that making payments would not stop the collections or spare our credit, so we decided not to make payments. We were also advised that making payments might validate our responsibility.

The US Dept. of Labor has been investigating the company's ERISA violations for over 2 years and we are still awaiting a resolution. We don't even know what, if anything, it might be. We'd be happy with a court order to have all the collections removed from our credit.

Dh has since reconsidered our stance on not making payments--but my credit repair research has shown me that making payments might even hurt our score more, as the last reported dates on the accounts would be more recent. We've been paying $60/mo for credit repair but things that they've gotten off just get put back on so I think we should cancel that. I've looked into Ch. 7 bankruptcy but I think the means test would make us only eligible for Ch. 13 and since dh has been working second and third jobs the past few months, our typical income is inflated and the court's decision would be based on that (and we are still barely getting by in reality).

Is there anything we can or should do that might help our situation? We used to have credit in the 700-range. We don't currently own a home and feel like there is no hope of ever owning one again. We want to implement a way to get there, but feel like we're stuck until the DOL thing is finished (and that could take several more years!).

[Vypros]

http://www.legalconsumer.com/means-t...ator/index.php

^ There's a good site to help you determine for sure if you'd pass the means test for a bankruptcy. If you DO and you decided to file for bankruptcy, I've been researching it for months and months and know quite a bit about it if you have any questions about that.

****

First of all, don't despair. Even if you can't make this go away and your credit is hurt, you are not forever doomed by this. You can have good credit again and you can own a home again, it's just going to take some time and a few years to repair your credit (even after a bankruptcy you can repair your credit).

Depending on how sure you are you could win this case, I'd talk to a lawyer and at least see what they have to say about the situation.

We were told that making payments would not stop the collections or spare our credit, so we decided not to make payments.

Whoever told you this was scum. I hate collection agencies. They sit and try to bully people with their scare tactics.

Anyways, I suggest you look up the "Fair Debt Collections Act" and study it through good, just to educate yourself of YOUR rights and what these collectors can and cannot do.

Secondly, the beautiful thing about medical bills, is that by law as long as you are making SOME sort of payment (yes, even something as piddly as $5 a month) they CANNOT do anything to you, they cannot mark your credit, and they cannot harass you for payment. So the person who told you the above quote, was just trying to scare you. I wouldn't be suprised if they didn't use other bullying tactics with you.

But yeah, I'd definately go talk to a lawyer about this, just to see what your rights/options are and to get a definate direction on where you might want to go.

[GooeyRN]

no advice, but your situation really sucks. I am sorry! I hope you don't get stuck with those costs.

[ChattyCat]

I think that ultimately you'll still be responsible for your medical costs. Usually, when you go in for care, you sign a form that says that you're responsible for whatever your insurance doesn't cover. I would think that would apply here.

Theoretically, you would have a case against the company that you bought the insurance from or your dh's former employer. But, since they went bankrupt, you're not going to recover anything. Other people that they owe money to would come first in the hierarchy, assuming the company had any assets left.

It's definitely a sucky situation, but I think your best bet will be to assume that you are responsible for the medical bills and try to figure out how to resolve the situation. Whether that means bankruptcy or trying to work it out with the creditors will depend on your circumstances.

[cdahlgrd]

That sucks.

I agree with pp, you will be held accountable. How long has it been? Look into the statute of limitations in your state.

I would definitely talk to a lawyer, at least a little, to learn the laws and your options. If it comes to bankruptcy, it isn't the end of the world.

What kind of credit repair company are you subscribed to? All the ones I have seen are frauds or they do the same things you can do yourself for free. I would be interested to know how yours works.

[SleeplessMommy]

Originally Posted by Shellie

The US Dept. of Labor has been investigating the company's ERISA violations for over 2 years and we are still awaiting a resolution. We don't even know what, if anything, it might be. We'd be happy with a court order to have all the collections removed from our credit.

I would suggest talking with your congressperson or senator's office. They should be able to let you know the time line of the Labor Department's actions.

You could also try taking the businesses CEO or owner to small claims court (personally, since the company is defunct) there might be some assets to squeeze out that way.

If many others were affected, local newspaper publicity could help with prosecution of the ex-business owner.

Have you tired writing to each doctor individually, explaining the ERISA situation? They may be willing to waive fees, especially since they will realize the futility of collecting.

[Shellie]

Originally Posted by Vypros

http://www.legalconsumer.com/means-t...ator/index.php

^ There's a good site to help you determine for sure if you'd pass the means test for a bankruptcy.

<snip>

Whoever told you this was scum. I hate collection agencies. They sit and try to bully people with their scare tactics.

Thanks for that link! According to that, even with the recent extra income, we should still qualify, but the time we factor in our actual expenses. I didn't realize that some of the rules have exceptions if you can prove the need to the trustee, so that would help in places too.

Originally Posted by GooeyRN

no advice, but your situation really sucks. I am sorry! I hope you don't get stuck with those costs.

Thanks!

Originally Posted by ChattyCat

I think that ultimately you'll still be responsible for your medical costs. Usually, when you go in for care, you sign a form that says that you're responsible for whatever your insurance doesn't cover. I would think that would apply here.

That's basically what they say, but those clauses are really designed to protect HCP from people who say they're covered and really aren't...but we were covered. We have proof we were covered--the company just didn't pay the claims. They are in trouble with the state and the feds for not paying the claims. Since we paid the premiums I honestly don't feel like I should have to pay these. I feel bad that these unpaid bills are probably dirving up costs for other people, but I held up my end of the bargain when I paid the premiums. Which is why I think we probably will file Ch. 7 if we can. I feel incredibly guilty about it but I've got to do what's best for us financially, long term.

Originally Posted by cdahlgrd

That sucks.

I agree with pp, you will be held accountable. How long has it been? Look into the statute of limitations in your state.

I would definitely talk to a lawyer, at least a little, to learn the laws and your options. If it comes to bankruptcy, it isn't the end of the world.

What kind of credit repair company are you subscribed to? All the ones I have seen are frauds or they do the same things you can do yourself for free. I would be interested to know how yours works.

It's been less than two years total. We have Lexington Law. When we first signed on a year agoour scores shot up 150 points with the first few waves of deletions but almost everything gets added back. We know we can do the letter writing ourselves but we didn't have the time and figured $60/mo was worth it.

Originally Posted by SleeplessMommy

I would suggest talking with your congressperson or senator's office. They should be able to let you know the time line of the Labor Department's actions.

You could also try taking the businesses CEO or owner to small claims court (personally, since the company is defunct) there might be some assets to squeeze out that way.

If many others were affected, local newspaper publicity could help with prosecution of the ex-business owner.

Have you tired writing to each doctor individually, explaining the ERISA situation? They may be willing to waive fees, especially since they will realize the futility of collecting.

Maybe that'd be a good start--we did originally call all the original creditors, before things were sent to collections. Some were sympathetic and some weren't. But none of them were willing to even change the amounts billed to self-paid rates.

*sigh*

It's such a mess. My dh is against Ch. 7. I think we should have filed right after it happened rather than spending the last 18+ months dealing with it. I'm afraid someone will sue and we'll get wage garnishments or something. We have ourselves in a situation where money is tight but we can't correct it overnight--so it's not just an unwillingness to pay. If we had it we would pay it--we had another loss in 2006 (over $100k on our house because it had structural problems) so we're just not in a position to pay those bills (especially since we had insurance and paid our premiums). We also have over $60k in student loans with a $400/mo payment. We have always worked so hard and have been very careful to always make sure we have medical insurance and we've never taken any form of assistance ever. We need some sort of relief in this situation though.