Proof of payment will only get them to update the status. You have to have them agree to delete the payment before you make the payment. Or you have to get the hospital to agree to pull the collection agency back in order for you to pay them. That is the only thing you can do to have it deleted.
I live my life like I type, fast and with a lot of mistakes.
Spacebar broken. Watch for finger.
02/04/2015 || TU 08: 728 EX 08: 709 EQ 08: 748
Spacebar broken. Watch for finger.
02/04/2015 || TU 08: 728 EX 08: 709 EQ 08: 748
As I understand the legal theory, the legal basis is not one of FCRA. It is based upon medical privacy laws (state and federal) and the limitations on disclosure of personally identifiable information related to medical records.
In your scenario, if one were to negotiate a non-medical debt to PIF or PFD with the OC, one would then DV the CA. However, with medical debt, one does not DV, otherwise the CA has your consent to obtain the relevent information.
A medical provider has a right to collect a legitimate medical debt. A CA may have the right to collect on behalf of the OC. Reporting is considered an act of collection similar in nature to dunning letters and calls. However, once a medical debt is paid/settled, there is no longer a legitimate collection. And now HIPAA rules apply to the disclosure of medical information.
The OC has provided priviledged information to the CA, without your consent. While the OC has a right to collections, the CA does not have a right to the information nor to report medically priviledged information, once a legitimate debt no longer exists.
The CA, by reporting a "medical debt" which is declared categorically on the CR to be medical, also discloses the name of "original creditor" (usually the medical provider whose name may also give hint to the type of medical treatments) along with your name, social security number, date of birth, etc.
Once the debt is settled/paid, the continued disclosure of medically priviledged information is potentially a violation of HIPAA (if one procedes with the process correctly and has not accidently given consent through DV or other methods). If paid/settled properly, none of these disclosures of medical information is done with the consent or release of the patient, which means there is a very narrow and limited means for the reporting of this information to any third party. And with the debt satisfied, this eliminates the OC or CA argument that it is for legitimate business purposes. Therefore, the theory and basis is that once the debt is discharged, the right to report it no longer exists, especially if one is able to settle it with the OC.
Therefore, the HIPAA letter process seeks to establish that a business relationship exists between the OC and CA, and identify who, what and when medically priviledged information has been disclosed to and/or by those parties. This shows that the OC has provided priviledged information to the CA. And the fact that the CA has reported it is an additional disclosure, all without consent. Once the debt is satisfied, then there no longer exists, under HIPAA, any reason for disclosure, which will also relate to the reporting.
In additional support of this, often and generally, a medical debt does not represent the extension of credit in the sense that a borrower applied for credit/loan and thereafter defaulted on a promise to pay under that agreement. Generally these are the result of medical emergencies, insurance disputes, loss of coverages, etc. which created an unforseen debt that was potentially beyond the financial means of the patient.
The reason this is a reasonable assumption, is that medical providers generally require payment at the time of service, otherwise service will not be rendered. Elective procedures require payment in advance. Only unplanned or medically necessary treatments end up in collections (yes, there are exceptions). Currently there are considerations under law to regulate the reporting (credit related) of medical debts differently than conventional creditors debts.
So, under the HIPAA process it is generally the theory to NEVER DV the CA, because this authorizes the CA to obtain the medical and priviledged information, because you asked them to obtain it.
IMO 
