Sister's medical debt sold to collections before claim submitted to insurance

[chryanna]

Hi, 

This forum was so much help to me in getting my credit sorted. My sister's now going through something of a mess and I'd really like to help her deal with it before it becomes a nightmare. She's almost 19. When she was 18 and on my parents' medical insurance and still living with them, they got in a fight and she ran away from home. During that time, she ended up calling an ambulance and staying in a hospital for one night, which, without insurance, cost $2600. This was approximately 9 months ago. She eventually returned to my parents' home, but the issue was a sore one between them and she didn't realize the repercussions of ignoring the debt or not submitting the claim. After several notices, and my sister's failure to submit the claim to her insurance, it was sold to a debt collection agency. Approximately one month ago, my sister received a notice from a collection agent and did not request debt validation within time.

I have not yet made any calls about this, or advised my sister about what to do. I don't want to make any wrong steps that will exacerbate the problem. Presumably, insurance would still pay the claim as it is within the one year period. If that's the case, my sister would only owe apx. $300, which she is willing and able to pay. But now that the debt has been sold, will the hospital just say they have no freedom to negotiate or intervene with the collection agency? I assume if she has to deal with the CA, she could probably settle for a lesser amount and negotiate with the creditor for a PFD.  But is there any way she can submit a claim to insurance if it's a debt to a collection agent? Worst case scenario, if she does pay off her medical debt entirely, will it be immediately deleted from her credit report? (I remember something about a bill to this effect being before Congress.)

Thanks in advance for the help!

[chryanna]

Bumping as I'm only visiting home for a short time and had hoped to be able to make some calls today.

[tboy1977]

Not sure honestly:

If the debt is within the timeframe for insurance, pretend the collection agency doesn't exist and file against the insurance.  Pay everything off (assuming insurance payment is successful), then after a couple of months, dispute the collection like crazy.

If insurance refuses, your only two options are negotiate a pay for delete or ignore until statute of limitations.  I'd choose former myself.

[RobertEG]

I would first submit the claim to the insurer, and let them determine the mutual obligations for the debt, and who they feel they are obligated to pay.

The owner is now, absent any alleged insurer, correctly assuming the entire debt obligation is hers.  If a claim is filed, new potential debtors enter the picture in the form of the insuror and/or her parents.  Legally dicey.  I would let the insuror weigh in first.   If the entire debt obligation rests with the insuror and/or parents, she may have basis for asserting entire deletion of the collection.

[chryanna]

So, my sister actually made calls today. She called the hospital first, who (unsurprisingly) said they no longer owned the debt and could not collect the money or intervene in the collection. She then called the collection agents (one for the ambulance, one for the ER), who indicated they would submit the claim for her. She provided her informaiton. 

She did not request PFD, they did not address what would happen with the remaining deductible. It seems odd to me that they would submit the claim on her behalf. But I suppose since hospitals can do it, so can collection agents?

Unless anyone sees any additional red flags, I was going to tell her to wait till insurance pays its portion (checking in a couple weeks to make sure they received the claim), and be willing to pay the deductible so long as they agree not to report and to delete the reporting respectively (since two collection agents). Does this sound right? 

[tboy1977]

Bravo!!!!!!!  yes