New Law Curtails Collection Efforts by Health Care Providers

Senate Bill S6522A/A7363A amended section 5201 of the New York Civil Practice Law and Rules, prohibiting healthcare providers from placing liens on an individual’s primary residence or garnishing wages to collect medical debt.
 
The term “hospital” as used in the law includes general hospitals, certain specialty hospitals, public  health  centers,  diagnostic  and treatment centers, dental clinics and dispensaries, nursing homes, certain rehabilitation centers and laboratories or central service facilities serving one or more  such  institutions.  This definition does not include facilities providing services to the mentally disabled which operated under the auspices of the Department of Mental Hygiene.
The term “health care professional” is quite broad, and includes all the licensed professions authorized under title 8 of the Education Law, such as physicians, dentists, chiropractors, physical therapists, pharmacists, midwives, podiatrists, psychologists, optometrists, social workers, as well as a host of other allied health care professionals.         
 
Before the bill’s signing, healthcare professionals and facilities were allowed to impose and enforce liens on a patient’s primary residence and to garnish wages to satisfy a judgment in a medical debt lawsuit.  A lien is a legal claim filed against property in the records of the county clerk’s office that can be used as collateral to repay a debt.  Wage garnishment, another collection method, occurs when an individual’s earnings are required by court order to be withheld by an employer for the payment of a judgment, including medical debt.  Both of these collection methods can lead to financial challenges for patients. 
 
The Governor noted that more than 50,000 New Yorkers have been sued for medical debt over the past five years. Assembly member Richard Gottfried, a supporter of the law, said, "New Yorkers struggle with health care costs even when they have insurance.  People seeking care end up with bills to cover ever-increasing out-of-pocket costs, including high deductibles, copays and the various fees insurance doesn't cover.”
 
This new law is designed to protect patients against abusive collection practices, but will make it even harder for health care providers to collect legitimate amounts which are due.  Providers should review their collection practices, including their methods for identifying past due accounts, and should identify problems early.  Current and accurate patient contact information will be important so that the provider can dialogue with patients who are past due on their accounts.  Every effort should be made to arrive at an agreed upon payment plan in order to avoid futile collection efforts and running afoul of the new law.
 
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