Following specific guidelines, medical providers can attempt to collect past due balances regardless of when the services were rendered. However, the time during which a provider can sue for the balances owed has always been restricted. New York recently enacted a new law which dramatically shortens the time to collect debt for medical services.
In April 2020, in the midst of New York on pause, Governor Cuomo signed legislation shortening the time providers can sue for medical services rendered. The shortening of the statute of limitations cut the time to sue in half, from 6 years from the date of service to 3 years.
Back in 2013, we reported the New York State General Assembly’s passage of the Consumer Credit Fairness Act, which introduced new requirements for debt collection litigation against consumers. Now, seven years later, the law has been passed. The change codified in CPLR Section 213-d provides:
An action on a medical debt by a hospital licensed under article twenty-eight of the public health law or a health care professional authorized under title eight of the education law shall be commenced within three years of treatment.
The Effect on Providers
Although three years might sound like a long time, it may not be long enough for those who accept insurance to bill the carrier, follow up for payment, process payments, switch the account to self-pay, bill the patient, conduct internal collection efforts, and begin litigation.
Shortening the statute to three years may prove to be impossible for some providers. The effect of which may cause a substantial decline in self-pay revenue. Providers that accept insurance will need to bill and wait for the insurance carrier to review and process claim(s). Supplementing a claim for payment with additional information as requested by the carrier and appealing a denial, if appropriate, can take upwards of 18 months.
Providers participating with insurance companies must wait for the carrier to finish processing the claim before determining the “patient responsibility,” and sending it on to the patient, guardian, or guarantor for payment.
If payment is not made within a relatively short period, the provider will need to quickly outsource the debt for collection and, if appropriate, suit to be commenced within the three-year statute.
Can the Three-Year Period to Collect Debt for Medical Services Be Extended?
There are certain actions that will extend (or toll) the statute of limitations thereby giving the creditor additional time to sue. New York State Governor Cuomo extended the statute of limitations to mid-July. Meaning if a creditor had until mid-March to sue because the statute of limitation was expiring, the governor’s order will have extended (or tolled) the time to sue.
Suits Past the Statute of Limitations
Suits brought past the statute of limitations are not only wrong, they are clear violations of the Fair Debt Collection Practices Act (FDCPA). A creditor can risk not only having their suit dismissed but leaving themselves open to litigation in violation of other statutes.
Suits brought against commercial businesses outside the statute of limitations will be dismissed as a matter of law. The violating creditor may be sanctioned for their behavior by the court, opening them up to penalties and costs.
If you have questions regarding debt collection, contact Frank, Frank, Goldstein and Nager for a consultation.