By Gerri Detweiler
It's bad enough to owe medical debt you can't pay. But what if you're young and being hounded by collectors for medical bills that were incurred when you were just a kid? Our series of articles about medical collection accounts has continually been one of the most popular on our blog. As a result, we've been flooded with questions, some relating to medical bills and minors.
Scenario 1: A young person received medical treatment a few years ago when he or she was under 18 and under their parents' care. The parents didn't pay the bills and now collectors are trying to collect from the youth. What are his or her rights and responsibilities?
"In most, if not all states, a minor lacks the capacity or legal ability to enter into a contract," asserts Ted Connolly, a bankruptcy and asset protection lawyer at Looney & Grossman in Boston. That's why medical providers require their parents to sign financial responsibility agreements before providing care. "To attempt to collect the debt on which the creditor cannot show a contract or an underlying basis would violate the Fair Debt Collection Practices Act," he says. Specifically, he points to this section of the FDCPA:
Unfair practices [15 USC 1692f]
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section: (1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
Connolly's advice here:
What a consumer should NOT do in this circumstance: Pay the bill. He or she is not legally obligated to a debt as a minor even though he or she has reached the age of majority. I can see a very remote possibility of the consumer having some responsibility on this debt under an unjust enrichment cause of action. But the creditor would have to sue in court asserting unjust enrichment and I don't imagine that happening unless the amount owed is huge.
What a consumer should do in this circumstance: 1) Respond to the creditor demanding to see proof of the debt -- the creditor must respond within 30 days and it could likely end the collection efforts because the consumer will not be party to the contract; 2) Send a letter mentioning the FDCPA and demanding to cease all correspondences regarding this debt; 3) If the creditor persists in its collection of this debt, the consumer should consider contacting his or her attorney general's office and/or contacting a lawyer who would take on the case on a contingency basis. (Attorney's fees and costs can be collected under the FDCPA.)
But there is still a small risk the collector could try to take legal action. It's true that "minors usually do not have the legal capability to enter into contracts," agrees Chi Chi Wu, staff attorney for the National Consumer Law Center. "However, in many states, the minor could be sued under the theory of 'Quantum Meruit', which is an equitable claim based on the idea that the minor received services from the provider, the minor benefited from the services, and the provider should receive the reasonable value of those services in compensation. No formal contract is required for a claim of quantum meruit, in fact, that's the whole idea of the theory. It's the same theory that holds a patient liable for a hospital bill even if he is brought in unconscious (and thus could not have consented to a contract)."
Atlanta bankruptcy attorney Jonathan Ginsberg agrees with both Wu and Connelly, saying that "there are two types of contracts at play in this situation, express written contracts and implied contracts." The parents probably signed an express written contract when they took their child in for treatment, while the child perhaps could be held responsible under an "implied contract theory -- in other words when you ask a physician to perform services there is a reasonable expectation that you will need to pay for those services. The question -- can a minor child bind himself contractually if he is under the age of 18? The answer to this will depend on state law. Obviously if the child was 10 at the time of the treatment then the answer is "no." If the child was 17 1/2 -- maybe a closer call."
Ginsberg says that if this were his client, he would advise them to ask the debt collector to verify the debt "and an explanation as to how a minor child can be bound to a contract that he did not expressly enter and that was created at the time the child was a minor." That would likely be enough to get them to back down. " My guess is that the collector would have an uphill battle collecting from a person on a debt incurred when that person was a minor and not legally competent to enter into contracts."
Of course, Mom and Dad are not off the hook here: they are likely still responsible for the bills, either because they signed an agreement accepting financial responsibility or because they in many states parents are responsible for their minor children's necessary medical care under what's called "doctrines of necessaries."
And that brings up another scenario raised by a reader:
Scenario 2: A father signed a financial responsibility agreement with his son's dentist when his son was 17. Now it's a few years later and his son received treatment as an adult but the dental office is still holding the father responsible for the unpaid bill saying that the financial responsibility agreement still applies. Is this something parents need to watch out for?
Parents need to be careful here, especially if their children continue to receive medical care as adults from the same providers they used as children.
"If the financial responsibility agreement is open-ended and would combine as a parental consent agreement coupled with an open-ended co-signing agreement, then Dad might still be on the hook," warns Southern California consumer law attorney Robert Brennan. But "if it is pretty strictly limited to financial responsibility while the kid is a minor, or is limited to a specific term of treatment (i.e. until the kid is 18), then Dad should be off the hook."
While this isn't the kind of problem most parents would anticipate, parents of children who are not managing their finances well may want to avoid future problems by notifying medical providers that they will no longer pay for their care. "The father needs to send written notice to the dentist stating that he disclaims future responsibility for his now adult son's treatment. By putting the dentist on notice, he would have an argument that the original contact has been canceled and no longer binds him," advises Ginsberg.
"This is definitely something every parent should keep in mind when signing financial responsibility agreements," Connolly warns.
Finally there is a third scenario that has reared its ugly head more than once: separated parents who refuse to pay their share of their children's medical bills.
Scenario 3: Divorced parents have agreements spelled out as to which spouse pays the medical bills, or how they are allocated. The parent who should be paying those bills per that agreement doesn't and the other spouse is being contacted by collection agencies. What is that parent's rights, responsibilities and options?
"The controversies in divorces never seem to cease," observes Connolly. He says that both parents are responsible to the creditor (the medical provider). "The settlement agreement, even if approved by the court, does not stop the creditor's ability to collect from either parent if both are liable at the time of the debt. What this means to parents: even though one parent may not be responsible under the divorce settlement, he or she will still have to pay in order to avoid collection efforts, negative impact on the credit score, and potential legal action. Both are legally obligated to pay the debt. However, if a parent pays these bills for which he or she was not obligated under the settlement, he or she should collect from the other parent, even if it means going to divorce court to do so."
"This happened to me personally when I got divorced," says Michelle Dunn who worked in debt collections for over 25 years, including experience in medical collections. "This is very common. All the person that is not responsible has to do is make a copy of the portion of their divorce decree that shows the other parent is responsible, and send that to the agency."
If that doesn't work, Ginsberg suggests that the spouse who is "being dunned go back to the divorce court and file a motion to hold the other parent in contempt. If the dunned parent gets sued, she could cross claim the other parent on the basis of the non-paying parent's contractual obligations."
Sadly, debt experts say medical bill issues like these won't be going away any time soon.
This article originally appeared on Credit.com. Gerri Detweiler is Director of Consumer Education for Credit.com.