Medical Recovery Services ordered to pay $127K in legal fees after suing woman over $460 hospital bill

IDAHO FALLS — Medical Recovery Services has been ordered to pay $127,000 in legal fees after wrongfully suing a local woman over a $460 hospital bill.

The Idaho Supreme Court’s ruling ends a nearly eight-year legal battle and backs up decisions made in lower courts that the medical debt collection company does not have a case against the patient. MRS is represented by attorney Bryan Smith and Bryan Zollinger of Smith, Driscoll & Associates.

The case

A woman was admitted to the emergency room at Eastern Idaho Regional Medical Center in Idaho Falls just before midnight on Sept. 3, 2017. She tried to give the receptionist her insurance information but was told it would be collected after she was medically screened.

The woman had extensive professional experience in medical billing, according to court documents, and knew the hospital needed the information to charge her insurance.

Doctors told the patient she needed a colonoscopy and endoscopy immediately. While being prepared for the procedures, her husband testified that he gave his wife’s insurance card to the ER registrar.

The following morning, the patient called her insurance administrator to inform them she had been admitted to the hospital. She also asked a nurse how she could get her insurance information to the hospital because she wasn’t sure EIRMC had received it from her husband.

The nurse gave the woman a phone number for the ER registrar. The patient left a voicemail and when the hospital called her back, she gave them her insurance details.

EIRMC’s records showed the insurance information was on the patient’s file on Sept. 5 — two days after surgery. A week after being discharged, the woman called the hospital to confirm the insurance information was correct. She was told it was.

Intermountain Emergency Physicians

EIRMC contracts with Intermountain Emergency Physicians, a group of doctors that provides services in the ER. IEP sends its own bills for services but relies on the hospital to gather patient information and share it with IEP so insurance companies and patients can be charged.

Although EIRMC had the woman’s current insurance information, IEP had outdated data from a 2014 ER visit. IEP submitted the 2017 claim to the old insurance company and it was denied because the woman no longer had coverage.

Three months after the ER visit, in December 2017, IEP turned the patient’s bill over to MRS. The patient and EIRMC were never contacted, even though the woman’s phone number was listed on IEP paperwork received from the hospital, according to court documents.

All of the woman’s medical bills from her visit were covered by her insurance company except IEP’s. Intermountain Anesthesia also had the old insurance information on file. When the claim was denied, IA called the patient, and she gave staff her new information. It was processed without any issue.

MRS mailed the patient 10 notices between August 2018 and June 2019, according to court documents. The first was returned undeliverable. The woman said she never received the others because they likely arrived during a period when she was having issues with her mail service.

“After not receiving birthday cards sent by her mother to her children, she suspected and reported potential mail theft to the United States Postal Service. The USPS opened a case, confirmed that a person on probation had been stealing (her) mail, and handled the matter through the suspect’s probation officer,” court documents say.

The lawsuit

MRS sued the woman in June 2019 for $2,500 – $1,225 for IEP’s bill, $229 in interest, $170 for court filing fee and $480 in attorney fees.

The woman contacted Idaho Medical Debt, a $1 million fund set up by Frank and Belinda VanderSloot to help people unfairly targeted by medical debt collectors. Idaho Medical Debt asked attorney Doug Farr to represent the patient.

During a hearing in magistrate court in 2021, a judge found the debt was not valid and dismissed MRS’ cases. Smith and fellow MRS attorney Bryan Zollinger appealed to District Court Judge Bruce Pickett, where they lost again. MRS then appealed to the Idaho Supreme Court, who agreed with the lower court decisions.

Farr tells EastIdahoNews.com his firm has taken on 169 clients on behalf of Idaho Medical Debt. This is the only case that has gone to the state Supreme Court, but it has similarities with the others.

“Our firm interviewed over 500 patients in eastern Idaho, and this was a common issue with certain contracted physician groups at EIRMC,” Farr says. “They would get the insurance information from the hospital and wouldn’t check to make sure it was updated.”

Many patients received bills from Intermountain Emergency Physicians, and they’re not sure what they are, according to Farr.

“By the time they start taking it seriously, they’re getting collection letters or lawsuits filed against them. By that point, interest and attorney fees have been filed,” Farr says.

During court proceedings, a doctor and partner with IEP testified that even if the woman at the center of the lawsuit had tried to contact IEP with her insurance information, there was no way she could have.

“The only IEP employees in the EIRMC ER are doctors, physician assistants, and a nurse practitioner, none of whom take patient billing information,” according to court documents. “(The doctor) added that even outside the ER, IEP does not collect insurance information directly from patients. He also testified that IEP does not provide its contact information to any of its patients and does not expect or anticipate that its patients will contact IEP to provide insurance information.”

Smith has said in the past that he does not talk to EastIdahoNews.com because we are “not a legitimate news organization.”

Watch the Supreme Court hearing in the video player above.

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