ARTICLE
Debt collection is an $11 billion industry, involving nearly 8,000 firms across the country. Today, millions of debt collection suits are overwhelming state courts. The practice is considered a "race of the diligent," where every creditor is rushing to the courthouse, hustling to get the first judgment, in order to be the first to collect on a debtor's assets. More than half of the debt in collections stems from medical care, which, unlike most other debt, is often taken on without a choice or an understanding of the costs. Since the Affordable Care Act of 2010, prices for medical services have ballooned; insurers have nearly tripled deductibles -- the amount a person pays before their coverage kicks in -- and raised premiums and copays, as well. As a result, tens of millions of people without adequate coverage are expected to pay larger portions of their rising bills. The article reported here notes that medical debt collection day is a monthly ritual for people who had been summoned, sued by the local hospital, or doctors, or an ambulance service over unpaid bills. A new twist is that if those summoned don’t show up, they could be put in jail. In the small town reported in this story, the Judge is a cattle rancher who was appointed a magistrate judge, though he'd never taken a course in law. Judges don't need a law degree in Kansas, or many other states, to preside over cases like these. The first collector of the day was also the most notorious: a private attorney representing doctors and ambulance services. He took debtors to court, and he won nearly every time; in about 90% of cases nationally, collectors automatically win when defendants don't appear or contest the case. He could ask for more, or, in some cases, even garnish a quarter of a debtor's wages. His fee was, and often still is, one-third of what he collects. He asked the court to summon defendants, over and over again. It was the judge's contempt authority that backed him. Every 4 months, he called the same nonpaying defendants to court to list what they earned and what they owned -- to testify, quite often, to their poverty. It gave him a sense of his options: to set up a payment plan, to garnish wages or bank accounts, to put a lien on a property. It was called a "debtor's exam.” If a debtor missed an exam, the judge typically issued a citation of contempt, a charge for disobeying an order of the court, which in this case was to appear. If the debtor missed a hearing on contempt, the attorney would ask the judge for a bench warrant. As long as the defendant had been properly served, the judge's answer was always yes. If debtors can post bail, the judge almost always applies the money to the debt. Like any collector working on commission, he gets a cut of the cash he brings in. Thousands of people are jailed each year for failing to appear in court for unpaid bills, in arrangements set up much like this one. The practice spread in the wake of the recession as collectors found judges willing to use their broad powers of contempt to wield the threat of arrest. Judges have issued warrants for people who owe money to landlords and payday lenders, who never paid off furniture, or day care fees, or federal student loans. Some debtors who have been arrested owed as little as $28. In jurisdictions with lax laws and willing judges, jail is the logical endpoint of a system that has automated the steps from high bills to debt to court, and that has given collectors power that is often unchecked. With hardly any oversight, even by the presiding judge, collection attorneys have turned this courtroom into a government-sanctioned shakedown of the uninsured and underinsured, where the leverage is the debtors' liberty. The power of contempt was originally the power of kings. Under early English rule, monarchs were considered vicars of God, and disobeying them was equivalent to committing a sin. Over time, that contempt authority spread to English courts, and ultimately to American courts, which use it to encourage compliance with the judicial system. There is no law requiring that a court use civil contempt when an order isn't followed, but judges in the U.S. can choose to, whether it's to force a defendant to pay child support, for example, or show up at a hearing. A person jailed for defying a court order is generally released when they comply. Congress has not acted on advocates' calls to amend the Fair Debt Collection Practices Act to prohibit collectors from requesting warrants. There are also no current efforts to bar nonprofit hospitals or medical providers that receive funds through Medicare or Medicaid from seeking warrants. Some states have reformed their laws, to make sure defendants are properly served or to prohibit wage garnishments for debt. But legal experts on collections say that more remains to be done, like taking jail out of the equation and instead requiring debtors to sign a financial affidavit or a promise to appear. Source: https://www.medpagetoday.com/publichealthpolicy/generalprofessionalissues/82766