At OakTree Law, we provide various solutions to help improve your financial situation. These include Chapter 7, Chapter 11, and Chapter 13 bankruptcy as well as help with avoiding foreclosure or wage garnishment. Medical debt is one of the leading reasons people seek financial relief. We’ve helped many clients get back on their feet, but in California, a statute of limitations on medical debt can impact how you proceed.
How Long Can a Debt Collector Pursue Payments?
For nearly all medical bills, collectors can pursue your debt for up to 4 years from the date the bill was issued. “Open book” exceptions extend the statute to the last service rendered or the date of last payment. Generally, the statute of limitations applies when there’s a breach of written contract; in other words, you failed to pay a bill from a hospital, clinic, or doctor’s office.
If your debt falls within the statute of limitations, the issuer can attempt to collect the debt. If unsuccessful, they can file a lawsuit against you, or the money owed can be assigned to collections or sold to a collection agency. However, they can’t file a claim if the statute of limitations has expired.
Laws Concerning the California Statute of Limitations on Medical Debt
State law traditionally required hospitals to provide 150 days to negotiate a payment plan. However, a new law increased the time hospitals must wait before reporting debts or filing collection actions to 180 days. Not until this period has passed can they send your medical bills to a debt collector.
The Fair Debt Collection Practices Act (FDCPA) also applies and makes it illegal for collectors to make annoying or distressful calls, threats, or claims that they’re lawyers or representatives of a credit reporting company or government agency. Obscene or abusive language is also forbidden.
On January 1, 2022, a new medical debt law took effect in California. It establishes various new provisions that:
- Limit the collection actions licensed agencies can take.
- Require health care clients to establish written policies on how accounts are sent to third-party collectors.
- Require hospitals to display a notice of and link to their policy online.
Also, medical debt can’t be assigned to collections unless the hospital:
- Sends the patient a notice that provides a timeframe for doing so.
- Lists the entity a bill will be assigned or sold to.
- States how the patient can receive an itemized bill from the hospital.
- Identifies the name/type of the patient’s health coverage
- Lists the date a facility or its agent originally sent the patient a notice about financial assistance
- Reveals any decision regarding a financial assistance application.
Amendments to an existing law prohibit the collection of hospital debts without providing the consumer with the first written communication notifying them their debt may go to collections. Actions to collect hospital debt will be under greater scrutiny. Under the California Civil Code, any complaint now filed to collect hospital debt is valid only if it includes certain factual allegations.
Contact OakTree Law
Unfortunately, many debt collectors ignore the law and engage in harassing tactics. But our Los Angeles bankruptcy attorneys are familiar with the California statute of limitations on medical debt and the newest laws protecting consumers. To learn more, request a free evaluation online or call 888-348-2609 to speak with us directly.