Hospitals in Washington State can't collect until they consider your financial status

Did you know that hospitals in Washington State must consider your financial status before collecting? There are a couple different laws regulating this. One is Washington State Administrative Code WAC 246-453-020 Initiation of collection efforts “shall be precluded pending an initial determination of sponsorship status”—i.e., until a person is screened for charity care eligibility.

There is a similar law in Oregon but it only applies to nonprofit hospitals, while Washington's applies to them all.

The second Washington law is RCW 70.170.060 which requires all hospital billing statements to notify recipients of possible free or discounted care:

All hospital billing statements and other written communications concerning billing or collection of a hospital bill by a hospital must include the following or a substantially similar statement prominently displayed on the first page of the statement in both English and the second most spoken language in the hospital's service area: You may qualify for free care or a discount on your hospital bill, whether or not you have insurance. Please contact our financial assistance office at [website] and [phone number].

This played out in court 2023 case Fairway Collections, LLC v. Turner, 29 Wn. App. 2d 204. A Mr. Turner was in a serious car wreck near Morton, Washington. It was serious enough that he woke up at a hospital in Seattle. He believed insurance had paid all his medical bills, but the hospital hired a collection agency to collect $7,432.

Mr. Turner countersued under the Washington State Consumer Protection Act (CPA), Collection Agency Act (CAA), and the federal Fair Debt Collection Practices Act (FDCPA). His initial counterclaims were based that Mr. Turner had been sued before he was screened for charity care.

After he was screened, the bill was reduced by 75%, Mr. Turner paid the remaining 25%, and the collection agency dismissed their claim. The collection agency then moved for summary judgment on Mr. Turners claims as Mr. Turner asked the court to add additional claims based on the amount Fairway tried to squeeze out of Mr. Turner. This was because during discovery, Mr. Turner learned that Fairway was attempting to collect more than their contract with the hospital allowed. The trial court granted Fairway summary judgment and Mr. Turner appealed.

The appeals court opinion is a wealth of information.

Fairway Collections_ LLC v. Turner_29 Wn. App. 2d 204.Pdf

Download PDF • 454KB

Review of a CPA claim:

To prevail in a private CPA claim, the plaintiff must prove (1) an unfair or deceptive act or practice (2) occurring in trade or commerce (3) affecting the public interest, (4) injury to a person's business or property, and (5) causation . . . CPA claim may be predicated either on a per se violation of a statute or on a deceptive practice unregulated by statute but involving the public interest.

A per se claims allows a plaintiff to satisfy the first three elements of the CPA's five-element test by proving a predicate violation of “a statute that contains a specific legislative declaration of public interest impact.” Such statements typically appear in other RCW statutes as something like RCW 19.16.440:

The operation of a collection agency or out-of-state collection agency without a license as prohibited by RCW 19.16.110 and the commission by a licensee or an employee of a licensee of an act or practice prohibited by RCW 19.16.250 or 19.16.260 are declared to be unfair acts or practices or unfair methods of competition in the conduct of trade or commerce for the purpose of the application of the consumer protection act found in chapter 19.86 RCW

Mr. Turner's complaint alleged two ways Fairway violated the CPA per se - first by attempting to collect before screening for charity care, and by adding on a 40% surcharge instead of the 35% allowed by the contract. Mr. Turner pointed out that the CAA includes as a prohibited practice that no licensed debt collector shall “[t]hreaten to take any action against the debtor which the licensee cannot legally take at the time the threat is made.” And similarly, Fairway had violated the CAA's big brother, the FDCPA's prohibitions on false or deceptive representations in connection with collecting a debt.

The appeals court reiterated several nice holdings such as the FDCPA is a strict liability statute . . . meaning that debt collectors are “liable for violations that are not knowing or intentional,”

Fairway's complaint alleging Turner owed $7,432.42 of debt principal is material for the purposes of the FDCPA because such a complaint filed in court and served on a consumer would likely mislead the hypothetical least sophisticated debtor. As amended, Fairway's complaint describes Turner's debt as follows [complaint does not include any mention of charity care or advise Turner that he may be eligible].

Note that the appeals court was talking about Fairway's complaint. As in their lawsuit against Mr. Turner. And although Fairway wasn't the hospital, the law applied to Fairway's communications.

A lawsuit can be a communication subject to the CPA and FDCPA. Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1031-32 (9th Cir. 2010) (“We decide this issue and conclude that a complaint served directly on a consumer to facilitate debt-collection efforts is a communication subject to the requirements of §§ 1692e and 1692f.”).

The appeals court summed up the situation. Mr. Turner was in an accident. Fairway moved to sue him without Fairway or the hospital screening Mr. Turner for charity care. Once he was screened, his bill dropped 75%. Ergo, Fairway's collection efforts falsely represented the character, amount, and legal status of the debt it sought to collect.

A second nice holding is one that trips up many potential CPA claims. Generally to pursue a CPA claim, the plaintiff must demonstrate a financial injury, so many would be CPA defendants skate away because the plaintiff didn't incur an actual cost in fending off the defendant. The Fairway court recognized that Mr. Turner's work in engaging with an attorney to investigate the lawsuit satisfied those elements of his CPA claim.

“Consulting an attorney to dispel uncertainty regarding [***24] the nature of an alleged debt is distinct from consulting an attorney to institute a CPA claim,” so “[i]nvestigation expenses and other costs resulting from a deceptive business practice sufficiently establish injury.” Here, the evidence showed that, when Fairway served its complaint on Turner, he was “frantic” to protect his good credit, so he called one attorney and then engaged another to manage Fairway's claim. Turner thus incurred costs to investigate the lawsuit filed by Fairway. This evidence is sufficient to establish a genuine issue of material fact as to causation and damages, the fourth and fifth elements of Turner's CPA claim.

Do you have a question or a telemarketing, debt collection, bankruptcy, contract, consumer protection, or appellant case that would make a great blog article? We might even review your pro-se complaint or motion in a blog post. Email peter@nwdebtresolution.com and/or nathen@nwdebtresolution.com and we may answer it for everyone!

The thoughts, opinions and musings of this blog are those of Peter Schneider, a consumer advocate and Washington State plaintiff's TCPA attorney at Northwest Debt Resolution, LLC. They are just that, his thoughts, opinions and musings and should be treated as such. They are not legal advice. If you are looking to file a lawsuit for TCPA violations and unwanted calls please contact me for a consultation.

Return to blog articles