Lawndale Tribune AND lAwNDAle News The Weekly Newspaper of Lawndale Herald Publications - Inglewood, Hawthorne, Lawndale, El Segundo, Torrance & Manhattan Beach Community Newspapers Since 1911 - Circulation 30,000 - Readership 60,000 (310) 322-1830 - October 6, 2016 Medical Debt Rising Along with the Price Tag for Care By Rob McCarthy Medical debt is a fact of life for 60 million insured Americans who don’t have enough savings to cover the cost of an emergency-room visit or a hospital stay. If you have your health, you have everything. But, at what cost? Treatment for a heart condition in a California hospital is going to cost $70,000, though the patient isn’t charged the full amount. A bout with pneumonia will result in $70,000 in hospital charges, and a hip-replacement reaches $150,000, according to the Centers for Medicare and Medicaid Services. The most-common procedures could set you back thousands of dollars. Medical debt has become a necessity for 20 percent of Americans and their families when faced with a health scare or a medical emergency. Half of U.S. adults have no money in savings since the Great Recession, and they’re going deeper in debt for housing, education and health care. The price tag for health care has risen 5 percent in a year. By comparison, medical debt hardly compares with the other consumer loans that people owe their creditors. Today’s households owe on average $20,000 in student loans, $103,000 in mortgages, and $3,800 for credit-card balances. The typical amount of medical debt is $1,200. Still, medical debt is the leading cause of bankruptcy in the country, according to credit experts. Medical debt - even high balances - won’t always show up on a credit report unless there’s been a non-payment or a delinquency. Medical debt isn’t regularly monitored by the credit agencies because physicians and hospitals don’t have a business relationship with them. The credit-scoring agencies recently placed less emphasis on medical debt, too. The exception is when a patient or family fails to pay a medical bill. Payment history comprises the biggest portion of the FICO credit score, so having a bill in collection seriously damages a credit score. A delinquency can cost borrowers their creditworthiness and subject them to high interest rates. The company responsible for consumer credit rating is FICO. The San Jose, Calif.-based company has updated its credit scorecard that retailers and banks use to make consumer loans. The FICO 9 version doesn’t include owed medical bills for under $100 either. At the time FICO 9 was rolled out last year, the company cautioned consumers that it would take time for the new credit-scoring system to be adopted by lenders. FICO told consumers with medical accounts in collection not to expect their credit scores to improve immediately. Some consumer advocates say unpaid medical bills are an unreliable predictor of risk. Some credit evaluators surveyed by the Federal Reserve in 2004 said they remove medical debt collections when they consider an applicant because they often represent disputes with an insurer and aren’t a good indicator of loan repayment. “People are making calculated decisions when taking on a car loan or credit card,” says Amy Traub, senior policy analyst at the think tank Demos. “With medical debt, it’s your life that’s at risk or your child’s life. It’s a catastrophic event.” FICO isn’t the only one giving patients with overdue doctor bills some needed protection. The Los Angeles District Attorney is shielding consumers from aggressive bill collectors in a civil lawsuit that could cost them $10 million. District Attorney Jackie Lacey, who oversees the South Bay, has filed a $10 million civil lawsuit against one of the nation’s largest billcollection companies for harassing consumers with repeated phone calls and refusing to follow state law. The Riverside, San Diego and Santa Clara county district attorneys joined the suit, which followed consumer complaints to the California Attorney General, Federal Trade Commission, the Better Business Bureau, and Lacey’s office. The civil complaint filed last month in Los Angeles County Superior Court alleges that debt-collection giant iQor of Delaware and Allied Interstate LLC of Minneapolis violated state and federal laws, and consumers’ right to privacy. The lawsuit was filed jointly by district attorneys in Los Angeles, Riverside, San Diego and Santa Clara counties. Even when consumers told debt collectors from iQor or Allied they had called the wrong number, the phone calls persisted, according to the civil complaint. The companies also called people before 8 a.m. and after 9 p.m. and tried to collect debts that had been discharged in bankruptcy. There is no state law that limits the number of calls an agency may make to you. Repeated calls over a short period, which may be annoying or harassing, are not allowed. Allied has a history of harassing consumers by phone, and the Federal Trade Commission sued the company for similar allegations of harassment and ignoring federal debt-collection law. The company settled with the FTC for $1.75 million and agreed to stop the illegal practices. The new complaint seeks civil penalties for the violations. Any amount from a judgment would be used for future public consumer protection work. Consumers who have been victims of repeated unwarranted calls from these companies are asked to call a hotline, 619-531-3115, and provide their information. John Oliver, the host of Comedy Central’s “Last Week Tonight,” exposed medical-debt collection practices recently when he forgave $15 million in uncollected doctor bills during a show. He spent $60,000 to buy the medi - cal debts of 9,000 people from a Mississippi company in the business. The debt portfolio was too old to collect under state law. Oliver highlighted the unregulated nature of medical-bill collection. Individuals in many states can buy and collect debts without a license or any connection to the treating physician or even the medical profession, he told his audience. The collectors often pay doctors a fraction of the bill amount, then demand the full amount from the patients and their families. Oliver said that old medical bills become the property of the most unscrupulous collectors, who threaten lawsuits and violence, in extreme cases. Oliver’s act of erasing $15 million in debt is being called the largest giveaway in television history. • Inside This Issue Certified & Licensed Professionals.......................5 Classifieds............................3 Food.......................................8 Hawthorne Happenings....3 Legals............................4, 6-7 Police Reports.....................3 Seniors..................................4 Sports....................................5 Weekend Forecast Friday Partly Cloudy 83˚/64˚ Saturday Sunny 80˚/65˚ Sunday Mostly Sunny 78˚/64˚ A Stroll Through the Rose Garden The Exposition Park Rose Garden is a historic 7-acre sunken garden located in Exposition Park. It has been called “one of the city’s best-kept secrets”. It was added to the National Register of Historic Places in 1991. Photo by Eric Ramos
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