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Forum Post: Jailed for $280: The Return of Debtors' Prisons

Posted 2 years ago on April 24, 2012, 2:52 p.m. EST by LeoYo (5762)
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Jailed for $280: The Return of Debtors' Prisons

By Alain Sherter | CBS MoneyWatch – Mon, Apr 23, 2012 1:40 PM EDT

How did breast cancer survivor Lisa Lindsay end up behind bars? She didn't pay a medical bill -- one the Herrin, Ill., teaching assistant was told she didn't owe. "She got a $280 medical bill in error and was told she didn't have to pay it," The Associated Press reports. "But the bill was turned over to a collection agency, and eventually state troopers showed up at her home and took her to jail in handcuffs."

Although the U.S. abolished debtors' prisons in the 1830s, more than a third of U.S. states allow the police to haul people in who don't pay all manner of debts, from bills for health care services to credit card and auto loans. In parts of Illinois, debt collectors commonly use publicly funded courts, sheriff's deputies, and country jails to pressure people who owe even small amounts to pay up, according to the AP.

Under the law, debtors aren't arrested for nonpayment, but rather for failing to respond to court hearings, pay legal fines, or otherwise showing "contempt of court" in connection with a creditor lawsuit. That loophole has lawmakers in the Illinois House of Representatives concerned enough to pass a bill in March that would make it illegal to send residents of the state to jail if they can't pay a debt. The measure awaits action in the senate.

"Creditors have been manipulating the court system to extract money from the unemployed, veterans, even seniors who rely solely on their benefits to get by each month," Illinois Attorney General Lisa Madigan said last month in a statement voicing support for the legislation. "Too many people have been thrown in jail simply because they're too poor to pay their debts. We cannot allow these illegal abuses to continue."

Debt collectors typically avoid filing suit against debtors, a representative with the Illinois Collectors Association tells the AP. "A consumer that has been arrested or jailed can't pay a debt. We want to work with consumers to resolve issues," he said.

Yet Illinois isn't the only state where residents get locked up for owing money. A 2010 report by the American Civil Liberties Union that focused on only five states -- Georgia, Louisiana, Michigan, Ohio, and Washington -- found that people were being jailed at "increasingly alarming rates" over legal debts. Cases ranged from a woman who was arrested four separate times for failing to pay $251 in fines and court costs related to a fourth-degree misdemeanor conviction, to a mentally ill juvenile jailed by a judge over a previous conviction for stealing school supplies.

According to the ACLU: "The sad truth is that debtors' prisons are flourishing today, more than two decades after the Supreme Court prohibited imprisoning those who are too poor to pay their legal debts. In this era of shrinking budgets, state and local governments have turned aggressively to using the threat and reality of imprisonment to squeeze revenue out of the poorest defendants who appear in their courts."

Some states also apply "poverty penalties," including late fees, payment plan fees, and interest when people are unable to pay all their debts at once, according to a report by the New York University's Brennan Center for Justice. Alabama charges a 30 percent collection fee, for instance, while Florida allows private debt collectors to add a 40 percent surcharge on the original debt. Some Florida counties also use so-called collection courts, where debtors can be jailed but have no right to a public defender.

"Many states are imposing new and often onerous 'user fees' on individuals with criminal convictions," the authors of the Brennan Center report wrote. "Yet far from being easy money, these fees impose severe -- and often hidden -- costs on communities, taxpayers, and indigent people convicted of crimes. They create new paths to prison for those unable to pay their debts and make it harder to find employment and housing as well to meet child-support obligations."

Such practices, heightened in recent years by the effects of the recession, amount to criminalizing poverty, say critics in urging federal authorities to intervene. "More people are unemployed, more people are struggling financially, and more creditors are trying to get their debt paid," Madigan told the AP.

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[-] 1 points by LeoYo (5762) 2 years ago

Debt Collector Is Faulted for Tough Tactics in Hospitals

By JESSICA SILVER-GREENBERG | New York Times – 4 hours ago

Correction Appended Hospital patients waiting in the emergency room or convalescing after surgery could find themselves confronted by an unexpected visitor: a debt collector at bedside. One of the nation’s largest medical debt-collection companies is under fire in Minnesota for having placed its employees in emergency rooms and other departments at two hospitals and demanding that patients pay before receiving treatment, according to documents released Tuesday by the Minnesota attorney general. The documents say the company also used patient health records to wrangle for more money on overdue bills. The company, Accretive Health, has contracts with dozens of hospitals around the country. Since January, it has faced a civil lawsuit filed by Attorney General Lori Swanson of Minnesota alleging that it violated state and federal debt-collection laws and patient privacy protections.

Ms. Swanson, though not bringing further charges on Tuesday, said she was in discussions with state and federal regulators to prompt a widespread crackdown on Accretive Health’s practices in other states. “I have every reason to believe that what they are doing in Minnesota is simply company practice,” she said in an interview, but declined to be more specific. An Accretive Health spokeswoman said, “We have a great track record of helping hospitals enhance their quality of care.” Hundreds of internal company documents released by the attorney general’s office cast a spotlight on the increasingly aggressive medical-collection techniques used against patients at hospitals across the country. As a growing number of hospitals struggle under a glut of unpaid bills, they are turning to companies like Accretive. To win promised savings, all hospitals have to do is turn over the management of their front-line staffing — ranging from patient registration to scheduling and billing — and their back-office collection activities. Accretive says it has such arrangements with some of the country’s largest hospital systems to help reduce their costs. Indistinguishable from medical staff members, Accretive employees register patients, take down sensitive health information and champion aggressive bill collection goals with incentives like gift cards for staff members, the company records show. “It is absolutely stunning that the company has systematically trampled on patient rights, perverting the charitable mission of a hospital,” Ms. Swanson said in an interview. Accretive is one of a group of debt-collection companies specializing in health care collection. Last year, the publicly traded company reported $29.2 million in net income, up 130 percent from a year earlier. In its pitches to hospitals, Accretive boasts that it trains its staff to focus on getting payment. Employees in the emergency room were told to ask incoming patients first for a credit-card payment. If that fails, employees are told to say, “If you have your checkbook in your car I will be happy to wait for you,” internal documents show. In July 2010, a manager at Accretive told staff members at Fairview Health Services, a Minnesota hospital group, that they should “get cracking on labor and delivery,” since there is a “good chunk to be collected there,” according to internal company e-mails. As part of its collection strategy, Accretive fostered a boiler-room environment at the hospitals it works with, according to hospital employees and the newly released documents. While hospital collections increased, patient care plummeted, the employees said. “Patients are harassed mercilessly,” a hospital employee told Ms. Swanson. Another hospital employee complained, “We were told if we don’t get money from patients, in the emergency room, we will be fired.” Accretive debt-collection employees, calling themselves “financial counselors,” are instructed by the upper management ranks to stall patients entering the emergency room until they have agreed to pay a prior balance, according to the documents. Patients with outstanding balances are closely tracked by Accretive staff members, who list them on what employees refer to as “stop lists,” internal documents show. In March 2011, doctors at Fairview complained that such strong-arm tactics were discouraging patients from seeking life-saving treatments, but Accretive officials dismissed the complaints as “country club talk,” the documents show. It is not clear how many times the “stop lists” induced patients seeking emergency care to leave the hospital. By giving its collectors access to health records, Accretive violates the Health Insurance Portability and Accountability Act, colloquially known as HIPAA, Ms. Swanson said. For example, an Accretive collection employee had access to records that showed a patient had bipolar disorder, Parkinson’s disease and a host of other conditions. Collection employees also discussed a patient’s cancer, speculating about whether the condition was “terminal or disabling,” company e-mails show.

Correction: April 24, 2012, Tuesday This article has been revised to reflect the following correction: An earlier version of this article misstated a measure of Accretive Health’s financial performance. Last year the company reported net income — not revenue — of $29.2 million.