SB 290-2014 Proposed Changes for Collection of Medical Debts in Indiana

Senators Tallian and Steele have introduced SB 290 which would alter the procedures and rights for creditors seeking to collect medical medical debts. Specifically, it purports to address “medical collection cases” which are defined as an action to collect a debt based on the provision of medical care, durable medical equipment, or a prescription.  If passed in its current form, the bill would:

1. Eliminate prejudgment interest for “medical collection cases”. Currently IC 24-4.6-1-103 provides for prejudgment interest at the rate of 8% on accounts where no other interest rate is provided for by agreement.

2. Allows a debtor to consolidate separate “medical collection cases” into one case. Further, it expands the jurisdiction of a small claims court to hear the consolidated case even where the combined amounts exceed the current small claims  $6,000 jurisdictional limit provided that each individual case prior to consolidation was for less than $6,000.

3. Allows a debtor to remove the “medical collection case” from a small claims docket to the circuit or superior court (depending, apparently, on which court has the small claims docket)  “at any time before trial” without a fee for the transfer.

4. Requires the creditor-plaintiff(s) to notify the debtor of the right to remove the case and of the right to consolidate cases. The notice of right of removal can be part of the complaint or can be placed on a separate sheet of paper. The notice of the right to consolidate cases has to be on a separate sheet of paper.

5. Creates a two year statute of limitation for an action on a debt based on the provision of medical care, durable medical equipment, or a prescription.  The current statute is six years for accounts and unwritten contracts and ten years for written agreements

6. The bill goes into some detail about the methodology for consolidating cases where the debtor requests it, but generally, the cases must be consolidated into the court where the first case was filed. It also seems to contemplate the potential for splitting out the medical collection pieces of an action  where the action has a mixture of claims, only some of which are medical collections.

7. Where a consolidation takes place, the court is authorized to order a consolidated payment plan or to order a garnishment where the creditors receive the proceeds of the garnishment on a pro rata basis.

8. Specifies that venue in a medical collection case is the debtor’s county of residence.

This bill has been assigned to the Senate Judiciary Committee.

Update 02/4/2014: On January 30, 2014, the Senate Judiciary Committee stripped the bill and amended it to simply recommend that the General Assembly study the issue of medical collection in Indiana’s small claims courts. The bill went through second reading in the Senate without amendment on February 3, 2014. The stripped down version is eligible for a vote through February 5 which is the deadline for Senate bills to pass the Senate on third reading.

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