‘Medical credit cards’ could lead to suits against doctors

Many doctors and dentists across the country are marketing medical credit cards to their patients, but lawyers say that in some cases they could lead to lawsuits against providers.

The cards could lead to a host of claims under state laws – such as unfair and deceptive practices and predatory lending statutes – being brought against a medical provider for not making proper disclosures.

Many doctors like the cards because they get paid immediately from the credit card companies rather than spending time collecting bills.

But consumer lawyers say they are seeing a growing number of cases where patients say they did not realize they had signed up for a credit card and did not understand its terms and conditions, such as interest rates of up to 27 percent.

“It’s becoming more and more of an issue. Doctors are marketing them as a means of financing, but the staff is not adequately explaining what the product is and they’re putting their patients in difficult financial predicaments,” said Gina Calabrese, a law professor and associate director of the elder law clinic at St. John’s University School of Law in New York.

Patients are being pitched the cards not only before elective procedures, but also when they are in need of urgent care or not in a position to make financial decisions.

“This is definitely happening with dentists where people are coming in with excruciating pain and need to have it solved right then,” said Claudia Wilner, a staff attorney with the Neighborhood Economic Development and Advocacy Project in New York City.

The issue of voluntariness has become enough of a concern that in California a bill has been introduced to prohibit dentists from offering financing to patients while under anesthesia.

Rx for debt

Lenders are capitalizing on the vast amounts consumers spend on medical bills by marketing credit cards specifically for health care expenses, such as Citi Health Card, GE CareCredit and Chase Health Advance.

Even some hospitals, physician and dental practices have gotten into the market by issuing their own branded credit cards.

Americans spent approximately $265 billion on out-of-pocket medical expenses last year, not including insurance premiums, said Mark Rukavina, director of The Access Project, a medical debt research and advocacy group in Boston.

“Tailoring a card to meet the needs of people paying nearly $300 billion seems to be a smart business move from the financial services perspective,” he said, adding that two-thirds of people with medical debt have insurance.

Typically, a patient is offered financing for procedures that aren’t covered by insurance or where the patient is uninsured.

This is not only happening for elective procedures, Rukavina said.

“We’ve heard complaints from people who signed up for a credit card or revolving line of medical health credit to help pay for routine care or costs associated with chronic care,” he said.

Lawyers contend that medical providers are not adequately explaining what a patient is signing up for. In many cases, patients think they are being offered a payment plan by the medical provider, not a credit card by a commercial bank.

“Sometimes the doctor’s office will say they don’t have to start paying now, so patients think they are getting flexibility in a payment plan with the doctor’s office. They’re asked to sign a lot of papers and often it’s not until later when they receive a bill they realize they have a credit card,” said Wilner, who said that one of her clients thought she had signed up for health insurance.

Like other credit card offers, medical credit cards often have low or zero interest for an introductory period. But that can change quickly.

Depending on the terms and conditions, some credit cards can jump from zero to 27 percent interest based on a triggering event, like a late payment.

Cards with “universal reporting,” for example, can trigger a jump in rates if the consumer is late on any credit card, even from a different creditor, Rukavina said.

“There’s very little regulation of credit cards, interest rates [or] the size of late fees, so people’s medical debt can climb at amazing rates. If a person misses a payment or is late on a payment, he is subject to skyrocketing interest rates. It ends up being extremely expensive and often cannot be paid,” said Wilner.

Many cases are already in collection by the time a lawyer sees them.

Another emerging trend is that some health care providers are checking the credit scores of patients before treatment and credit scoring companies are creating a special credit score for medical debt.

While it is not necessarily inappropriate for a medical provider who is acting as a creditor to run a credit check before extending credit to a patient, Wilner said that patients have complained that their medical providers are running credit checks to look for open lines of credit.

“The billing office will run the credit score and say to the patient, ‘Oh, I see you have a Visa card and you have $1,600 in available credit. Why don’t you just charge it to that.’ That’s not the intended purpose of a credit score,” said Rukavina.

Legal ills

Although patients are sold the credit cards at their doctor’s office, medical providers are generally not subject to a lawsuit under the federal Truth in Lending Act (TILA), which requires certain disclosures and is a defense to a debt owed.

“Once the medical care is charged on the credit card and the doctor is paid, the patient has no more responsibility to pay the doctor and the money is now owed to the credit card,” said Wilner.

However, state regulation of “loan brokers” may apply, said Chi Chi Wu, a staff attorney with the National Consumer Law Center in Boston.

“When a hospital, dentist or doctor pitches a credit card, there’s a good argument that they are acting as a broker or loan arranger under state Credit Services Organization Acts,” she said.

Claims against a medical provider for improper disclosures could also fall under state unfair and deceptive practices laws, said Wilner.

Another issue is that many medical debt cases can eventually lead to a dispute over the quality of services or whether the medical services were completed.

Chase Health declined to comment for this article. GE CareCredit did not return calls.    MMLR

Questions or comments should be directed to the
writer at: sylvia.hsieh@lawyersusaonline.com