If your patient files bankruptcy, what happens next? When their balance to you is included in your debts, you need to be prepared with next steps.
Posted in Articles on Tuesday, January 28, 2025
Since 2023, bankruptcy filings have risen 16.4 percent, increasing the chance that you'll encounter a patient who has filed. What do you do if they owe you for past appointments and treatments? Here are the steps you should take.
Cease Collection Attempts
The most important action is to immediately cease all attempts for collection of past due amounts upon notice of the bankruptcy. If you are using an outside source for collections, be sure they are aware of the bankruptcy and take the appropriate action. An attempt to collect the unpaid fees is a violation of a court order and can cost you in attorney fees, court costs and punitive damages.
Consult an Attorney About Discharging
Generally, a provider can discharge a patient when the doctor/patient relationship has become broken. However, keep in mind that refusing to give the patient any more appointments based on non-clinical reasons (e.g., past due accounts) could be considered constructive abandonment and should be avoided if possible.
Regardless of whether the debt is discharged in bankruptcy, the provider should not feel obligated to treat someone for free. Consult a bankruptcy lawyer to confirm if that rationale is correct in your jurisdiction. And, depending on the type of bankruptcy, some debts may still be paid. Again, your attorney can advise you further on your options such as filing a claim with the court.
Continue to Adhere to Standards of Care
Keep in mind that standards of care still need to be adhered to, even if a bankruptcy is involved. Once a health care provider has undertaken a course of treatment, they should not discontinue that treatment without giving the patient adequate notice and the opportunity to obtain the services of another provider. Care should be taken that the patient’s health is not jeopardized in the process.
Notify the Patient of Termination, if Applicable
If you determine to terminate the doctor/patient relationship, a letter to this effect should be sent by certified mail/return receipt and by regular mail. Using both methods ensures and documents that the patient was either notified or a valid attempt to do so was made. The letters should communicate the following:
- Inform the patient of the reason(s) for the termination, i.e., failure to follow instructions or cooperate with care and/or failure to meet financial obligations for professional services rendered.
- If continued care is still required, the patient should be encouraged to seek it. The termination letter should state that you will provide them with adequate time and assistance to seek another provider and give a specific time frame they have to do so, e.g., 30-45 days.
- Inform the patient that you will be available during this time for emergency care or consultations, or to offer a referral, if necessary.
- You may not necessarily be required to make a specific recommendation to a subsequent treating provider, but you are responsible to help the patient find substitute care if requested. Be sure to recommend the patient contact the local professional society. You may not want to refer them to any of your acquaintances.
- Inform the patient that a copy of their records can be forwarded to them or to a subsequent treating practitioner upon request.
- Reasonable fees for record duplication may be allowed; check with your state board or association on the allowable fees. Consider that it may not be prudent to place a financial stumbling block such as a records duplication fee in the patient's way. Attempting to collect a fee for record duplication may cause the patient to retaliate with a board complaint or lawsuit for any perceived wrong that, up to this point, was not that important.
No matter your next steps, it is important to respect your patient throughout the process of the bankruptcy, for both your benefit and theirs.