An interesting situation is brewing in Idaho, where a state lawmaker is being accused of proposing legislation that would help one of his largest campaign contributors, the owner of a healthcare collections firm.
State Sen. Tony Potts, a Republican, who proposed the legislation, said the accusations are part of a “witch hunt” orchestrated by his opponent in an upcoming primary election.
The legislation proposed by Potts would have reversed a Idaho Supreme Court decision, a case which was argued by a friend of Potts. In that case — Medical Recovery Services v. Strawn, Lewis and Knight — the Idaho Supreme Court ruled that judges have the discretion to set the fees charged by attorneys hired by collection agencies to collect on unpaid debts.
On intake forms that were used at healthcare providers which placed unpaid debts with the agency, the forms indicated that, among other charges, attorneys fees would be set at either $350 or 35% of the principal debt and interest. In some cases, that meant the attorneys fees were higher than the amount of the debts.
Upholding a lower court’s decision, the Idaho Supreme Court unanimously ruled in 2014 that judges have the authority to set how much the attorneys are paid, and the amount should not be determined by fine print.
Justice Jim Jones, who wrote the opinion, wrote that only the debt, not the underlying contract between the patient and the clinic, had been transferred to Medical Recovery Services, so the attorney fee section of the contract was unenforceable.
Potts’s bill would have added one sentence to Idaho law, allowing collection agencies to charge an additional fee, so long as it was “expressly authorized by the agreement creating the debt.”
What made the situation somewhat sticky is that Bryan Smith, the owner of Medical Recovery Services, was one of the largest campaign contributors to Potts. Both Potts and Smith said the bill, which died in committee, was an attempt to “harmonize” state and federal law.
Smith said he tried to get a similar law passed with another lawmaker in 2017 but was unsuccessful. Smith said — and campaign records confirm — he did not make any contributions to the sponsor of the 2017 bill.
