As evidenced by a recently held webinar on AccountsRecovery.net, there are a lot more questions than answers about a soon-to-be-enacted medical debt collection law in Nevada. But, thanks to some questions submitted to the Financial Institutions Division of the Nevada Department of Business and Industry, there are some answers to help companies in the accounts receivable management industry make the necessary adjustments to comply with the law, which is going into effect this coming Thursday, July 1. Thank you to Holly Vu-Fulkerson, a Senior Counsel at Cognizant, for sharing these questions and answers with me and allowing me to publish them for everyone else.
- What happens if the medical debtor doesn’t sign for the mail? How long does the collection agency have to wait before considering their duty to provide the consumer notice discharged? Is the collection agency’s task complete on sending the letter?
Answer: The 60-days starts from the date of mailing (the next day is day 1). The process is: an agency is assigned a debt, mails out the notice required by SB248, an agency must wait 60 days, when the 60-days has ended then an agency may proceed to attempt to collect the debt as normal and in compliance with all other provisions in SB248, NRS and NAC 649, and FDCPA, no matter what the debtor does on their end.
- Section 7.5 requires collection agencies to provide medical debtors certain disclosures before taking a voluntary payment, which might make sense over the phone, but what does a collection agency do with a mailed-in payment or payment through online portal? Do they send another letter? If so, why would that not be considered an “action to collect a medical debt” and how long do they have to wait before they can consider it delivered? Can a collection agency include these disclosures in the newly required 60-day notice to ensure a medical debtor receives it before making a voluntary payment, without causing the letter to lose its apparent status as not an “action to collect a medical debt”?
Answer: The FDCPA language and SB248 language may be combined in the 60-day notification letter.
Suggested language for the letter, in addition to the requirements in SB248 and FDCPA:
This is a notification that ABC Collection Company will not make any actions to collect this debt within 60 days from the date of this letter. Any payments made toward the debt during this timeframe are considered voluntary and will not void the 60-day notification period described above. We will take no other action to collect this debt until 60 days from the date of this letter.
All letters need to be approved by [Nevada Financial Institutions Division].
A medical debtor may make a voluntary payment. SB248 must be complied with regarding the disclosures. Suggestion to add SB248 voluntary payment verbiage on the agency’s website and to mail a letter confirming receipt of a voluntary payment with the required language and the required disclosures.
- What happens when a debtor pays a debt in full through an on-line payment portal or in the mail prior to receiving any disclosures? In that case, is the collection agency still obligated to make the disclosures that (a) the payment is not due; and (b) the debt will not be reported to CRA in the initial 60 days?
Answer: Pursuant to Section 8.5, the protections set forth in sections 7, 7.5 and 8 of SB248 are for the benefit of medical debtors and cannot be waived. The disclosure must be made to the debtor.
- Our collection agency does not report to CRAs. Do we still need to make the disclosure required in SB248 that “the medical debt will not be reported to any credit reporting agency during the 60-day notification period” or can we say “we do not report to the debt to any CRAs”?
Answer: Pursuant to Section 8.5, the protections set forth in sections 7, 7.5 and 8 of SB248 are for the benefit of medical debtors and cannot be waived. The disclosure must be made to the debtor. Suggested language: Pursuant to NRS 649, medical debt cannot be reported until 60 days from the date of the letter. However, ABC Collection agency does not report to credit reporting agencies.
- We need clarification on the provision prohibiting a collection agency to “charge or collect a fee of more than 5 percent of the amount of the medical debt, excluding interest, late fees, collection costs, attorney’s fees and any other fees or costs, as a collection fee or as an attorney’s fee for the collection of the medical debt.” Is this provision referring to charging the debtor? Our collection agency does not charge the debtor anything. However, our collection agency does charge the hospital client a contingency fee of a certain percentage for medical collection work.
Answer: The contingency fee is typically paid by the agency’s client and not the medical debtor. SB248 caps the collection fee that may be charged and collected by the collection agency from the medical debtor, which is 5% of the principal balance of the medical debt.
