A state law in Idaho that requires medical providers give individuals adequate notice before handing an account off for collections is constitutional, the Idaho Supreme Court ruled yesterday in a case that started when a healthcare provider sued an individual for an unpaid medical debt. The decision affirms that the Idaho Patient Act can lawfully impose notice and waiting period requirements on medical creditors before they pursue lawsuits, report debts to credit bureaus, or take other extraordinary collection actions.
The background: The dispute arose after the plaintiff filed a collection action to recover $777 for medical services. The defendant counterclaimed, arguing the lawsuit violated the Idaho Patient Act because the provider failed to comply with statutory requirements that apply before an account can be placed into collections or litigation. Those requirements include sending a final billing statement, allowing time for disputes or insurance resolution, and waiting prescribed periods before pursuing legal or credit reporting actions.
- The plaintiff responded by challenging the constitutionality of the statute, arguing it violated the First Amendment, the Fourteenth Amendment, and imposed excessive penalties.
- A lower court initially agreed in part, but after the Idaho Attorney General intervened, that decision was reversed and the statute was upheld. The case then moved to the Idaho Supreme Court
The ruling: The Idaho Supreme Court affirmed the lower court and held that the statute is constitutional. The Court ruled that reporting medical debt to a credit reporting agency is commercial speech and therefore subject to intermediate scrutiny.
- Under that standard, the Court concluded the law serves a substantial government interest and is reasonably tailored. The Court noted that the statute is designed to “govern the fair collection of debts owed to health care providers” and to prevent patients from being surprised by lawsuits or credit reporting before receiving adequate notice. It emphasized that the law does not bar providers from suing, but instead sets conditions that must be met first.
- On the right to petition, the Court made clear that the statute does not block access to the courts. As the Court explained, the law “does not deprive [the provider] of a cause of action” and at most creates a delay, not a denial, of litigation.
- The Court also rejected arguments that statutory penalties were unconstitutional, finding the damages were not “so severe and oppressive as to be wholly disproportioned to the offense.”
