The Washington Supreme Court has ruled that collection agencies pursuing hospital debt must provide notice of charity care, answering a certified question that could reshape how medical accounts are handled once they move beyond the provider. In a decision rooted in both statutory interpretation and public policy, the court held that the obligations tied to charity care do not disappear when a hospital assigns a debt to a third-party collector.
The background: The case stems from a patient who received medical care and was later billed for those services despite allegedly qualifying for charity care at the time.
- The hospital assigned the account to a collection agency, which filed suit and obtained a judgment without ever notifying the patient about the availability of financial assistance.
- The patient only learned about charity care after judgment had already been entered and later qualified for a partial reduction in the balance. However, that reduction was not honored because the account had already reached judgment status.
- The lawsuit that followed focused on whether the collection agency’s failure to provide notice of charity care could support claims under the Washington Consumer Protection Act and the Fair Debt Collection Practices Act. A federal court dismissed some claims but asked the Washington Supreme Court to decide a key threshold issue: whether the charity care statute applies to collection agencies collecting hospital debt.
The ruling: The court answered that question with a clear yes. It concluded that the statutory requirement that “all hospital billing statements and other written communications concerning billing” include a charity care notice extends to collection agencies as part of those “other written communications.”
- In reaching that conclusion, the court emphasized both the plain language of the statute and the broader policy goals behind it. The opinion highlights that the legislature intended patients to be informed of potential financial assistance before collection efforts undermine access to those benefits. As the court put it, without notice, “the statutory purpose could be denied,” reinforcing that disclosure is central to the law’s function.
- The court also leaned on assignment principles, noting that a collection agency “steps into the shoes” of the hospital and carries with it applicable statutory obligations. In practical terms, that means the duty to provide charity care notice follows the debt.
- Importantly for the industry, the court signaled that failure to provide such notice may support a non-per-se claim under the Consumer Protection Act, even where no explicit statutory violation exists at the time of the conduct. The opinion reiterates that the CPA is intended to reach conduct that violates public policy, not just actions expressly prohibited by statute.
- A dissenting opinion argued that the statute’s plain language limits the notice requirement to hospitals, warning that the majority expanded the law beyond its text.
- For collection operations, the takeaway is clear: when it comes to hospital debt in Washington, charity care obligations do not stop at assignment, and failure to incorporate those disclosures into collection communications could carry legal risk.
