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Lawsuit settlement over medical debt interest

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More than 1,200 people facing medical debt are getting relief from interest charged by debt collectors.

Hospitals usually don’t charge interest on medical debt. but collection agencies do.  In a recent case, it’s alleged a collection agency was charging people interest from the moment patients saw the doctor, which was years before it even bought the debt.

More than a million dollars has been set aside for people who were charged pre-judgment interest on their medical debt.  Tanesha Roberson was stung by the emergency room bill she faced after her son’s spider bite was treated at Highline Medical Center.  It was $2,800 in medical charges and $1,900 dollars in interest.

“They took care of it so I didn’t mind paying the hospital bill, but to get charged extra?  That was the devastating part and I just couldn’t afford it,” Roberson explained.

Roberson was having trouble finding work at the time and fell behind on her bills.

Highline sold the debt two years after the visit.  However, the collection agency charged her interest from the date of service.

“At the time people went into the hospital they had no idea what their bill was going to be,” attorney Adam Berger explained.  “They had no idea how much they were going to owe, and charging interest on an unknown amount just isn’t lawful.”

Attorney Adam Berger with Schroeter Goldmark & Bender sued the collection agency, Ray Klein Inc. out of Oregon, for charging consumers pre-judgment interest.

Typically, hospitals do not charge interest on medical debt.

Once hospitals sell it to collection agencies, interest begins accruing at 12% per year.  The allegations in this case concern a debt portfolio purchased in 2012.

“Contracts between the hospitals and collection agencies vary, but usually {that interest} goes to the collection agency,” Berger said.

The case in King County ended in a settlement.  Under the agreement, more than 1,200 consumers will get relief from accrued pre-judgment interest.  More than one million dollars has been set aside in a fund to handle these cases.

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