Wisconsin Hospital Sues Debtors Despite Pandemic Promises

An explosive report from Wisconsin Watch and WPR revealed that Froedtert South hospital in Kenosha filed more debt collection lawsuits in 2020 than in 2019 despite pledging that it would rarely do so during the pandemic. 

According to the report: 

This year’s lawsuits collectively seek to recoup $1.1 million in alleged debt, according to a WPR/Wisconsin Watch analysis.

 

A previous Wisconsin Watch/WPR investigation found that hospitals statewide sued dozens of patients early in the pandemic. Froedtert Memorial Lutheran in Milwaukee and Green Bay-based Bellin Health Systems dismissed some of those lawsuits following the April 1 report. They were among several hospitals — including Froedtert South — that pledged to limit aggressive debt collection during the public health crisis.

 

“As a general matter, Froedtert South has suspended filing small claim suits during the COVID-19 pandemic,” J. Thomas Duncan III, the hospital’s vice president and chief operating officer, wrote in an April 1 email.

So what happened? Why did the hospital choose to file so many debt collection lawsuits after saying it was not going to do so? The hospital isn’t commenting, but as attorneys with a lot of experience in the debt collection/bankruptcy world, we have a pretty good guess. We suspect the debts were sold off to a debt collection firm in an attempt to raise money for the hospital. 

Many businesses and large institutions do not handle their own debt collection work. Instead, they sell the debt off to firms that specialize in debt collection. Organizations like hospitals do this so they can save money by freeing up staff time that would otherwise be spent on collections, and raise some quick cash. Debt collectors typically pay debt holders upfront and hope to recoup the money in collections, which is where the quick cash part comes in. 

Healthcare providers are in a cash crunch because of the pandemic. Many people have been delaying medical procedures, which reduces the amount of money coming in. Even facilities overwhelmed with COVID patients may be having cash flow issues because their regular patients are not coming in. 

How We Can Help with Medical Debts

At Hanson & Payne, we have been helping both patients and providers here in Wisconsin figure out what to do with their medical debts. 

We help providers determine when and how to get paid during this difficult period of time. We also assist patients who are weighed down by debt. Oftentimes negotiating a debt settlement is a good solution for both parties. 

Providers who are strapped for cash are willing to forgive debts in exchange for a lump-sum payment now, even if that payment amounts to pennies on the dollar. We can facilitate this negotiation and help both sides walk away in a better position than they were. 

The Hanson & Payne team is committed to being there for Milwaukee area families and businesses during this challenging time. Our experience representing both creditors and debtors gives us an edge at the negotiation table, and in the courtroom. If you are looking for legal counsel in this challenging time, we would be honored to take your call. Contact us today to schedule an initial consultation.

Delay in Unemployment Benefits Leads to Bankruptcy

Wisconsin is one of a handful of states that is struggling to disperse Coronavirus relief money allocated by Congress. The delay is so bad it has forced some Wisconsin residents to file for bankruptcy. While bankruptcy may be a good option for some people in financial distress, rushing into bankruptcy could cause you more harm than good. 

Delayed Benefits Cause Distress 

Back in March 2020, when we were just beginning to grasp how serious the pandemic would be, Congress passed a COVID relief bill that increased the value of unemployment benefits and expanded unemployment benefits to workers who are not usually eligible for them — like those who are self-employed or work in the gig economy. It was a much-needed boost for those whose lives have been turned upside down by the pandemic. 

Unfortunately, Wisconsin’s Department of Workforce Development struggled to distribute the new benefits. They blamed their ancient computer system, which is just not equipped to handle the spike in claims and changes in benefit eligibility and levels. Months later, some people were still waiting on their money

When Congress voted to provide additional benefits to the public in December, the same thing happened again. It may be late April before the benefits authorized in December are ultimately distributed. 

Unemployed Look to Bankruptcy System for Relief

There is only so long you can wait for benefits before you have to take whatever action you can to keep yourself afloat. Wisconsin Public Radio reports that people waiting for benefits have “tapped into personal savings, gone into credit card debt and resorted to selling things in an effort to make ends meet.” The Journal Sentinel talked to one woman who chose to file for bankruptcy after her benefits were delayed. 

While bankruptcy may be a lifeline for those in financial distress, timing is really important in bankruptcy law. Talking with an experienced bankruptcy attorney about whether bankruptcy is right for you right now can save you from making a financial mistake out of desperation. 

Timing Is Everything 

There are two timing-related issues to keep in mind when considering filing for bankruptcy. The first is that filing before you hit rock bottom, or before you find yourself on an upswing, means you may go into more debt after filing that you could have otherwise had forgiven if you had waited a bit longer to file. 

The second timing-related issue to keep in mind is that filing for bankruptcy now prevents you from filing again for several years. If you think things are going to get worse over the next couple of years, it might be better to wait to file. 

It is not fun to think about your life getting worse than it is right now when you are already experiencing a lot of financial pain, but it is something you need to consider. 

If you need advice about when to file for bankruptcy, the Hanson & Payne team is here to help. Please contact us today to schedule an initial consultation.