Frank Vandersloot 1-29-20 at state Capitol by Nathan Brown

Frank VanderSloot talks with reporters at Idaho’s state Capitol in Boise on Jan. 29.

BOISE — A bill to put some limits on medical debt collection in Idaho is headed to the House floor.

After almost five hours of often passionate, occasionally angry testimony both from people in the medical and debt collection industries and from people from eastern Idaho with personal stories about how they had been forced to pay bills many times more than their original medical bills, the House Business Committee voted to send the bill to the House floor with a “do pass” recommendation. Reps. Vito Barbieri, R-Dalton Gardens, and Tammy Nichols, R-Middleton, cast the only “No” votes.

“I feel like I could have sat in front of you as any one of these folks who have been challenged by medical bills,” said Rep. Gayann DeMourdant, R-Eagle. “If you’ve grown up in a home without insurance, if you’ve raised a family at any point without insurance. ... If you’ve ever had to testify in front of a judge about medical debt, then you will know how much this needs to be done.”

Rep. Brooke Green, D-Boise, said she had a similar experience when she didn’t receive a medical bill sent to her shortly after she moved out of her family home.

“I was that 19-year-old girl who sat on the receiving end of an attorney demanding that my $89 bill was now going to cost $400,” she said.

The bill, which is being sponsored by Assistant Majority Leader Jason Monks, R-Nampa, had its genesis in a campaign by Melaleuca CEO Frank VanderSloot. VanderSloot has been calling publicly for stricter limits on medical debt collection since spring 2019, after Idaho Falls law firm Smith, Driscoll and Associates sued Melaleuca seeking to garnish the wages of an employee whose original $294 debt had increased to more than $5,000 with attorney’s fees after Melaleuca fought their attempt to garnish her pay.

Monks’ bill, called the Idaho Patient Act, would require providers to submit a bill to a patient’s insurance or to the patient within 45 days of providing a service or discharging the patient, and to send the patient a summary of services within 15 days after that. From there, no interest could be charged for another 60 days, and a medical provider could not sue a patient or turn a bill over to collections until 90 days after a patient receives a final statement. The bill would also cap attorneys’ fees at $350 or 100 percent of the principal amount in uncontested cases or $750 or 100 percent of the principal in contested ones.

“I think the current law in my opinion is unjust and unfair,” Monks said. “It takes advantage of individuals. And that’s why we need to change this.”

Smith, Driscoll and Associates does legal work for the Idaho Falls medical debt collection company Medical Recovery Services. Bryan Smith, the law firm’s co-owner, listed himself as a partner in Medical Recovery Services in a 2014 congressional campaign disclosure filing, although at Wednesday’s hearing he denied owning Medical Recovery Services and didn’t answer more direct questions from a couple of lawmakers about his exact relationship to the company. Rep. Bryan Zollinger, R-Idaho Falls, works as a lawyer for Smith’s firm.

Smith spoke for almost a half-hour, defending his firm’s conduct in the Melaleuca employee’s case that led to VanderSloot’s interest in the issue. The Melaleuca employee told East Idaho News — which VanderSloot originally funded, although he has said he no longer owns it — that she hadn’t received notice before being sued. Smith said she got six statements in six months at an address in Idaho Falls where she lived, then 17 notices over four years, then three voicemails from the collection agency. He told the committee they were about to hear from many people who would claim they didn’t receive notices, when the person used as the “poster child” for the bill got notices and ignored them.

“She had a good job,” Smith said. “She could have paid it. She could have made $10 a month payments. She simply didn’t want to.”

Smith said filing fees and the cost of service would add up to more in many cases than the caps the bill would impose.

“If this were the law today, that doctor who exercised good faith and treated the patient wouldn’t have gotten paid because we wouldn’t have taken the lawsuit,” he said.

VanderSloot, who created a legal fund last year to represent people in medical debt cases, said his account of what happened to his employee was accurate. So far, most of the cases they have taken on have been in eastern Idaho and involved Medical Recovery Services.

“The bottom line is ... most of them, the vast majority of them, would have paid their bills up front had they got a bill,” VanderSloot said.

Monks said he has negotiated extensively with the Idaho Hospital Association and Idaho Medical Association on the bill, and after originally opposing it, they are neutral on it now. Several health care providers and collection company owners testified against the bill, saying it would penalize doctors and collection companies when hospitals fail to bill in a timely manner and lead to providers passing on extra costs to consumers or billing patients up front.

“I think this well-intentioned bill is going to have unintentional consequences that are going to affect patients’ access to care,” said Dr. Jack Lassetter, a cardiologist who practices in Idaho Falls.

Zollinger also testifed against the bill. He said putting restrictions on medical debt collection that don’t apply to other industries could be a violation of the U.S. Constitution’s equal protection clause. He asked that the bill be sent to the House’s amending order instead.

“There’s a solution out there, and it won’t hurt the consumer like this does,” he said.

Reporter Nathan Brown can be reached at 208-542-6757. Follow him on Twitter: @NateBrownNews.