Debt collector connected to huge hospital chain, Tenet, ignored billing dispute laws for years

It’s a basic tenet of billing practices, debt collection, and fairness — if someone sends you a bill, and you think it’s wrong, you have the right to dispute it and get a prompt response. It’s also federal law. Except Tenet Healthcare, through a firm that handles some of its bills, ignored that law. For years. In some cases, people who felt their medical bills were wrong had to wait a year for a response, and suffered the consequences — like a ruined credit score — the whole time.  What were the consequences for the company? A $500,000 fine and $5 million in refunds. For perspective, Tenet had revenue of $4.3 billion last quarter.  Last week, Tenet CEO Trevor Fetter sold a tiny bit of the shares he owned in the company for $2.6 million. He still owns shares worth $46 million.

Let’s back up a bit. Tenet, the nation’s third-largest hospital chain, owns a “business process” company named Conifer — it does billing for both Tenet and non-Tenet hospitals.  Conifer has an “indirect subsidiary” named Syndicated Office Systems, which does business under the name Central Financial Control, which has the unsavory job of trying to get people to pay their unpaid medical bills.  You follow?  What’s an indirect subsidiary? I don’t know. What happened when I tried to find out?  I was told no one would answer my question. I’ll get back to that.

The Consumer Financial Protection Bureau recently said Syndicated / Central had been engaged in illegal activity and announced an enforcement action against the company.

“Syndicated Office Systems mistreated consumers and prevented them from exercising critical debt collection rights,” said CFPB Director Richard Cordray. “These violations are particularly egregious given the challenges many consumers already face who are attempting to navigate the medical debt maze. Today we are putting a stop to these illegal practices and getting consumers the relief they deserve.”

Here’s what the CFPB says Syndicated / Central Financial did:

• Failed to respond to more than 13,000 consumer credit report disputes within the 30-day time frame required by law. On average, the company took more than 90 days to respond to consumers’ disputes and, in some cases, took over a year.
• Failed to send debt validation notices to more than 10,000 consumers. During this time, the company continued to collect over $2 million from consumers who did not receive the notices. These notices can be an especially important consumer safeguard with regard to medical debt, where issues like insurance reimbursements and medical billing processes are commonly fraught with complexity, confusion, and delay.
• Reported inaccurate information to the credit reporting agencies and then failed to provide a timely response to consumer disputes about the errors.

Most critically, the CFPB said that Syndicated “had no policies or procedures in place to investigate these consumer credit report disputes.” The firm treated them like any other complaint and had no deadline for responding. This went on for at least 2.5 years.

What’s the law? Back in 2010, the Fair and Accurate Credit Transaction Act took effect. It required “furnishers” of credit data to entertain “direct disputes” from consumers — previously, such disputes were handled indirectly, via the credit bureaus. Furnishers, like Syndicated, must investigate the dispute and provide an answer within 30-45 days. Not 90 days, not a year, not whenever the firm gets around to it.

Remember, Syndicated / Central Financial is a separate company set up just to deal with billing issues.

According to the CFPB, it is an “indirect subsidiary” of Conifer, owned by Tenet.  I called Syndicated to better understand what it’s relationship is with Conifer, and after waiting on hold, got an operator who told me I should call or email Sharon Lakes, who is Conifer’s senior director of communications. Not so indirect.

When I got Lakes on the phone, she refused to answer questions about the term, pointing me back to the CFPB statement.  I said some consumers online describe Syndicated as Tenet’s debt collection arm, which she said was inaccurate, but she wouldn’t say more.  When I tried to ask other questions, she pointed me to a statement she had emailed, and said, “that’s where I’m going to stop.”

“Throughout the investigative process, CFC was forthcoming and responsive to all CFPB requests for access to data and other information relating to the company’s medical debt collection policies, procedures and processes,” the statement read. “The CFPB found no unfair, deceptive, abusive acts or collection practices in its investigation.”

Unpaid medical bills are a huge problem and I don’t doubt collecting on them is very hard work. I also understand why Tenet would want to keep an arm’s length from this work.  Syndicated is doing billing work on behalf of hundreds of non-Tenet hospitals.

But it’s incredible that a firm backed by a billion-dollar entity had no procedure in place to deal with the 2010 law. On a more human level, let’s not forget what happened here: sick people went to a hospital, got treatment, got bills they didn’t agree with, complained, and were ignored for months while their credit suffered.

Those folks are getting refunds for the bills they paid under those circumstances, to the tune of $5.4 million.  The lesson for you?  Look at your medical bills, even if they are confusing. Dispute them if you think they are wrong, even if your dispute falls on deaf ears.  If that happens, complain to the CFPB. You might get a refund some day.

And know that through neglect, ignorance, arrogance — who knows why — large companies can and do ignore their responsibilities under the law, and raising a stink is the only way things change.

Read the enforcement action for yourself by clicking here (PDF).

See the original news story about this topic, which appeared on Credit.com