Defending Medical Debt Lawsuits: Statutory Protections

Medical debt collection is subject to unique federal and state restrictions designed to protect vulnerable patients from predatory healthcare billing.

1. Hospital Charity Care Statutory Defense

Under Section 501(r) of the Internal Revenue Code and state hospital accountability laws, non-profit tax-exempt hospitals are legally required to establish Financial Assistance Policies (FAPs). A hospital cannot pursue extraordinary collection actions (such as lawsuits) without first making reasonable efforts to determine whether the patient is eligible for free or discounted charity care.

2. The Federal No Surprises Act

The federal No Surprises Act protects consumers from out-of-network surprise bills for emergency services and certain non-emergency care at in-network facilities. If a lawsuit seeks payment for emergency medical care exceeding in-network cost-sharing amounts, the claim violates federal law.