Georgia Collectors Association, Inc.

A State Unit of ACA International, The Association of Credit and Collection Professionals
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Recent News Articles
NEWS ARTICLES OF INTEREST TO GCA MEMBERS

 

From various news sources, here are some articles you may find interesting.

GCA Member Prevails in Court
Collection Law Firm Victorious Against State in Supreme Court Case
June 15, 2010
 

A state supreme court has upheld a lower court ruling in favor of a debt collection law firm that was sued by the state AG to compel it to hand over certain documents in an investigation.

The Georgia Supreme Court recently upheld a lower court ruling that the state’s attorney general’s office, acting on behalf of the Governor’s Office of Consumer Affairs, overstepped constitutional bounds in demanding documents from a law firm practicing debt collection in the state.

Georgia's Office of Consumer Affairs (OCA) was investigating Frederick J. Hanna & Associates (FJH), based in Marietta, Ga., following consumer complaints about the firm’s debt collection practices. OCA requested files from FJH in their investigation, which FJH refused to hand over. OCA then had the state attorney general file a lawsuit against the company to compel them to cooperate.

Fred Hanna, CEO of the company, said that his firm had offered to turn over all files for cases in which there was a consumer complaint, but the OCA had requested all files, which would include thousands of cases.

"They were taking the shield law used to protect consumers and turning it into a sword to attack me," Hanna said. "There are already enough laws to protect debtors."

A lower court agreed and denied the state's request for the files, stating that because FJH's day-to-day operation directly involves the practice of law, and because the investigative demand directly impacts their practice of law, that demand is an attempt by the OCA to regulate the practice of law and constitutes an impermissible interference by the executive branch into the exclusive jurisdiction of the Court in violation of the separation of powers doctrine.

On June 7, the Georgia Supreme Court upheld the ruling. The seven-justice panel was split on the decision 4-3.

Even with the success his firm had against the state, Hanna expects lawsuits against collection firms to continue to multiply as plaintiff attorneys look for cases that are difficult to fight. Many law firms that pursue collections do so throughout the country, Hanna explained.

He noted that it is very costly to fight a case filed in a different jurisdiction, like Hawaii. These cases would dry up quickly if laws were changed to require filing of cases wherever the collection firm is domiciled, Hanna said.

Hanna doesn't expect a further appeal of the case because he doesn't see any federal implications. Yet he says that other debt collection law firms in other states, if they have similar laws to Georgia, might be able to cite this case if they face similar circumstances.

 

"Every lawyer in state of Georgia should be thanking Fred Hanna for taking on the state government on behalf of law-abiding lawyers," said John H. Bedard, Jr., managing partner of Bedard Law Group PC, Duluth, Ga. "He did not yield to the tremendous pressure that a state can put on a defendant."

It's very easy to sensationalize the behavior of "a few bad actors" in the industry, Bedard added. "Fred is not one of them. The state court has vindicated Fred. Every lawyer in the state owes him a debt of gratitude."

Even though Hanna won the case in the state's highest court, Bedard expects state officials to continue aggressively pursuing cases against collection firms, because such cases make good political press.

"There is no need for more regulation of law-abiding collection firms, but unfortunately, politicians get a lot of mileage out of reporting to their constituencies that they’ve taken on a wrong-doer and collection agencies are erroneously targeted. It makes a lot of headlines."

The coverage tends to be one-sided, according to Bedard. "The articles paint us all with the same sort of brush. No one reports about the good collection firms do for consumers. Law-abiding firms help consumers dig out of their financial problems. They help consumers save their homes, save their automobiles protect their credit and get their financial affairs in order. The public needs to know all of the good that the industry does – helping keep children in school, clothes on their backs and food in their mouths. The industry delivers an estimated $39 billion back to the economy. That benefits everyone in the country."

Medical Collectors Need to Move Up in the Cycle to Avoid Death

May 28, 2010

A fundamental shift in the healthcare revenue cycle paradigm will force ARM companies to move up in the payment cycle, or run the risk of becoming obsolete.

 
There’s a sea change occurring in medical collections, and ARM companies need to change with it or they will see a significant decrease in this part of their business, according to Tony Reisz, president and CEO of Ontario Systems, based in Muncie, Ind.
Two major government programs are driving health care providers to collect fees earlier in the process – the 2009 economic stimulus package and the 2010 health care reform legislation, Reisz explained.

The $787 billion stimulus package signed into law in early 2009 included $30 billion for electronic medical records. That enables health care providers and third-party firms providing office services better, quicker insight into the status of patient accounts, including monies owed by insurance companies and by patients (“CMS Proposed Rules to Receive Health IT Incentive Payments Too Inflexible, Says 53 Health Care Organizations,” May 21).

The health care legislation will drive up health care premiums in order to cover dependents to age 26 and those with previously existing conditions who would have been denied coverage before. So companies, which were already moving strongly to high-deductible plans, are moving even faster in that direction. The higher the deductible, the more the patient responsibility, and the more risk that fees will become delinquent.

“If ARM companies don’t move further up into the revenue cycle, they’re going to become disintermediated,” Reisz said. “More outsourcing companies are looking to take over the back office functions of hospitals, including billing and collections.”

With more “consumer-driven” care, these outsourcers and health care providers that continue to do their own billing and collections will seek to collect more of their fees earlier, including at the time of service, which heretofore has been rare in the health care industry. More typical has been waiting for insurance payment, then billing the patient for the remainder. But this has meant that payments didn’t start for months after treatment, and the longer the delay, the higher the risk of non-payment.

The more successful these efforts are, the less receivables will fall into the delinquency stages where ARM companies have tended to get involved, according to Reisz. “ARM companies need to imbed themselves higher in the revenue stream in order to protect themselves. ARM companies have not typically been proactive in this area.”

In order to move higher up in the health care revenue stream, ARM companies need to have good data, analytics, methodologies and practices, Reisz said, adding that outsourcing firms, including some that are subsidiaries of high tech companies have already moved aggressively in this direction.