EDITOR’S NOTE: This is the third part in a series of stories about medical debt and Medical Recovery Services.
Here are the other installments:
IDAHO FALLS — It’s easy to vilify a medical debt collector.
Threatening collection letters, phone calls, lawsuits, wage garnishments and attorney’s fees are things no one wants to deal with. And yet, not everyone’s experience with debt collection is a bad one.
Bruce Herker of Rexburg says Medical Recovery Services sued him, and the overall experience was good.
“They were very gracious to us. They were very informative,” Herker says. “I just think it’s interesting that everybody’s up in arms that these people are such bad people when, in reality, they aren’t.”
His debt collection saga began years ago when he went to the doctor. Herker says he never got a bill and before he knew it, MRS was contacting him for payment.
He went back to the doctor’s office, and a worker told him they had tried to resolve the bill but were unable to track Herker down.
“I’ve lived in the same house 23 years. I’ve had the same phone number in the phone book for 35. I hadn’t changed a thing,” Herker says.
So Medical Recovery Services took over the case. Herker admits that dealing with any debt collection company isn’t the best, but says MRS is just doing its job. He ended up working out a payment plan with the company.
“It’s like if you were the weatherman on Channel 3 and you called for fair skies and sunshine and 65 degrees, and it rained all day and ruined somebody else’s stuff,” Herker says. “It’s not his fault. He was doing his job the way it was supposed to be.”
Herker isn’t alone. EastIdahoNews.com spoke with several other people who were high in their praise of the company and the attorneys who handle its caseload — Bryan Smith and Bryan Zollinger.
David Lyon, also sued by Medical Recovery Services, has multiple sclerosis. He missed paying a medical bill and it was turned over to MRS.
“They were nice, competent. There was no one screaming at me,” Lyon says. “Nobody was threatening to take me to jail, and everyone was professional.”
Lyon was going through a particularly rough patch at the time, and that’s when he says Smith gave him the chance of a lifetime.
“Bryan gave me a job. He probably shouldn’t have,” Lyon says. “I wasn’t in a really good place, but he worked with me, and he was more than happy to help me when I needed it and treated me very fairly. I can’t say enough good things about him as an employee.”
Similar to other agencies
Smith maintains Medical Recovery Services is no different than any other debt collector in Idaho.
“All I’m doing is providing a service as an attorney to Medical Recovery Services, who provides a service to the doctors,” Smith says. “… If you’re looking for people who are unhappy with debt collection, you’re going to have a lot of them.”
He says MRS is careful in the way it handles things and in the vast majority of cases, he works with clients to make payment agreements without resorting to court proceedings. He says lawsuits are filed in less than 1 percent of all accounts they see for collection.
“We bend over backwards to help people, but you can’t help everyone,” he says. “There’s always people who are mad.”
While looking into Medical Recovery Services, EastIdahoNews.com reviewed hundreds of debt collection lawsuits filed across the state, and specifically at cases in Bonneville County, since that is where the company is located.
We found similarities between MRS and its competitors. In terms of caseload, MRS filed at least 5,600 lawsuits statewide between 2016 and 2018. That number appears to be on par with other debt collectors, although MRS does show a higher number of lawsuits in eastern Idaho.
At the onset of cases, we found that the amount of money MRS requests for prejudgment attorney fees doesn’t differ much from other local debt collection agencies. Prejudgment fees are attorney costs added to debt when the lawsuit is initially filed.
We took a random sampling of 15 debt collection cases filed in Bonneville County in 2018 from MRS, Bonneville Billing and Collections, and Action Collection Services.
In the sampling, MRS requested prejudgment fees that typically ranged from $400 to $600. The other two agencies’ requested fees ranged from $400 to $800. All three requested up to several thousand dollars if the debt being sought was large.
Judges generally approved the requested prejudgment fees for all three collection agencies, although sometimes fees were knocked down to a lower amount.
Where Medical Recovery Services differs
The major difference in the data — and the reason EastIdahoNews.com is focusing on MRS — is in supplemental attorney fees. These are fees attorneys request after a court judgment.
When a judge rules in favor of a debt collector (almost always by default), the debtor is responsible for paying the principal debt, prejudgment attorney fees and prejudgment interest. That’s usually around a 30 percent markup, but can be much higher.
With a judgment, either the debtor pays up, or the debtor’s wages will be garnished.
Once the debt and prejudgment fees are paid off, you may think that would be the end of it, but that’s not always the case. Idaho Code 12-120 allows attorneys to continue to seeking post-judgment or supplemental attorney fees to pay for continued efforts by attorneys to pursue a debt. And these requested fees are typically much higher than prejudgment fees.
In Bonneville County, we found only a handful of cases by other collection agencies where attorneys pursue supplemental attorney fees. But MRS fought for the fees in several hundred cases, and typically MRS sought between $800 and several thousand dollars.
Although attorneys state the amount requested in supplemental fees, judges ultimately decide how much the debtor must pay. Sometimes MRS receives its full request, but often the amount is knocked down by a couple hundred dollars. Other times, a judge awards MRS less than half of the requested amount.
In many cases, particularly those in which the principal debt is under $1,000, we found the supplemental fee awarded was more than a 50 percent markup on the original debt. In more than a few cases, the supplemental fee award matched the original debt.
We asked Smith about his policy on supplemental fees. He says MRS only requests the fees if the agency does “post-judgment discovery” while garnishing wages. Post-judgment discovery includes things like interrogatories, subpoenas, depositions or a supplemental debtor’s examination.
“Supplemental attorney’s fees are necessary,” Smith says. “Otherwise, people who have judgments against them could simply engage in evasive behavior designed to make collection of the judgment very difficult and cost-prohibitive. This, in turn, would dissuade creditors from engaging in efforts to collect valid judgments or make collection of judgments, particularly small judgments, hollow victories.”
And MRS takes supplemental fees very seriously.
MRS is the only medical collection agency is Idaho that repeatedly ends up in the Idaho Court of Appeals or the Idaho Supreme Court, and most of those cases deal with some aspect of collecting supplemental attorney fees.
EastIdahoNews.com will take a deeper look at this issue Friday.
Who owns Medical Recovery Services?
In our investigation of Medical Recovery Services, we attempted to determine how the business operates and who owns it.
When asked by EastIdahoNews.com if he was the owner, Smith became offended and refused to answer.
“I don’t think that’s an appropriate question to ask people what they own, and how much they make or why they do what they do,” Smith says. “I don’t think that’s proper journalism. It doesn’t make any difference. I’m not interested in talking about what I own, and what I don’t own.”
When pressed about his relationship with MRS, Smith responded, “I’m a law firm that represents Medical Recovery Services.”
Forms filed with the Idaho Secretary of State show the business was formed in 2001. Dale Thomson, Smith and Gullborn Investment Family were listed as managers. In a form filed later, Ned Zollinger was added, but his position was not specified.
In a 2016 amendment to the LLC, Bryan Zollinger and Taylor Lugo were added as managers. Those same names are stated on a 2018 Secretary of State annual report.
When Smith ran against Congressman Mike Simpson in 2014, a campaign disclosure form shows he declared himself as a “partner” in Medical Recovery Services and stated that he had made between $100,000 to $1 million the preceding year from the business.
It’s not clear how Medical Recovery Services gets past-due accounts from doctors. Many debt collection companies buy debt for pennies on the dollar or sometimes doctor may keep the debt and share a portion of money collected with the collector.
Although Smith won’t address the specifics of his relationship with Medical Recovery Services, he says debt collection companies are needed to go after people who haven’t paid their medical bills, and he makes money doing it.
“I represent people, and doctors wanted their bills collected,” he says. “Out of that was born Medical Recovery Services.”
Tomorrow on EastIdahoNews.com, we take an in-depth look at how MRS makes so much money on fees, how collections work in the legal system and why one local doctor dropped the company after learning he was using their services. If you have a debt collection story you believe the public should know about, email email@example.com.