VanderSloot reveals ‘egregious’ medical debt collection practices, says fund will cover at least 102 cases

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IDAHO FALLS — It has been six weeks since Melaleuca CEO Frank VanderSloot and his wife, Belinda, announced they were creating a $500,000 fund to defend Idahoans against excessive tactics by medical debt collectors.

READ VANDERSLOOT’S $500,000 ANNOUNCEMENT

The move came after EastIdahoNews.com posted a series of reports about Medical Recovery Services (MRS), a medical debt collection company based in Idaho Falls. MRS has been accused of being aggressive, unfair and unethical in their practices but attorney Bryan Smith stands by his actions.

READ SMITH’S RESPONSE TO VANDERSLOOT’S $500,000 ANNOUNCEMENT

VanderSloot says he and his attorneys have learned a lot over the past few weeks about medical debt collection in eastern Idaho. They are still offering free consultants and can be reached by visiting Idaho Medical Debt, calling (208) 534-2208 or emailing idahomedicaldebt@gmail.com.

VanderSloot spoke with EastIdahoNews.com about what his team has found.

NATE EATON, EASTIDAHONEWS.COM: Frank, on April 25, you announced you were providing $500,000 to help people unfairly targeted by medical debt collectors. What have you guys found?

FRANK VANDERSLOOT, MELALEUCA CEO: So far we have been contacted by 242 different individuals. We’ve interviewed and had consultations with 141 of them and we’ve agreed to take the cases of 102 of them. That doesn’t mean of the 141 we’ve talked to that’s all we’re going go take. We’re still in the process but we only take the cases that we think we can win – the ones we think were mistreated or have a good argument against how they were treated or what they’re being asked to pay. Those are the ones we’re taking.

EATON: Over 100 cases. That seems like a lot of cases.

VANDERSLOOT: It’s a lot. This is a big deal. This is not a little deal. This is a big, big deal.

EATON: What are these people telling you?

VANDERSLOOT: Here are the things folks are telling us.

The medical service provider either fails to bill the insurance company or improperly accounts for the bills that have been paid. So errors. And the collection companies still want to be paid even though the errors are made evident to them.

In some cases, there was no bill. In many cases, the first time the debtor even knows that there’s a bill is when they hear from the collection company.

There are excessive, huge attorney fees being assessed to these folks – pre-judgment and post-judgment.

Several times people have been told that the debt was paid off and they thought the debt was paid off, but then they get bills for attorney fees.

There are several cases where the collection company sends notices that are harassing, misleading and threatening that they’re going to send the sheriff after you, and listing, in our opinion, totally improperly what they can instruct the sheriff to do.

A notice provided to EastIdahoNews.com that was sent by Medical Recovery Services to an eastern Idaho resident.

In some cases, the collection agency told them not to get an attorney because it will only cost them more because they’ll have to fight them and attorney fees will be more. They’ll have to pay their attorney and us.

EATON: Most of these people are pretty vulnerable and tell us they feel they’re being taken advantage of because they can’t afford to get an attorney and the bills are confusing.

VANDERSLOOT: It reminders me of looters that go in after a tragedy. After a flood or a fire or a hurricane, the looters come in and try to take the spoils from the people who have already been damaged.

By the way, it’s not just MRS. There are other collection companies but, of the 102 cases that we have taken on, all but five of them involve MRS.

EATON: What else are you hearing?

VANDERSLOOT: Here are some of the more egregious things. I’m only giving you ones we have heard several stories about where there are patterns.

  • Refuses to stop collection efforts on debt that has been discharged in bankruptcy.
  • Refuses to stop collection efforts on debt that was paid by the insurer even after the medical service provider demands the collection agency stops billing. The pattern there is the collection agency says, ‘Look, we understand there was an error but we got involved and since we got involved, you need to pay our fees’ even though the poor patient had nothing to do with making the error in the first place.
  • Garnishing bank accounts that contain only funds from social security, disability, veteran funds or other funds protected by the federal government. They’re off limits.
  • Misleading debtors into believing that they do not need to file anything with the court or show up in court after a complaint has been filed.
  • Setting up a payment program and having people pay, sometimes for many years, only to learn about the transaction fees or attorney fees that are being tacked onto the bills as they’re paying – they learn after many, many years they’ve not made any progress.

EATON: So what’s next?

VANDERSLOOT: If you have any empathy for people at all, somebody has to take issue with this some of this stuff. If these stories are true, some of these things would be illegal actions – if they are true.

So we’re going to look deeper, we’re going to take these cases on and we’re going to see what we can do.

MRS alone has filed 1,600 cases alone in the last eight months. That’s 200 cases a month, that’s 10 cases a day. Think about the amount of work that goes into not only the attorneys that are fighting these cases but the burden on the court system.

It’s also curious that Intermountain Emergency Physicians, that’s the emergency room at Eastern Idaho Regional Medical Center, accounts for 71 percent of all the people who have contacted us – more than all other medical doctors and institutions in southeastern Idaho combined.

That’s run by a group of doctors and is a separate entity from EIRMC. But something really curious is that Bryan Smith, who is part owner of MRS and the partner attorney from Smith Driscoll, he’s listed as the agent of Intermountain Emergency Services by the Secretary of State. I think that’s curious.

This document from the Idaho Secretary of State shows Bryan Smith as the agent for Intermountain Emergency Physicians.

There’s a lot more to look into here and hopefully, the medical institutions and the doctors will be transparent with their interactions with these collection agencies. We think that doctors deserved to be paid and hospitals deserved to be paid – that’s not what we have a beef with. It’s the attorney fees being tacked onto these bills.

EATON: Have you learned anything else?

VANDERSLOOT: There is an interesting problem with MRS. MRS basically hires itself. Normally a collection agency has attorneys and would negotiate a good fee with their attorneys – especially if they’re going to use them exclusively. They would be in a position to negotiate a good fee. Well, when you’re negotiating with yourself, you’re probably not going to negotiate very hard so the fees seem to be exorbitant.

I do want to say that I think it’s important to be fair here. There’s another side to this story, I’m sure, and they should be able to tell their side of the story. From our side, it looks really bad.

My hesitancy to talk about this in the press is that trial by press is not fair but I do think people deserve to know what we’re hearing.

I would not be making these things public if we were hearing these stories from one person or even two or three people. We’re hearing these stories over and over and over from now dozens and dozens. Everybody has their own story but there are so many similarities to what we’re being told that I think it warrants to let the public know that at least this many people are having these stories. I think it warrants more looking into and folks deserve their fair day in court.

EastIdahoNews.com has contacted Bryan Smith for comment. We will post an update when we receive a response.

WATCH OUR 4-PART INVESTIGATION ON MEDICAL RECOVERY SERVICES HERE

— Part 1: Medical debt nightmare: Why a local woman could end up paying over $5,550 for her $294 doctor’s visit

— Part 2: Man fights 5-year legal battle with debt collection company after doctor’s error

— Part 3: How Medical Recovery Services takes care of business

— Part 4: Medical debt, collections and the fees you’ve probably never heard of

EDITOR’S NOTE: In 2015, Melaleuca CEO Frank VanderSloot provided the seed money to launch EastIdahoNews.com. For a short time, he was an owner. He has never had anything to do with the operations of EastIdahoNews.com. Over a year ago, he totally divested his ownership.

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