Courts try to revise debt settlement for hospitals

The Baltimore Sun

Maryland district court officials want to give defendants in debt collection lawsuits new access to legal help and change the way that settlement conferences are handled, in response to criticism that hospitals, credit card companies and other creditors often have an unfair advantage.

The courts are responding to an investigation into hospital debt collection practices published last month by The Baltimore Sun. That report, as well as a University of Maryland law school study released in November, found that defendants are confused by the court process, do not understand that they sometimes have legitimate defenses and assume that they must accept whatever terms are dictated by hospital lawyers in settlement conferences. The Sun also found that hospitals almost always win cases that go before a judge, simply by presenting an affidavit that the person was treated there.

The district court system is considering setting up "self-help centers" so that people who cannot afford attorneys can get legal advice. It is also considering using computers to show simulated meetings between attorneys and unrepresented defendants in civil cases, said Ben C. Clyburn, the chief judge of Maryland's district courts.

The first change will take effect in two weeks, when defendants assigned to the so-called "rocket docket" in district courts in Baltimore and in Montgomery and Prince George's counties receive new notices about their rights - including that a judge will consider their case if they don't want to, or can't, reach a settlement with creditors' attorneys. That follows a recommendation in the University of Maryland study.

During the past few years, attorneys who file large numbers of debt collection lawsuits in those three jurisdictions have been given weekly access to courtrooms to try to work out agreements with defendants. These sessions are known as "rocket dockets" because they encourage rapid, on-the-spot settlements. Court officials have said the goal is to reduce the size of trial dockets.

"We will explain the process a lot better and put citizens in a better position to understand what they need to do, so they are prepared at these conferences," Clyburn said.

Nearly one-third of the 132,000 lawsuits that Maryland hospitals have filed against patients in the past five years over unpaid bills have been filed in Baltimore District Court, which serves many lower-income debtors. The Sun found that some hospitals have won judgments against patients covered by Medicaid, despite a Maryland law prohibiting that. Some hospitals have also sued patients three or more years after their stays ended, raising questions about whether the statute of limitations had expired.

Last year, 15 students in consumer law clinics at the University of Maryland School of Law observed rocket docket sessions in the three jurisdictions. They found that the process confuses many people because they are summoned for "trial." When the defendants arrive, they walk into a courtroom where a bailiff sits in the judge's chair and a clerk calls them to meet with creditor attorneys at a large table.

In Baltimore, defendants receive both a trial summons and a notice about the "007 docket" - a reference to the courtroom in which the rocket docket is held - that states: "This proceeding is not a hearing; a judge will not be present in the courtroom."

The University of Maryland study termed the two documents "confusing, misleading and contradictory."

The new notice written by the state district courts makes it clear that the rocket docket is a "resolution conference" and states: "Speaking with the plaintiff's attorney can help bring about the resolution of your case, but you are not required to speak with the plaintiff's attorney. It is your option and will not be held against you."

Many defendants are not aware of the legal consequences if they acknowledge that they owe a debt, that there are limitations on fees and interest rates that can be charged, or that collection can be barred by a statute of limitations, said Daniel L. Hatcher, an assistant professor of law at the University of Baltimore.

"Negotiation only works if there is a power balance," said Michael Millemann, a Maryland law professor who co-wrote the study. "Creditor attorneys have a real interest in resolving these cases promptly, even if they don't get 100 cents on the dollar. What is missing is the counterweight for the defendants."

Tom McCray-Worrall, a Maryland law student who witnessed several rocket dockets, said he saw many instances in which attorneys for creditors said the defendant owed the debt, then asked if the person preferred a payment plan or a lump sum. No proof of the amount of the debt was presented, McCray-Worrall said.

The self-help centers envisioned for district court would be modeled after centers in circuit courts for family court cases. Those centers are staffed by lawyers hired under contract and legal services programs, including the Legal Aid Bureau and Maryland Volunteer Lawyers Service.

Other options include a program under which volunteer lawyers agree to staff a court for one day, lay advocates are trained to give legal information, and paralegals can represent clients.

An attorney who handles collection cases for the law firm of Peroutka and Peroutka said self-help centers could be helpful, but she said she was troubled by the implication that plaintiffs' attorneys do not help defendants.

"What I like about it is, you can work out what you can work out, and if there's a dispute, you can find out about it," said Michelle Gagnon, president of the Maryland-District of Columbia Creditors Bar Association.

Herbert A. Thaler, one of the state's most active hospital-debt collection lawyers, said the rocket docket should be reserved for "uncontested cases, where the person acknowledges they owe the money."

Thaler said he has declined to take part in the process, saying that he prefers to get a judgment or work out a payment plan that goes before a judge. But if a self-help center could be set up outside the courtroom where the rocket docket is held, he said, he would consider taking part.

Millemann said changes that could benefit alleged debtors in the rocket docket should also apply to those who decide to represent themselves in court.

"These trials are truncated, very abbreviated, very quick-moving. If you don't have a lawyer or some other source of legal advice, you are not much better off in the litigated process," he said.

Clyburn said court officials are examining The Sun's series as part of the work of the new Access to Justice Commission, which was formed by Robert M. Bell, chief judge of the Court of Appeals.

The commission, led by retired Court of Appeals Judge Irma S. Raker, is focusing on the civil docket in district courts and family court in circuit courts, Clyburn said. Millemann chairs the subcommittee that will focus on those who cannot afford to hire a lawyer.

"I think there will be some major changes to make it easier for citizens to understand and access the system," Clyburn said.

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