Hospitals suing patients over unpaid bills would have to put their names on the lawsuits under new Colorado bill

By John Ingold, The Colorado Sun. (Via AP Storyshare)

Colorado lawmakers are considering a bill that would prevent hospitals from publicly concealing their involvement in lawsuits against patients, following a joint Colorado Sun/9News investigation into the practice.

The bill, House Bill 1380, would apply to all debt collection lawsuits broadly, not just those over medical debt. It would require that the owner of a debt be listed among the plaintiffs in any lawsuit seeking to collect on the debt.

The bill passed its first committee hearing late Wednesday. Supporters say they hope the bill will make it easier for people to understand who is suing them and why in debt collection cases.

“When a consumer doesn’t recognize the name, they often ignore the action, and that can make things worse for them,” said state Rep. Javier Mabrey, D-Denver, one of the bill’s lead sponsors.

The proposal addresses an issue highlighted in The Sun and 9News’ investigation.

The investigation, which was done in conjunction with the Colorado News Collaborative and KFF Health News, found that UCHealth, the state’s largest health care provider, has sued thousands of patients per year over what it claimed were unpaid bills. But UCHealth’s involvement in the lawsuits was invisible to the public because the lawsuits were filed in the names of debt collection companies working for the health care providers.

It is common practice for hospitals and other medical providers to work with debt collection companies to pursue patients for money. But providers like UCHealth go a step further and “assign” the debt to the debt collector without relinquishing ownership of the debt.

Based on that, the debt collection companies put their own names on lawsuits against patients, arguing that they are the proper plaintiff even though the money isn’t owed to them.

Since the publication of the investigation, The Sun and 9News have learned of multiple other hospitals and medical groups in Colorado that engage in the same practice.

The exterior of the University of Colorado Hospital on the Anschutz Medical Campus in Aurora, photographed on Oct. 18, 2019. The hospital is the flagship of the UCHealth system. (John Ingold, The Colorado Sun)

UCHealth officials told The Sun and 9News that the health system sued more than 15,000 patients between 2019 and 2023 over debts. Since 2000, almost none of the cases has listed UCHealth as a plaintiff. Jacki Cooper Melmed, UCHealth’s chief legal officer, said it makes more sense to use the debt collectors’ names on the lawsuits because they are the ones making decisions about the lawsuits.

“We are not hiding anything,” she said. “There is no mystery about what’s going on here.”

But consumer-advocacy groups say the system has the effect of concealing UCHealth’s involvement in the lawsuits, making it harder to track the enormous amount of litigation coming from the nonprofit hospital system.

“This is not how responsible parties should act,” Carly Weisenberg, the lead health care organizer at the Center for Health Progress, testified Wednesday before the state House Judiciary Committee. “Deceiving people who owe money should never be a strategy to hide affiliation.”

Weisenberg’s organization currently has a campaign pressuring UCHealth to stop suing patients.

Multiple patients sued over UCHealth debts told The Sun and 9News that the practice of suing under the debt collectors’ name caused them confusion as they struggled to understand who was suing them and what the bill was for.

The only note of the health system’s involvement in the cases comes in brief attachments to the lawsuit complaints that are sealed from public view. Even then, the attachments provide the barest of information and are not on any kind of official form or letterhead, leading some patients to question whether the lawsuits were a scam.

At Wednesday’s committee hearing, Mabrey, the sponsor, said this kind of confusion is common in cases where people are sued by entities who don’t actually own the debt they are suing over.

“At a certain point it feels like, ‘What part of this is real?'” he said.

That skepticism could cause people not to respond to the lawsuits, leading to default judgments and wage-garnishment orders being entered against them.

When the bill was introduced, it required the plaintiffs in a debt-collection lawsuit to own 100% of the debt over which they were suing. After intense negotiation with representatives of the debt-collection industry, though, Mabrey moved Wednesday to drop that requirement.

The version that passed the committee now says collection companies assigned the debt can be listed as plaintiffs so long as the underlying owner of the debt is also listed as a plaintiff.

That change tempered much of the opposition to the bill, with prominent players in the debt-collection lobby moving to more neutral positions.

“What we have at the end of the day may serve our needs and Colorado consumers, as well,” Alan Greenberg, an attorney who specializes in debt collection cases, told the committee Wednesday.

The bill, which is supported by the Colorado Attorney General’s Office, also contains two other significant provisions related to debt collection.

One prohibits collection agencies from seeking warrants for the arrest of people being sued over debts, though it does not forbid judges from issuing warrants if a defendant is nonresponsive to court orders. The second creates new regulations for so-called debt management services providers — companies that work with people to consolidate and pay off debts.

The House Judiciary Committee approved the bill on a 7-4 vote, with Democratic Rep. Marc Snyder of Manitou Springs voting no alongside the committee’s three Republicans. The bill next goes to the full House, and it also must still pass in the state Senate before the legislative session ends on May 8.