Michael J. Sacopulos, Esq.

An doctor was sued several weeks ago for her use of a healthcare financing company. The suit was brought as a class action and is based upon consumer fraud laws. The allegations center around the way the credit application was presented and when it was signed by the patient. The patient claims that she did not understand that she was signing a credit application and that the practice performed unnecessary work in an effort to collect the entire amount of her line of credit. The doctor needs to prepare for a long, painful process. This is not a medical malpractice case, so normal professional liability policies will not cover it. Further, given the general public’s current hostility towards finance firms, there is a risk to taking the case to a jury.

Basically, this is a predatory lending case. Predatory lending is a general description for activities that violate consumer laws. A common element to most predatory lending cases include the lender or lender’s agent engaging in fraud or deception to conceal the true nature of the loan obligation from an unsuspecting or unsophisticated borrower. This means that a practice could be sued based on what information was presented to a patient or for how a signature of the application was secured.

It seems that this doctor is not alone. News reports from Houston, Texas to National Public Radio have been looking into allegations of predatory lending in the medical world. A quick Google search for “predatory lending” yields dozens of law firms looking to represent “victims.” The Attorney General of New York has launched an investigation into medical lending firms. It seems we are at the start of a trend that will result in a wave of predatory lending cases being filed against medical providers.

Medical finance firms can provide a service to both patient and practice. The question should not be whether to offer patients a financing option, but how and when to offer this option.

Do’s and Don’ts

• I recommend that the credit application be given to the patient without other documents.
• Don’t hand the patient a stack of documents with an instruction to “sign these.” A separation in time from when the patient applies for the line of credit and when the professional services are rendered also helps.
• Staff should be familiar with how the credit firm works to answer basic questions and should refer the patient directly to the financing firm for more specific information.
• Finally, a little common sense should be used. Don’t present a credit application to a patient that is heavily medicated or is not in a condition to fully appreciate what they are signing.

With a little training of staff and appropriate procedures, a practice can go a long way to protecting itself from a predatory lending claim.