A patient owes you for services rendered but they just filed for bankruptcy. What should you do-—and will you ever see that money?
Posted in Articles on Wednesday, March 19, 2025
Bankruptcy filings rose 16.8 percent in 2023—up from 387,721 in 2022 to 452,990 in 2024. So what should you do if you're notified that one of your patients is in the rising group of people who have recently filed?
Stop Collection Attempts
If you've been attempting to collect on the past due amount, immediately cease once you have been notified of the bankruptcy. If you are using an outside source for collections, make them aware of the newest development so they can take the appropriate action. Attempting to collect will be a violation of a court order, which can cost you in attorney fees, court costs and punitive damages.
Be Careful About Discharging
Generally, a provider can discharge a patient when the doctor/patient relationship has become broken. However, keep in mind that refusing to book appointments with an existing patient based on non-clinical reasons (e.g., past due accounts) could be considered constructive abandonment and should be avoided if possible.
Regardless of whether the debt is discharged in bankruptcy, the provider should not feel obligated to treat someone for free. Consult a bankruptcy lawyer to confirm if that rationale is correct in your jurisdiction. And, depending on the type of bankruptcy, some debts may still be paid. Again, your attorney can advise you further on your options such as filing a claim with the court.
Take the Proper Termination Steps
If you decide to terminate the doctor/patient relationship...
- Send a letter. Confirm the termination using certified mail/return receipt and by regular mail. Using both methods ensures and documents that the patient was either notified or a valid attempt to do so was made.
- Provide a reason. The letter should provide the termination reason, i.e., failure to follow instructions, etc.
- Provide a time frame. The termination letter should state a specific time frame for the patient to find another provider e.g., 30-45 days. During that time, the health care provider should inform the patient that they will be available for emergency care or consultations or to offer a referral.
- Provide resources. If continued care is required, strongly urge your patient to seek it. You may not necessarily be required to make a specific recommendation, but you are responsible to help the patient find substitute care if they request it. You can recommend that they contact a local professional society if you don't want to refer them to any of your acquaintances.
- Provide records if requested. The termination letter should also inform the patient that, upon request, a copy of their records will be forwarded to them or to a subsequent treating practitioner. Reasonable fees for the duplication of records may be allowed, but keep in mind that may not be prudent to place a financial stumbling block in the patient's way. Attempting to collect a fee for record duplication may cause the patient to retaliate with a board complaint or lawsuit for any perceived wrong that, up to this point, was not that important.
Maintain Your Standard of Care
Regardless of bankruptcy status, you should maintain your Standard of Care. Once you have undertaken a course of treatment with your patient, you should not discontinue that treatment without providing patient adequate notice and the opportunity to find another provider. Above all else, do not jeopardize the patient's health.
No matter your next steps, it is important to respect your patient throughout the process of the bankruptcy, for your benefit and theirs.