New Statute of Limitations for Medical Providers Seeking to Collect Medical Debt
The New York legislature has amended the Civil Practice Law and Rules by adding a new section 213-d to read, in relevant part, as follows:
Actions to be commenced within three years; Medical Debt. An action on a medical debt by a hospital... or a health care professional shall be commenced within three years of treatment.
Prior to this change, the statute of limitations to file a lawsuit to recover medical debt was six years.
This change became effective April 3, 2020.
The Statute of Limitations Generally
The primary purpose of Statutes of Limitation is to relieve defendants of the necessity of investigating and preparing a defense after a certain period of time has elapsed. The law presumes that by the time the statute of limitations has expired, evidence has been lost, memories will have faded, and witnesses have disappeared.
Once a lawsuit if filed with the court, the Plaintiff has satisfied the statute of limitations. It does not matter if the case is pending in court for 15 years. A defendant will not be able to successfully get the case thrown out on statute of limitations grounds.
Today, with most courts in New York having adopted electronic filing, a lawsuit can be filed up to 11:59 p.m., on the day before the limitations period is set to expire.
What about medical providers with bills outstanding for more than 3 years?
While the amendment takes effect immediately (April 3, 2020), the bill is silent as to whether the law will have retroactive effect. But under New York common law, a statute will generally not be applied retroactively unless the amended statute expressly provides for retroactive treatment. As a result, the new three-year statute of limitations for medical debt will cover debts resulting from treatment occurring on or after April 3, 2020.
Is the statute of limitations extended by payment arrangements?
No, the statute of limitations is not extended by payment. Meaning, if you are a doctor or a hospital that is accepting a payment plan from a patient that will take longer than 3 years for the patient to pay it off (e.g., a patient paying a $4,000 bill at the rate of $100 per month); you should put that claim into the hands of a litigation attorney to secure the payment arrangement with a court agreement (a stipulation of settlement). This way, if the patient doesn't make the payments as promised, there are court remedies that can be used to collect the outstanding debt.
Debt Collection Lawsuits & Medical Malpractice
It is not uncommon for a debt collection lawsuit to be met with a medical malpractice counterclaim by a patient. In New York, the statute of limitations on medical malpractice is 2.5 years. Many of our healthcare clients hold on to their medical debt claims for 2.5 years to avoid a situation where a counterclaim is asserted against them for medical malpractice in the debt collection lawsuit.
When the statute of limitations to collect medical debt was six years, this provided little need for oversight or diligence. The difference between the two limitations periods was 4.5 years. Now, the difference between the statute of limitations on medical malpractice and to collect a debt is only six months.
What that means is that medical billing staff and billing agents must be very diligent and get their medical debt claims into the hands of a litigation attorney quickly.