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Medical Bill Collection Firm Will Be Dropped

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Times Staff Writer

Los Angeles County has decided not to renew its contract with a private collection agency that has been accused in a lawsuit of harassing and threatening low-income residents who had not paid their county medical bills.

As a result of its decision not to renew its contract with Los Angeles-based U.S. Credit Bureau, the county was dropped as a defendant in a suit brought last year by 13 former county medical patients. Under the settlement, the county also pledged to advise all medical patients that they can only be charged according to their ability to pay.

The U.S. Credit Bureau, one of the largest private collection agencies in the country, has been under contract with the county since 1979 to investigate and collect unpaid county medical bills. County officials said the firm receives a commission amounting to 36% of the debts it collects. Last year, the firm earned $1.6 million in commissions from its county contract.

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“All we’re doing is promising to comply with our own standards, and since we were not going to renew with USCB anyway, it seemed reasonable to enter into a voluntary dismissal,” Senior County Counsel Frank DaVanzo said Tuesday.

Evaluated Bids

DaVanzo said the county’s decision not to renew its contract with the U.S. Credit Bureau when it expires on April 30 had nothing to do with the lawsuit. He said the county evaluated bids from 12 firms, including the U.S. Credit Bureau, and decided four other firms had better offers. County officials rated the bids according to such factors as size of the firm, ability to resolve debtor complaints and financial stability.

Christine Hely, an attorney with the Legal Aid Foundation of Los Angeles, which is representing the former county patients, said they will continue to pursue their claims against the U.S. Credit Bureau.

According to Hely, the former patients have accused the U.S. Credit Bureau of threatening them with lawsuits, jail and deportation if they did not pay their bills. In some cases, Hely said, collectors spoke to third parties, such as the patients’ employers and relatives, in their zeal to collect.

“They told one woman she should go out and prostitute herself; they told another woman she was going to have to sweep parks on weekends, and they told several people they were going to lose their welfare checks,” Hely said. “They told a woman that they were going to take away her daughter’s house, and they told another woman they would take away her husband’s car. They also used obscenities.”

She said the county was included as a defendant, because county officials asked the credit bureau to collect bills that should never have been sent.

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“These are really poor people,” she said. “All of them are below the poverty level.”

Under a county program required by state law, county patients are supposed to be charged according to their ability to pay. Hely said that most of those who were harassed were not even required to pay for their care under the eligibility rules, but the county had failed to advise them of their rights.

“It’s the county’s fault that the bills were sent to the debt collector,” Hely said. “The abuse is the fault of the debt collector.”

Allegations Denied

Lloyd Dix, an attorney for the U.S. Credit Bureau, said the allegations against the firm are false.

DaVanzo said it is possible that the county may have asked the collection agency to pursue patients who were not required to pay, because of the huge caseload involved.

“It’s very likely that 13 people could have slipped through,” DaVanzo said.

In fiscal 1983-84, the county referred $164 million in medical bills to U.S. Credit Bureau and G. C. Services Corp. of Santa Ana, which also was under contract and is expected to have its contract renewed. The two agencies collected $5.4 million, charging a total of $1.9 million as commission.

Of that, U.S. Credit Bureau was asked to recover $84.4 million in bills. The firm recovered $4.4 million and kept $1.6 million as commission.

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