Probate, Hospital Bills and COVID

For my third self study lesson today in this COVID series, I share a lesson on probated account management for hospitals and healthcare providers who may have never faced the complexities of probated claims for health services in such heavy concentration.

In this complicated time under the impact of COVID, more than 4000 people have died in the USA. Maybe they didn't succumb to COVID, maybe it was some other cause of death. And with our complicated system of healthcare billing, where providers of every type may treat a patient for a knee replacement or a heart attack or an open reduction of a fracture and if any of those people die in this hectic time, what about the decedent's debts? They're paid through the probate process as well, because any person with the power of attorney can no longer act on behalf of the deceased to handle the debts.

The probate process takes place under the supervision of a probate court, and there are certain rules and laws that must be followed whenever a court is involved. They can vary somewhat from state to state, but some steps are common and occur in a prescribed order. 

ABOUT THE AUTHOR:

Dr Maria Todd is the Director of Business Development at St George Surgical Center, and the author of 23 books on healthcare business administration topics, including: The Managed Care Contracting Handbook 2nd edition (3rd edition out soon), The Physician Employment Contract Handbook, 2nd edition, and the Handbook of Medical Tourism Program Development (2nd edition out soon) and the Employers Guide to Medical Tourism Benefit Design (out soon), and Launching a Robotic Service Line (out soon) published by Informa's CRC Productivity Press.

She is the group leader for The Managed Care Contracting Group here on LinkedIn, with over 11,000 members. When not in her part time role at SGSC, she works as a private healthcare business consultant, as she has for the past 40+ years. Her career spans from working as an OR nurse, an ASC administrator and hospital revenue cycle manager, a health law paralegal and mediator, and the director of provider contracting for a large national HMO brand.

Probate is the court-supervised process of authenticating a last will and testament if the deceased made one. It includes locating and determining the value of the person's assets, paying their final bills and taxes, and distributing the remainder of the estate to their rightful beneficiaries. 

Each state has specific laws in place to determine what's required to probate an estate. These laws are included in the estate's "probate codes," as well as laws for "intestate succession," when someone dies without a will.

In cases where there is no will, probate is still required to pay the decedent's final bills and distribute their estate. The steps involved are generally very similar, regardless of whether a will exists—even though laws governing probate can vary by state. It also gets complicated when the decedent dies with residences in two different states. With the number of deaths due to COVID in New York and New Jersey and other states where people may have been snowbirds, this is a huge risk exposure for hospitals and other medical providers who treated the decedents and are due payment from the estate.

Most states have laws in place that require anyone who is in possession of the deceased's will to file it with the probate court as soon as is reasonably possible. An application or petition to open probate of the estate is usually done at the same time. Sometimes it's necessary to file the death certificate as well, along with the will and the petition.

As a creditor, you'll need to file a CAVEAT with the itemized bill and any EOBs from any third party payers to substantiate your claim for any balances owed. C copy goes to the county court in which the decedent's will is authenticated and the executor recognized by the court. There is generally a filing fee and official forms obtained from the County Clerk of the Courts. A certified copy also goes to the Executor. Generally you file three certified copies. The instructions for probate collections is generally available online.

Duty to Locate Assets, Tax returns, Insurance policies, Credit Card Statements, and Other Documents

The executor's first task involves locating and taking possession of all the decedent's assets so they can protect them during the probate process. This can involve a fair bit of time and sleuthing. Some people own assets they've told no one about, even their spouses, and these assets might not be delineated in their wills.

But they must ensure property taxes are paid, insurance is kept current, and any mortgage payments are made to prevent foreclosure so the property isn't lost.

The executor might literally take possession of other assets, however, such as collectibles or even vehicles, placing them in a safe location. They'll collect all statements and other documentation concerning bank and investment accounts, as well as stocks and bonds. They can also control bank accounts, mattress cash stashes, shoebox cash stashes, and more. Recently, my husband and his sister located "a significant sum" of currency stashed in flour sacks with flour in them in the basement of their stepfather's home upon his passing.

The decedent's creditors must be identified and notified of the death. Most states require the executor to publish notice of the death in a local newspaper to alert unknown creditors. Known creditors who filed a CAVEAT are placed on a list. After all bills are in, the executor may prorate the assets and pay out a portion of the debts owed so that everyone gets something. This is a reason to subscribe to the local paper, and not just the digital version as they may not publish the classified notices in the digital subscription version.

Creditors typically have a limited period of time after receiving the notice to make claims against the estate for any money owed. The exact time period can vary by state. After that, the account is closed and if you didn't get your bills in and follow up, you'll not receive any money from the estate.

The executor can reject claims if they have reason to believe they're not valid. The creditor might then petition the court to have a probate judge decide whether the claim should be paid. For the sake of your reputation, your efficiency and your sanity and for all concerned, verify the accuracy of all bills and statements before submission. If the balance is small and probate does not make economic sense consider first your small balance write off policies and determine if the pursuit and labor to manage the probate account receivable is worth the time, labor, expense, and effort.

When all these steps have been completed, the executor can petition the court for permission to distribute what is left of the decedent's assets to the beneficiaries named in the will. This usually requires the court's permission, which is typically only granted after the executor has submitted a complete accounting of every financial transaction they've engaged in throughout the probate process.

Some states allow the estate's beneficiaries to collectively waive this accounting requirement if they're all in agreement that it's not necessary. Otherwise, the executor will have to list and explain each and every expense paid and all income earned by the estate. Some states provide forms to make this process a little easier. The accounting process could take months to finalize. Someone at the hospital must be appointed to manage this.

For some of my clients that are small Critical Access Hospitals or those understaffed I do two things: I train the staff or I accept outsourced assignments to help out. These cases can take tens of hours to maintain until closed, per account. There are also filing fees, and documentation that are required. It also takes time to learn the relevant state procedures and rules. I may also need access to your legal counsel.

Also a BAA is requried under HIPAA for outsourcing because The HIPAA Privacy Rule applies to the individually identifiable health information of a decedent for 50 years following the date of death of the individual.

The process requires a lot of effort in tracking and maintenance whether you get paid or not, so no, I don't take these on contingency. If you had a trained staffer available for this, you would be paying them their salary, benefits and underwriting their overheads, regardless of outcome. So it isn't fair to ask someone else to do this on contingency.

If that is of interest to you, please call me by phone at (800) 727.4160. My phones are answered 24/7/365 live answer, no voice mails. If I am available, my secretaries will either transfer your call to me or take a message and I will return your call at my first opportunity.

RECEIVABLES FACTORING AGENTS

If you are overwhelmed and you want to sell the accounts for quick cash, there may be healthcare financial factoring companies who will purchase your accounts receivables for a percentage. Talk with them about waiving recourse. They buy these "at risk" but some put in recourse provisions that if they don't get money and they gave you money that you have to accept the accounts back under specified terms and conditions and pay them back what they advanced on the account(s).

Some handy references:

Federal Trade Commission Consumer Information. “Debts and Deceased Relatives.” Accessed March 4, 2020.

New York State Unified Court System. “When There Is No Will.” Accessed March 4, 2020.

The Superior Court of California, County of Santa Clara. “Closing and Distributing the Probate State." Accessed March 4, 2020.

Michigan Legislature. “700.3801 Notice of Creditors.” Accessed March 4, 2020

Internal Revenue Service. “Filing Estate and Gift Tax Returns.” Accessed March 4, 2020.

Utah Courts. “Civil Terminology for Utah Interpreters,” Pages 20-21. Accessed March 4, 2020. (helpful no matter where you may be located)