Who Is A Medically Distressed Debtor Under The Medical Bankruptcy Fairness Act? Part I
By Carmen Dellutri, Attorney at Law on Feb 19, 2008 in Means Testing
The Medical Bankruptcy Fairness Act, H.R. 5138, was introduced in the House of Representatives on January 28, 2008. This bill, if passed in its present form, would amend the Bankruptcy Code is several different ways.
Before we begin analyzing the bill and the changes that could be made to the Bankruptcy Code, it is important to note that Congress is finally recognizing that many individuals are either not covered by health insurance or have inadequate health insurance coverage.
Medical bankruptcy issues really started to gather steam before Congress changed the bankruptcy code in October 2005; however, it seemed that all the literature, expert testimony and bankruptcy analysis concerning medical debtors fell on deaf ears. While I applaud the idea behind the Medical Bankruptcy Fairness Act, this bill will need a substantial amount of work before becoming law.
First, the Medical Bankruptcy Fairness Act would amend Section 101 of the Bankruptcy Code, which is more commonly known as the definitions section. Section 101 would be amended to add the definition of a “medically distressed debtor” as a debtor, or a dependent of the debtor, who has in excess of the lesser of 25 percent of the household income or $10,000.00 of medical debt ( which was not covered by insurance) in a twelve (12) month period in the last three years or lives in a household with a person who was out of work for four (4) weeks in the last twelve (12) months.
As an attorney who helps people file bankruptcy, I looked at the first section of the definition, and it would appear to me that for a person to qualify as a medically distressed debtor, I would have to go back 3 years in either their, or one of their dependent’s, medical history and determine that at any one time during that three (3) year period, was there a specific time when the debtor or one of their dependents had more than $10,000.00 outstanding in medical debt which was confined to a 12 month period.
Logically, my analysis would have to start with whether the debtor or any dependents had any medical debts in the last three years. I would be shocked to find a family or individual that had not received some form of medical care in the last three (3) years. Then, I would have to determine whether the debtor had insurance, and what bills, if any, were either paid by insurance or not.
For all the bankruptcy attorneys out there, can you just imagine having the debtors provide you with all of their medical bills, their family’s medical bills and insurance documentation along with all of the other documents that the debtors have to produce. This leaves about 20 new questions in my mind which will spawn additional litigation. (Just think about HIPPA & other privacy concerns).
The second part of the definition has even more holes in it. A medically distressed debtor could also mean a debtor or a member of the debtor’s household, where one individual lost all or substantially all employment for at least four (4) weeks in a twelve (12) month period due to a medical problem. You don’t have to be an attorney to start seeing the problems with this definition.
Part II of this article will continue the analysis.
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