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Who’s liable for a minor’s medical debt?

Opening Credits columnist Eric Sandberg

Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” She writes “Opening Credits,” a weekly reader Q&A column about issues for people who are new to credit, for

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Question for the expert

Dear Opening Credits,
One of my employees had surgery done when she was a minor. The bill was, of course, given to her parents, who did not end up paying the bill. She is now 21 years old and came to me when I discovered she had problems with her credit. The only problem was this medical charge, which the hospital sent to collections (not to her parents anymore, but to her now, since she is no longer a minor). She signed nothing stating she would pay. Is this legal? Is there a process to get this removed from her record?  — Tim

Answer for the expert

Dear Tim,
Here are two messages to pass on to your anxious, credit-damaged worker:

  • Breathe a big sigh of relief. It is highly unlikelythat she will bear legal responsibility for the debt.
  • Get into action mode. To resolve this mess, she’sgoing to need to do a bit of work.

The fact that your employee was under the age of 18 when she went to the hospital for that procedure is key to her “case.” Minors (unless formally emancipated) cannot enter into a legally binding contract and can’t be held liable for a bill. Hence, neither the hospital where she had her operation nor the collection agency to which they sold the debt has the right to pursue her for payment or report it to the credit bureaus.

Her parents, on the other hand, may not be so protected. Eventually, this bill will boomerang back to them, as they are the ones who almost certainly consented to take care of it in the first place. According to Wendy Britton, a registered nurse and health care consultant out of Norwalk, Iowa, “any and all minors admitted to a hospital have to be accompanied by an adult who will assume financial responsibility for the bill. That’s industry standard across the country.” During admissions, they had to complete some lengthy forms, and embedded in them was some wording about payment. If they signed, they agreed to assume the charges.

Now on to the work part …

Your employee must take action to stop the collector from unlawfully reporting the delinquent debt to the credit bureaus. It’s unfairly wreaking havoc on her  credit history and credit score.

Her first stop is the hospital itself. “She needs to get proof of the date of services and her age when the procedures happened,” Britton says. “She’ll need copies of the original paperwork with her birth date indicating that she was a minor when she had the procedure.”

Once she has those documents, have her make multiple copies and send a set each to the collection agency and the three major credit reporting bureaus.  (Each has its own formal dispute process to follow, but this evidence will expedite damage control.) She should attach a letter summarizing the situation. It should also say that she expects the collectors to cease reporting the debt to the bureaus and for the bureaus to stop listing it.

Of course, the collection agency may turn around and pursue her parents for payment and begin to report the debt on their reports, but for her, the matter should be cleared up relatively quickly. (The bureaus have 30 days to investigate.)

Bear in mind that time lines are important. Assuming she was a day shy of 18 when the operation occurred and she just turned 21, the debt is three years old at the very youngest. If no one pays up, it will appear on the responsible party’s credit report for another four years. That may not be so bad, but getting sued is a risk, so I recommend her parents check the statute of limitations for lawsuits and unsecured debts for their state.

Finally, it may be wise for her to contact the hospital’s public relations department and explain what’s going on. They’re probably unaware that the collection agency they sell outstanding debts to is breaking the law, and they may stop using the agency when notified. If the hospital is unresponsive, it could be effective to contact the local newspaper, too, says Britton. “If that showed up in a newspaper, I’d guarantee the hospital would sit up and take notice.”

By the way, your employee is lucky to have such a concerned and involved boss.

See related:Minor who wants her own credit card will need help from parents, How to dispute credit report errors

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