Bad debt collections: the rules, the law and you.

It is never a pleasant task to take action on a patient's bad debt. After all, this patient has potentially been with you a long time, is generally a very nice person, and you trust them! In these challenging economic times, it has never been more important to develop systems regarding bad debt and especially to know the law. One report I recommend in all my seminars and to all my clients is "The Fair Debt Collection Practices Act." This is an 18-page report that explains the legal requirements you must follow to collect bad debt. Because this is a federal report, it is in your best interest to find out what your state requires. A great website to check out is www.lawdog.com. It gives wonderful, thorough information on what your specific state requires.

Most states follow "The Fair Debt Collection Practices Act." The website is www.ftc.gov/os/ statutes/fdcpa/fdcpact.htm. Some of the information listed in this report is as follows:

* You may not call the debtor before 8:00 AM or after 9:00 PM.

* You may not leave information on a recorder about their bad debt.

* You may not call them at work unless they give you permission to call them. (Fortunately, your patient gives you permission to call them when they fill out their health history).

* You must send your patient only one final notice. (This is the biggest mistake we make in our collection efforts ... we tend to send the patient 12, we really mean it, this is your final notice ... final notice!)

* You may not collect from patient any interest, fees, or charges incidental to original amount unless the debtor is made known of it and signs acknowledgment of it. You may not also deposit a postdated check before the date listed on the debtor's check.

* You may not use any symbol or communication on envelope signifying that you are attempting to collect a bad debt.

* You may not falsely represent yourself to the debtor. (This means, you may not send them a collection letter on your attorney's stationery.)

All of the above-mentioned rules listed are in this report. Of course, the best collection efforts and the ones that save our sanity is collection at the time of service.

There are many other rules to follow in the legalities of collections:

* You may not accept a postdated check that is dated more than five days away.

* In most states, the amount required to take a debtor to small claims court is $300 to $3,000. You can verify this on the website www.lawdog.com.

* A bad check can be collected many ways. Most states allow you to refer the insufficient funds payment to your local county prosecutor. Some states require you to refer the insufficient funds check to your local magistrate department. There will be a dollar amount listed with your local courts on the dollar amount that constitutes a misdemeanor (usually $500 or less) or a felony (usually any amount over $500). Again, I refer you to the website www.lawdog.com.

Another important consideration is to have clearly stated "disclaimers" for your patients to understand your collection requirements. Some dental practices outline this on a separate "financial" form. I recommend all disclaimers be on the same form as your patients' dental, health and physical information--The Patient History Form. I offer a detailed health history in my company along with a Health History Update form. All information regarding my products are outlined on my website: www.bantaconsulting.com. Clearly stated guidelines of acceptable collection and payment practices in easy to understand terms will assist your patients in making financial arrangements that are comfortable for them and you. They sign the Patient History that acknowledges your rules and regulations for collection and acceptance of treatment recommendations.

Some of the disclaimers I recommend on your Patient History are as follows:

* I understand that my insurance is an agreement between my insurance company and me. I also understand that I am responsible for my balance regardless of my insurance.

* I understand that I may incur a 1.5% or 18% (or whatever your state allows) finance charge if my balance goes beyond 90 days.

* I assign dental benefit payments to be paid directly to Dr. from my insurance company. (The new X12-ADA 2002 claim form also outlines the patient's financial responsibility on line 36 of the claim form. Also outlined the same way on the ADA 2000 insurance form on line 39.)

* I give permission for my dentist and his/her clinical team to take any necessary diagnostic films, photos or study models to properly enable complete diagnosis and treatment.

All of these disclaimers allow you to legally treat, diagnose and inform patient of all needs and requirements in your office. You have the best chance winning a court case when the patient signs disclaimers.

Remember, when dealing with the law and collections, make sure you are aware of the federal and state requirements. The federal guidelines are what most states follow, but your state has jurisdiction on additional guidelines and laws. Your state laws are what will be mandated for your dental office. As always, please take this and any other valuable information you read and "tweak" it to meet your practice mission and philosophies.

Lois Banta is CEO, President and Founder of Banta Consulting, Inc., a company that specializes in all aspects of dental practice management. Lois has over 28 years of dental experience and consults and speaks internationally. To contact Lois for a personal consultation or to invite Lois to speak to your organization; Office-816/847-055, Address: 33010 NE Pink Hill Rd, Grain Valley, MO 64029, Email: [e-mail] or check out her website: www.bantaconsulting.com.