Legal reporters’ coverage of medical funders prompts calls for regulatory action

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health reform. He welcomes questions and suggestions and tip sheets at joseph@healthjournalism.org.

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It’s no secret that even insured patients sometimes are unable to cover the full cost of their care. When that happens, some people turn to medical funding companies for help. Physicians and other providers sometimes will even refer patients to these entities, which are set up to pay the provider and then collect from the patient.

There can be problems with this option, as journalists Alison Frankel and Jessica Dye learned last year in an investigation of unscrupulous medical funding companies.

Dye (@jdye) is a legal correspondent for Thomson Reuters in New York. Frankel (@AlisonFrankel) is a veteran legal reporter and editor who updates Reuters’ On The Case blog. In their Reuters investigation, Frankel and Dye reported how medical funding company investors profit by financing care for desperate patients, and how some business groups now have called for the federal Consumer Financial Protection Board to take action.

Frequently working with physician billing companies, medical funders purchase medical bills at a deep discount from physicians, hospitals and other providers who care for patients involved in personal injury and medical device litigation. It’s a little-known business built on investing in surgeries for injured plaintiffs.

The funders profit by collecting more from patients than they paid the medical provider to buy the bill, Dye and Frankel wrote. As they explain in a new AHCJ  tip sheet, it is not an easy topic to cover. “Medical funding agreements are typically private and multilayered contracts,” they wrote. “But sometimes those agreements are disputed, and if that happens, you can find a record of them in personal-injury legal cases involving auto accidents, medical malpractice, workplace injuries, and defective drugs and devices, among others, meaning any case that involves a plaintiff who needs medical care as a result of his or her alleged injuries.”

Given the legal complexity of these agreements, it helps to have a lawyer review your reporting, Dye and Frankel suggest. “We suspect that the opacity and complexity of the medical funding business is a big reason the industry’s possible abuses are not widely covered,” they wrote.

While it’s a difficult topic to cover, it’s an important one, they said. “Sadly, it’s often the case that abusive medical-funding practices target primarily the poor and injured—those who have few other options.” Check out their new AHCJ tip sheet on covering this industry.

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