80-2101-10498-3

 

 

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE CITY OF RUSH CITY

 

 

                                          

In The Matter of Darrel                FINDINGS OF FACT

Dahlberg and Cheryl Dahlberg          CONCLUSIONS OF LAW

Appellant/Debtors v.                  AND RECOMMENDATION

Rush City Hospital, the

City of Rush City,

Respondent/Creditor   

 

 

 

The above-entitled matter came on for hearing before Administrative Law Judge Rita A. McConnell on May 13, 1996 at 10:00 a.m. in a conference room at Rush City Hospital, 760 West 4th Street, Rush City, Minnesota, 55069.   The record closed at the conclusion of the hearing.^[1]

The Appellants (hereafter "the Dahlbergs") were represented at the hearing by Cheryl Dahlberg with assistance from Richard Lindig.   Respondent Rush City Hospital (hereafter "the Hospital") was represented by its administrator, Lynn Clayton, it business office manager, Deb Fore, and its director of Recaptures and collections, Carole Swanson.  State Representative Loren Jennings was also present during part of the hearing as an observer.

This Report is a recommendation only and not a final decision.  Mr. Lynn Clayton, the Administrator of the Rush City Hospital, will make the final decision.   After a review of the record, he may adopt, reject, or modify the Findings of Fact and Recommendations contained herein.  Pursuant to Minn. Stat. Sec. 14.61, the final decision of the Administrator shall not be made until this Report has been made available to the parties to the proceeding for at least ten days.  An opportunity must be afforded to each party adversely affected by this Report to file exceptions and present argument to the Administrator.  Parties should contact Lynn Clayton, Rush City Hospital Administrator, 760 West 4th Street, Rush City, Minnesota, (320)358-4708 to learn the procedure for filing exceptions or presenting argument.

               STATEMENT OF ISSUES

1)  Is the claim of the Hospital to $359.90 of the Dahlberg's tax refund valid on the grounds the Dahlbergs owed a debt of $359.90 to the Hospital as defined in the Revenue Recapture Act, Minn. Stat. Sec. 270A.03?

2)  Did the Dahlbergs receive written notification of the Hospital's claimed right to their income tax refund under the Revenue Recapture Act?

Based on the files, records and proceedings herein, the Administrative Law Judge makes the following:

 

                FINDINGS OF FACT

 

1.  On April 26, 1995, the minor son of the Dahlbergs, Jared Dahlberg, was injured at the home of a playmate and was brought by his mother to the Rush City Area Clinic (hereafter "the Clinic") for medical attention.

2.  When the physician at the Clinic examined Jared's injury, he instructed Mrs. Dahlberg to take her son to the Rush City Hospital, located next door to the Clinic, for Emergency Room treatment. 

3.  The Dahlbergs were not charged for the office visit at the Clinic.  Dahlberg Exhibit 11.  They did, however, incur $180.00 in charges through the Clinic for services rendered by the Clinic physician in the emergency room.  Dahlberg Exhibit 6. 

4.  When Mrs. Dahlberg arrived with Jared at the Emergency Room, she was met by nurse Lisa Taylor who completed the Emergency Room Record (Hospital Exhibit 1).  On that document, the Dahlberg's insurance company is listed as MinnesotaCare, which was the only insurance information offered by Mrs. Dahlberg at the time.    The form also shows a Medicaid number of 01554469.  That number is the correct MinnesotaCare number for Jared Dahlberg, but had not been issued to the Dahlbergs as of April 26, 1995. 

5.  Mrs. Dahlberg brought with her to the hospital a letter from MinnesotaCare, the content of which was generally to welcome the Dahlberg family to the program.  She gave the letter to an unnamed hospital employee.  Ms. Dahlberg no longer has the letter or a copy, and did not receive the letter back from the hospital employee. 

6.  Nurse Taylor took no steps to verify whether or not the Dahlbergs had coverage under MinnesotaCare before administering care to Jared, and was not asked by Mrs. Dahlberg to do so. 

7.  Jared Dahlberg received proper and appropriate medical attention from Rush City Hospital and the attending physician, Dr. Swanson, on April 26, 1995.^[2]

8.  On or about May 4, 1995, the Hospital issued an itemized billing statement for the services Jared received on April 26 showing a total due of $359.90.  The statement also explained that the "physician's fees [were] not included in this statement."  Hospital Exhibit 2.  The billing statement indicated the Dahlberg's insurance company was Medical Assistance, which is administered by the same state agency that administers MinnesotaCare.  The bill also reflected the policy number set forth in paragraph 4 above.

9.  On or about May 15, 1996, the State sent the Hospital notification that the May 4 bill would not be paid by MinnesotaCare because Jared was not eligible for service on April 26, 1995.  Hospital Exhibit 5.^[3]

10.  After the billing was prepared, Carole Swanson of the Rush City Hospital billing department checked Jared Dahlberg's eligibility under MinnesotaCare through the use of a Medifax Verification Transaction.  These verification efforts consistently showed that Jared was not eligible for MinnesotaCare until May 1, 1995.  See Hospital Exhibit 3 for an example of the Medifax check completed in November for Jared's coverage.

11.  In addition to using the Medifax system, Swanson and other hospital administrative employees placed several phone calls to MinnesotaCare and were consistently informed that coverage did not begin until May 1, 1995.

12.  When MinnesotaCare initially informed the Hospital that Jared was not covered on April 26, 1995, Swanson called Mrs. Dahlberg to give her that information and to verify the policy number the Hospital was using.

13.  In July and August of 1995, the Hospital sent monthly statements to the Dahlbergs reflecting an amount due of $359.90 for Jared's emergency room care.  The July bill was returned by the Dahlbergs with a handwritten note stating:  "Please submit to MinnesotaCare.  #D01554469."  Hospital Exhibit 12.  The August bill was also returned by the Dahlbergs with a handwritten note stating:  "Jared is covered by Minn.Care.  Why haven't you submitted bill to them?  Case #J0092166 MN Care 444 Lafayette Rd. St. Paul 55155-3829."  Hospital Exhibit 4.

14.  The Hospital's billing policy is to send monthly statement to the patient until the account is 90 days old, at which time the bill is pulled for collection activity starting with calls to the patient asking for payment.

15.  When the Dahlberg's September bill was generated by the computer, Swanson pulled it from the bills to be mailed to again check on Jared's eligibility under MinnesotaCare.  Again the State advised Swanson that Jared did not become eligible until May 1, 1995.

16.  On or about October 5, 1995, Swanson spoke to Mrs. Dahlberg by phone explaining that the Hospital had been unable to secure MinnesotaCare coverage for the bill and that any further action regarding the coverage had to be taken by the Dahlbergs.  Swanson also explained to Mrs. Dahlberg that the Dahlbergs were liable for the bill regardless of any dispute they may have with their insurance.  Mrs. Dahlberg began to make her own inquiries of MinnesotaCare to determine the status of Jared's coverage.  The Dahlbergs did not, however, make any alternate arrangements for payment of the bill.

17.  When the Hospital's attempts to use alternative collection methods for eight months were unsuccessful, Swanson decided to initiate Recapture proceedings to obtain payment on the Dahlberg's bill.

18.  On December 27, 1995, Swanson sent the Dahlbergs a letter notifying them that the Hospital intended to ask the Department of Revenue to forward the Hospital money due the Dahlbergs by way of a tax refund to satisfy the amount due the Hospital and Clinic.  Hospital Exhibits 13 and 14.

19.  In January of 1996, Swanson submitted a Revenue Recapture Act Certification to the Minnesota Department of Revenue indicating the Dahlbergs were liable to the Rush City Hospital for $359.90.  Hospital Exhibits 17 and 18.  Swanson also commenced a Conciliation Court action to recover any shortfall that might remain after the Recapture.

20.  The Hospital did not send any billings to the Dahlbergs once it began the Recapture procedure.

21.  Beginning on February 3, 1996, the Dahlbergs began sending in partial payments on their accounts with the Rush City Hospital and Clinic.  They paid a total of $25.00 to the Hospital between February 3 and March 9 and a total of $15.00 to the Clinic between February 3 and February 20.  Dahlberg Exhibit 4.

22.  On or about February 23, 1994, the Department of Revenue notified the Dahlbergs that $359.90 of their 1995 tax refund was being sent to Rush City Hospital under the Revenue Recapture Program.  Dahlberg Exhibit 7.

23.  On or about February 24, 1996, the Minnesota Department of Revenue informed the Hospital that it had recaptured the total amount due from the Dahlbergs and sent the Hospital a check for that amount on February 29, 1996.  Hospital Exhibit 19.

24.  On April 12, 1996, the Dahlbergs sent the hospital a request for an itemized copy of the bill for Jared's emergency room services "for submission to our insurance company."  The letter included a copy of the insurance claim form indicating the Dahlbergs were submitting the claim to Student Assurance Services, Inc.  The Dahlbergs indicated "none" in the space allocated for listing family or group insurance policies.  Hospital Exhibit 9.

25.  On April 11, 1995, the Student Assurance Services paid the Rush City Area Clinic $104.00 in partial satisfaction of the Clinic bill for Jared's services, leaving a balance of $76.00 as the Dahlberg's responsibility.  Dahlberg Exhibit 23.  On April 25, 1996, the Student Assurance Services issued a check to Rush City Hospital on behalf of the Dahlbergs in the amount of $287.92, leaving $71.98 as the Dahlberg's responsibility.  Hospital Exhibit 7.

26.  On May 1, the Hospital wrote a note to the Dahlbergs explaining that it had received insurance proceeds to cover their accounts at both the hospital and the clinic.  When these payments were combined with the amount received through Recapture and the $40.00 cash payments from the Dahlbergs, they resulted in an overpayment of $206.92.  The Hospital issued a refund check to the Dahlbergs in that amount and advised the Dahlbergs as follows:

Your account at the Rush City Hospital/Clinic is paid in full. Conciliation Court and the Minnesota Recapture Program have been notified your account has been satisfied in full.

Hospital Exhibits 7 and 8.

 

Based upon the foregoing, the Administrative Law Judge makes the following:

 

                   CONCLUSIONS

1.  The Administrative Law Judge and Rush City Hospital have jurisdiction in this matter pursuant to Minn. Stat. Secs.  14.50, 270A.08 and 270A.09 (1991).

2.  The Rush City Hospital provided proper notice of the hearing pursuant Minn. Stat. Sec. 270A.09 and Minn. Rules 1400.8550 (1993).

3.  The Rush City Hospital bears the burden of proving the amount and existence of the debt and its right to collect the debt by a preponderance of the evidence.  The Dahlbergs have the burden of proving their affirmative defenses by a preponderance of the evidence.   Minn. R. 1400.8608.

4.  Minn. Stat. Sec. 270A.07 permits a claimant agency  to collect a debt through a set-off of the tax refund owed the debtor by the Department of Revenue.

5.  Debt is defined in the statue to mean "a legal obligation of a natural person to pay a fixed and certain amount of money, which equals or exceeds $25 and which is due and payable to a claimant agency."  Minn. Stat. Sec.270A.03, Subd.5.

6.  As of January, 1996, the month in which the Hospital began the Revenue Recapture proceedings, the Dahlbergs owed the Rush City Hospital a debt as that term is defined in the Revenue Recapture Act in the amount of $359.90.

7.  Rush City Hospital had a valid claim to the tax refund due by the Department of Revenue to the Dahlbergs.

8.  The Hospital sent the Dahlbergs notice of the Hospital's assertion of a right to the refund as required under Sec. 270A.08.

9.  The Dahlbergs  carried the burden of showing that they did not receive the Hospital's notice and that they received actual notice only when the Department of Revenue sent them a notification of refund on February 23, 1996. 

 

Based upon the foregoing Conclusions, the Administrative Law Judge makes the following:

 

                 RECOMMENDATION

IT IS HEREBY RECOMMENDED that the appeal of Appellant/Debtors be denied.

Dated this 12th day of June, 1996.

 

 

                              ____________________

                              Rita A. McConnell

                              Administrative Law Judge

                                                                               

Reported:  Tape recorded, not transcribed; 4 tapes.  

 

                        MEMORANDUM

 

The amount at issue in this case is $152.98, which is the difference between the amount recaptured by Rush City Hospital and the amount the Hospital reimbursed to the Dahlbergs after all proceeds (Recapture, insurance, and private pay) were applied to their accounts at the Hospital and the Clinic.

The facts as presented at the hearing of this matter were complicated and undoubtedly led both parties to the point of exasperation as each struggled to determine whether MinnesotaCare would cover the charges for Jared's care on April 26, 1995.  Nevertheless, those charges were incurred by the Dahlbergs and they were obligated to pay the Hospital either through insurance or with their own funds.  Only after the Hospital had exhausted all others means of collection did it turn to Revenue Recapture.  It exercised its rights appropriately under the statute and was entitled to the funds.

The Dahlbergs claim that they were not responsible for the charges - and thus the debt was not owed - because the Hospital failed to verify MinnesotaCare coverage before administering to Jared.  The Dahlbergs failed to carry their burden of proof on this defense.  First, Mrs. Dahlberg bases her claim on the fact that on April 26, she presented a hospital employee with a letter from MinnesotaCare.  Mrs. Dahlberg has neither a copy of that letter nor any record of its contents, nor can she identify the hospital employee to whom she gave the letter. Without this information, the Dahlbergs cannot establish by a preponderance of the evidence that the letter left her son's coverage uncertain.

Second, Mrs. Dahlberg claims that a hospital employee informed her that MinnesotaCare would cover the emergency room charges.  Nurse Taylor is the only hospital employee who had the opportunity to discuss insurance with Mrs. Dahlberg that day.  Taylor testified convincingly that she has never checked on the availability of coverage for any patient and has no recollection of being asked to do so by Mrs. Dahlberg.  Since the Dahlbergs came to the Hospital after the business office had closed, there was no staff on hand who could perform such verification before emergency services were administered, particularly since the medical staff was concerned with providing care.

The Dahlberg's claim that they did not receive the Recapture notice sent out by the Hospital is credible in light of the careful record-keeping the Dahlbergs observed in connection with this matter.  They were not prejudiced by this lack of notice, however, since they  were afforded the right to contest the validity of the Recapture at a hearing as provided in the statute.  The Hospital made no attempt to bar the Dahlberg's appeal as untimely.

For the reasons set forth above, the Revenue Recapture by the Hospital was appropriate and the Dahlberg's appeal should be denied.