Equitable relief is a powerful tool to defend work comp-related collections cases

An on-going hassle for injured workers and their attorneys is what to do when medical providers attempt to collect bills for services that are denied by the workers compensation insurer. Iowa has a statute preventing collection of unpaid medical bills during the pendency of a workers compensation case. Nebraska does not have such a statute. However injured workers and their attorneys have the option of asking for equitable relief in the form of an injunction on collection of bills they claim are related to their workers compensation court. This article will show you the simple steps of how to make your case for equitable relief.

Jurisdiction

Most collections cases related to unpaid medical bills are filed in County Court in Nebraska.  However, County Courts can not grant injunctions because they do not have general equitable jurisdiction possessed by the District Courts.  Iodence v. Potmesil, 239 Neb. 387, 476 N.W.2d 554 (1991) However the District Court and County Court have concurrent original jurisdiction in civil matter under $45,000. Neb. Rev. Stat. §24-517.   The County Court is supposed to transfer a case to the District Court when the relief requested is exclusively within the jurisdiction of the District Court. Neb. Rev. Stat. §25-2706.  In my view not granting a motion to transfer would be an abuse of discretion by the County Court. No person shall be deprived of life, liberty, or property, without due process of law, nor be denied equal protection of the laws. Neb. Rev. Stat. CONST. Art. I, § 3: See also U.S.C.A. Amd. V.  The essence of procedural due process is simply that fundamental fairness which a person has the right to expect-even demand-and receive through our system of law.  Appeal of Levos, 214 Neb. 507, 515, 335 N.W.2d 262, 267 (1983) My opinion is that if equitable relief is available to the defendant in a collections case, it is unconstitutional to deny that defendant the right to ask for equitable relief by denying a motion to transfer to District Court. Essentially the court would be asking the defendant to fight the collections case with one hand behind their back.

Building your equitable case

I think the following facts would lead to a District Court granting injunctive relief in a collections case related to a workers compensation injury.

1. Strong evidence of the unpaid bills being reasonable and necessary because of the work injury. This evidence would come in the form of a causation opinion and an order from treatment from a doctor. Evidence of medical causation allows you to argue that the medical provider has a reasonable expectation of payment.

2. Evidence of payments by private health insurance.  This is important because it shows that the medical provider has paid something for their services.

3. If the worker has no private insurance, present evidence that your workers is willing and able to make installment payments. Even better evidence would be evidence from other medical providers showing they were willing to accept small installment payments.

Another argument to make in an equitable case is to bring up the fact that if your client was on Medicaid and the provider accepted Medicaid, that the provider would be paid pennies on the dollar and would be forced to write off the balance. How fair would it be for someone who paid $.60 on the dollar through their private insurance for services to face a judgment while the person who paid $.20 on the dollar through Medicaid had their balance wrote off.?

Interaction between Law and Equity

Many workers compensation lawyers in Nebraska defend collections suits by arguing that Neb. Rev.  Stat.  §48-120 precludes collections for workers compensation bills as a matter of law. I’ve made that argument, but judges seem to agree with collections attorneys when they argue that 48-120 doesn’t apply because if a claim is denied there is probably a factual reason. I’m not going to get into a detailed analysis of the merits of this argument. I think the best approach to defend collections claims stemming from workers compensation accidents claims is to file a legal motion to dismiss paired with a motion to transfer to District Court to ask for equitable relief if the motion to dismiss as a matter of law is overruled. 

 

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