The CEO of Melaleuca has started a legal fund to push back against a local medical debt collection company.
“Society is built so that the big guys can shove the little guy around,” Frank VanderSloot said April 25. “The attorney can shove the unsuspecting person around. And … we’re in a position where we have resources, and we’re trying to make sure that the little guy has an opportunity to fight back. My dad was a little guy. I grew up as a little guy. My wife grew up in a … poor family. We know what it’s like to live in that situation.”
VanderSloot, a well-known businessman and conservative political donor who’s reported to be the richest man in Idaho, said in a news release and a letter to the media Thursday that he and his wife Belinda are establishing a $500,000 fund “to protect East Idaho citizens from attorneys who appear to be using unscrupulous methods to take small debts of a few hundred dollars and transform them into huge debts of thousands of dollars by adding outlandish attorney fees.”
“Belinda and I have decided that we simply cannot stand by and allow our neighbors to go through the kind of financial duress and emotional pain that is apparently being perpetrated by (Medical Recovery Services),” he wrote. “Dozens or perhaps even hundreds of local families have been the targets of these aggressive tactics. Many find the behavior of these attorneys ruthless, unethical, and heartless. If the stories are true, it’s difficult not to agree. Fortunately, MRS seems to be the only collection firm that is operating with these principles.”
VanderSloot said he has signed a contract with a Boise law firm — some local lawyers, he said, were reluctant to take the job — and they will be sending someone to Idaho Falls to represent people being sued by Medical Recovery Services, an Idaho Falls medical debt collection firm used by many hospitals and doctors locally and in other parts of the state.
“Our phone is already ringing off the hook with people that are asking for help,” he said.
VanderSloot’s announcement comes after a series of stories by East Idaho News, which VanderSloot founded, looking at MRS and highlighting the case of an anonymous Melaleuca employee whom MRS tried to charge $5,864.25 in legal fees and costs on a now-paid $294 medical bill.
The law firm Smith, Driscoll and Associates, which is co-owned by local lawyer and GOP activist Bryan Smith and employs Rep. Bryan Zollinger, R-Idaho Falls, handles MRS’s cases. Smith is the second vice chairman of the state Republican Party, and he represented the plaintiffs in an unsuccessful attempt to overturn the Medicaid expansion ballot initiative voters passed in November. Smith refused to answer East Idaho News’ questions about whether he owns MRS, although publicly available paperwork has listed Smith as a partner in the company and Zollinger as a manager.
Smith and Zollinger got an original judgment in 2018 for $976.41 against the Melaleuca employee and an order to garnish her pay. However, Melaleuca’s lawyer said the company got papers that didn’t match her real name. Melaleuca and Smith faced off in court, and in July 2018 Smith got an order garnishing her wages for $1,272.55. In March 2019, Smith filed for supplemental attorney fees seeking $5,583.25. After the story came out, VanderSloot said Smith, Driscoll and Associates offered to drop the case if she agreed to stop speaking out, which she refused to do.
With attorney’s fees and other costs, judgments in medical debt cases are routinely for twice or more what the original debt was. While VanderSloot said he doesn’t like that, he said he would mostly be defending people in cases that are more extreme, where the amount of money being sought is 10, 20 or more times the original bill.
“That’s the kind of situation that you say, ‘This shouldn’t happen,’” he said.
Smith defended his practices in an email.
“We take our professional and ethical obligations very seriously,” he said. “In representing the interests of our clients, we always ensure to follow all applicable rules, regulations and statutes — as well as our professional ethical obligations. When collecting owed debts — earned by medical professionals — our practices are fully supported by the applicable laws of our highly regulated industry, and the court determines post-judgment fees on a case-by-case basis. The fees in question are for the time and resources we have invested in these cases to best support our clients.”
David Lyon, who used to work for Smith as a process server and now helps Rep. Chad Christensen, R-Ammon, run his campaign, said the way Medical Recovery Services is being portrayed in the media doesn’t line up with his experiences with Smith. Lyon recounted instances where he would try to serve someone at home, only to be told the person no longer lives there, then go to their place of employment and find the same person who denied being the one he was trying to serve.
“The narrative is completely wrong,” Lyon said.
VanderSloot said he plans to push for changes to the law to protect people from excessive legal fees. Idaho’s laws, he said, are mostly written to protect businesses rather than consumers.
“We want to make clear that we believe that people should pay their bills,” VanderSloot wrote. “Doctors and hospitals have the right and the need to collect for services rendered. We will not be helping people avoid paying legitimate bills. But, going forward, we will be defending people from unscrupulous, unreasonable or unnecessary attorney fees.”
VanderSloot said he doesn’t have a problem with making people pay for services they’ve received, but debtors should be protected from having to pay many times what the original bill was. A bill that would have put some limits on legal fees and court costs in debt cases passed the state Senate unanimously this year but never got a vote in the House.
“We’re going to look to other states to see what other states have done,” VanderSloot said. “It’s my understanding our laws in Idaho are way behind.”
VanderSloot wrote anyone who feels they are being treated unfairly by a collection company in southeastern Idaho can reach out confidentially at 208-534-2208 or firstname.lastname@example.org, or post publicly on the “Idaho Medical Debt” Facebook page.