Frank VanderSloot, CEO of Idaho Falls-based Melaleuca, recently announced that he and his wife have started a legal fund to push back against a local medical debt collection company.

IDAHO FALLS — So far a law firm hired by the CEO of Melaleuca has agreed to take on 102 people’s debt cases, most of them people who are being sued by Medical Recovery Services.

As of Friday, 242 people had reached out seeking assistance with their cases, Frank VanderSloot said in an interview. He said lawyers held consultations with 141 of them and have agreed to take on 102 of their cases.

VanderSloot, who is reportedly the richest man in Idaho, announced in late April he was creating a fund to represent debtors fighting what he views as unfair collection tactics, pledging $500,000 of his own money to the effort. His announcement came on the heels of a series by East Idaho News, which VanderSloot founded, examining Medical Recovery Services’ debt collection practices. The series led off with the story of an anonymous Melaleuca employee whom MRS tried to charge $5,864.25 in legal fees and costs on what started as a $294 medical bill.

The Idaho Falls law firm Smith, Driscoll and Associates, which is co-owned by lawyer and GOP party official Bryan Smith and employs Rep. Bryan Zollinger, R-Idaho Falls, handles MRS’s cases. Although Smith wouldn’t address the specifics of MRS’s ownership with East Idaho News, Smith and Zollinger play a role in running MRS according to public records — Zollinger is a manager and MRS’s registered agent according to filings with the Idaho Secretary of State’s office, and Smith’s 2014 congressional campaign disclosure form lists him as a partner. The firm has a busy practice suing people over medical debt, routinely filing as many as 200 or more cases a month across Idaho, mostly in Bonneville County and other counties in eastern Idaho but sometimes in the Magic Valley and other parts of the state.

VanderSloot has hired Snell and Wilmer, a law firm with offices in major cities throughout the West, including Boise. He said they only take cases they think they have a chance of winning.

“We only take the cases that appear to us to have merit, where it appeared to us these people are being treated unfairly,” he said.

VanderSloot said the lawyers have taken on a few cases that started as debts Bonneville Collections was trying to collect, but that the vast majority dealt with MRS. As they talk to people who are looking for representation, “certain patterns are developing, where the stories are similar to each other,” VanderSloot said.

In some cases, VanderSloot said, the legal fees end up being many times the original debt. In others, a doctor misbilled a patient, or the insurance company paid but the doctor still sent a bill. In others, someone didn’t know they had a bill until they heard from a collection agency, or an agency is trying to collect on a bill that was already paid. In some cases, VanderSloot said, MRS tried to collect a debt that had been discharged in bankruptcy or by an insurance company, or tried to take money from disability or other benefits that are legally protected from garnishment. Or, they told debtors they didn’t need to show up to court, or that hiring a lawyer would increase their bill.

“We’re hearing so much of the same thing,” VanderSloot said. “There’s so much smoke that there’s got to be a fire here someplace.”

Smith said in an email his firm follows the law and hasn’t engaged in wrongful conduct. He defended the language MRS uses in collection notices, which VanderSloot criticized in a recent interview with East Idaho News.

“There are several cases where the collection company sends notices that are harassing, misleading and threatening that they’re going to send the sheriff after you, and listing, in our opinion, totally improperly what they can instruct the sheriff to do,” VanderSloot told East Idaho News.

Smith said this is standard language used by collection agencies nationwide, follows federal law and has been approved by the Idaho Department of Finance.

“Federal law requires that MRS notify debtors that the sheriff could garnish wages and that the sheriff could take other actions to satisfy a judgment,” Smith said. “Without such language, MRS would not be adequately warning debtors about the consequences they could face following a judgment. MRS follows federal law and puts debtors on notice so they are aware of what may happen if they do not pay their bills.”

VanderSloot said 71 percent of the debtors who have contacted them have debts from Eastern Idaho Regional Medical Center’s emergency room. Many physicians at EIRMC are part of Intermountain Emergency Physicians. Smith is Intermountain’s registered agent, according to state records, and Intermountain uses MRS’s services. VanderSloot pointed to this, as well as the overlap between MRS and Smith, Driscoll and Associates, as a problem.

“They basically hire themselves,” VanderSloot said. “For all practical purposes, it’s the same people.”

Smith said his firm follows the Idaho Rules of Professional Conduct to ensure no conflicts with the people they represent. Registered agents, he said are designated to receive official notifications such as service of process and notifications from the Secretary of State.

“Serving as a registered agent does not create a conflict of interest, nor does it create any ownership interest in the business that we represent,” he said. “The suggestion that the designation ‘registered agent’ is somehow ‘curious’ is uninformed and indicates a complete lack of understanding how registered agents function in Idaho.”

If you go to EIRMC, you might get a bill for your care that, if you don’t pay, turns into a lawsuit from Medical Recovery Services. However, EIRMC itself does not use MRS, stressed hospital spokeswoman Coleen Niemann. Most of the doctors who work there are not employed by the hospital and bill separately for their services.

“When you visit the ER, you receive a bill from EIRMC from your ER visit that includes costs associated with nursing care and supplies and medication and so forth,” Niemann said. “You’re also going to receive a separate bill from various independent physicians who may see you during your care. That may include an emergency physician, (it) could include a radiologist, (it) could include a pathologist who reviews a biopsy.”

Niemann said in an email that EIRMC tries to work with uninsured or underinsured patients, including sometimes writing off bills for people making less than 200 percent of the poverty level and putting limits on people’s bills above that based on income. The hospital also allows interest-free payment plans for up to five years.

VanderSloot said several cases were dropped over the past couple of weeks after Snell and Wilmer took them on.

“We’re just getting started, but that seems to be the pattern,” he said. “We’re involved, they drop it.”

Smith said there have only been 42 cases where VanderSloot’s attorneys appeared for debtors. In 29 of them, Smith said, the debtors had already lost and judgments had been entered. None of them, Smith said, were cases where MRS was seeking supplemental attorney’s fees, and one was a case that had been dismissed 13 years ago.

“The narrative being pushed by Mr. VanderSloot that MRS and my law firm have engaged in wrongful conduct continues to be based on misinformation,” he said.

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