The Idaho Supreme Court unanimously ruled recently that medical collection agency Medical Recovery Services cannot ask for attorney's fee that are higher than what patients paid for their care.
The decision affirms a lower court ruling against the agency that's owned by Bryan Smith, who is challenging incumbent Mike Simpson in the Republican primary for Idaho's 2nd congressional district.
The high court affirmed that Bonneville County (Idaho) Magistrate Judge Michelle Mallard was justified in lowering attorneys fees requested by Medical Recovery Services and rejected a request that the collection agency be awarded additional attorneys fees for work done during the appeal.
The case involved three patients who were treated between December 2010 and April 2011 at an urgent and primary care clinic. Medical Recovery Services argued it was owed $350 in attorneys fees per patient, which in each case was more than the cost of the care provided.
Mallard had issued a default judgment, meaning the patients lost because they did not respond to the lawsuits, in favor of Medical Recovery Services but reduced the attorneys fees to the amount of the original cost of care, relying on state laws regulating collection agencies.
Records show Medical Recovery Services and Diversified Equity Systems, another collection firm that Smith has a stake in, have been involved in more than 10,000 court cases across southern and eastern Idaho, according to The Idaho Statesman.
Bryan Zollinger, an attorney with Smith, Driscoll and Associates, had argued that state rules governing collection agencies should not apply in the cases because the contracts mandating $350 in attorneys fees were contracts between the patients and the clinic, not between the patients and Medical Recovery Services. He first appealed the case to Idaho's 7th District Court, where Judge Dane H. Watkins upheld Mallards decision in November 2012. Zollinger then appealed to the Idaho Supreme Court.
"That contention is wholly without merit," wrote Justice Jim Jones in his nine-page opinion. "[Medical Recovery Services] acknowledges that it is a licensee under [state collection agency laws]. Indeed, [it] is a collection agency and in the business of collecting debts for other parties."
Zollinger argued that Medical Recovery Services should be awarded fees for expenses related to appealing the case to the Supreme Court. Jones wrote that the agency was not entitled to a fee award because it failed to prevail on appeal.
Zollinger further argued that state collection agency laws were unconstitutional. The Supreme Court rejected that charge.