Background
Mikrae Preston received medical care at Skagit Valley Hospital in 2017 and qualified for the hospital’s charity care program based on her income. However, the hospital never assessed her eligibility before billing her. The hospital subsequently assigned Preston’s debt to SB&C (Skagit Bonded Collectors LLC), a collection agency. SB&C filed a collection lawsuit and obtained a judgment without including any information about the charity care program. Preston discovered the program only after judgment was entered and later received approval for a 30% bill reduction, which SB&C refused to honor under its policy excluding accounts with judgments.
Preston sued SB&C alleging violations of the Washington Consumer Protection Act (CPA), the Collection Agency Act (CAA), and the federal Fair Debt Collection Practices Act (FDCPA). When the federal district court dismissed some claims, it certified a critical question to Washington’s Supreme Court: whether RCW 70.170.060(8)(a)—which requires hospitals to notify patients about charity care in billing statements and written communications—applies to collection agencies collecting hospital debt.
The Court’s Holding
The Washington Supreme Court answered yes, holding that collection agencies must provide statutory charity care notice when collecting hospital debts. The statute requires that “all hospital billing statements and other written communications concerning billing or collection of a hospital bill” include notice that patients may qualify for free care or discounts, along with financial assistance office contact information. The court interpreted “other written communications” to include collection agency notices.
The court grounded its decision in both statutory language and public policy. As an assignee of the hospital’s debt, the collection agency “steps into the shoes” of the original creditor and assumes all applicable statutory rights and liabilities. Critically, the court reasoned that if assignment eliminated the notice requirement, patients eligible for charity care would be deprived of the program’s benefits by virtue of debt transfer—a result contrary to the legislature’s intent to promote healthcare access regardless of ability to pay. The court also held that failure to provide such notice can constitute an unfair or deceptive practice under the Washington CPA, even absent an explicit CAA requirement at the time the alleged conduct occurred.
Key Takeaways
- Collection agencies must include charity care eligibility notices in all hospital debt collection communications
- Statutory obligations don’t disappear when debt is assigned; assignees inherit these duties from hospitals
- Collection agency failures to notify patients about charity care can violate the Washington Consumer Protection Act as unfair or deceptive practices
- The legislature’s charitable care policy overrides arguments that collection agencies lack financial assistance offices
Why It Matters
This decision strengthens protections for vulnerable patients by ensuring they retain access to financial assistance even after hospital debt is assigned to third-party collectors. Collection agencies can no longer strip away charity care disclosures during collection efforts. The ruling also addresses a temporal gap: although the CAA received explicit charity care notice requirements in 2019, this decision establishes that agencies had such obligations even before the statutory amendment, based on the underlying policy protecting access to healthcare.
For practitioners, the decision expands the Consumer Protection Act’s reach beyond specific statutory violations, allowing courts to impose obligations based on public policy. Healthcare providers and collection agencies must now ensure debt assignment agreements account for ongoing charity care disclosure obligations. The court’s emphasis on preventing assignment from defeating statutory benefits signals that Washington courts will interpret healthcare consumer protection laws expansively to protect low-income patients.