Mari Krueger is still battling with debt collector Medical Recovery Services over thousands in unpaid medical bills 10 years after her husband, Steve, was arrested at MRS' request. (Samantha Hanny Photography)
The knock came just four days after Steven Krueger got out of the hospital. He was recovering from back surgery in his home in Idaho Falls when sheriff's deputies arrived with a warrant to bring him to the courthouse.
Steve was in a back brace and wasn't supposed to travel, except to the doctor.
"I just kind of stood there stunned," says Mari Krueger, Steve's wife. "I was just horrified ... I was almost hysterical."
Mari wasn't stunned by Steve's arrest simply because of his condition. She was also shocked because he wasn't accused of committing a crime. What he was accused of was failing to pay his medical bills.
Thanks to rising medical costs and an increase in insurance deductibles, Steve has plenty of company. More than one in four Americans say they have had trouble paying a recent medical bill, and 82% of workers with employer-provided health insurance now have to meet an annual deductible, up from 63% 10 years ago, according to the Kaiser Family Foundation.
That increase in medical bills has led to aggressive attempts to collect on them, with hospitals around the country launching thousands of lawsuits against indebted patients. A 2019 study published in the Journal of the American Medical Association documented 20,000 lawsuits filed against patients by Virginia hospitals in 2017 alone, for example.
"We're really in what I would call the perfect storm of policy failures here," says Michael Satz, a University of Idaho College of Law professor who specializes in consumer finance law after having worked in debt collection. He pointed to a collection system riddled with "old statutes" not designed to deal with medical debt.
The end result of that perfect storm? Debtors can find themselves in jail — a harsh reality that's on the rise, according to Satz and others based on their experiences.
A handful of states like Washington and Illinois are starting to update their laws to curb the practice and better protect medical debtors, but those efforts are far from widespread, leaving people like the Kruegers waiting for a knock on the door.
"It just really was humiliating, because we had never been hauled into something like that, you know, we never experienced anything like that," Mari says.
'A De Facto Debtors Prison'
The U.S. outlawed debtors prisons in 1833, and in 1983, the U.S. Supreme Court ruled that jailing people over debt was unconstitutional. But 44 states allow the arrest of someone who fails to appear in court after a creditor wins a judgment against them or who doesn't provide that creditor with information about their finances, according to the ACLU.
In Iowa, for instance, debtors who fail to show up in court or answer creditors' questions "may be arrested and imprisoned until the debtor complies." In Delaware, failure to comply with an examination of a debtor's finances may lead to a contempt of court finding and "imprisonment not exceeding 170 days."
Hospitals, doctors and debt collectors are increasingly using laws like these to effect the arrest and sometimes jailing of those who owe them money, or to threaten them with jail to pressure them into paying their bills, those who work with debtors say.
"In recent years, I have noticed an increase in the number of people being aggressively pursued for medical debts as well as an increase in the number of those who have been arrested for failing to appear," says Doug Depew, a Kansas bankruptcy attorney.
And it's not just Kansas.
"It definitely seems to be happening more," says Andy Spears, executive director of Tennessee Citizen Action, an advocacy organization that, among other things, works to improve access to health care in the state.
At its most basic level, the practice "terrorizes" debtors, according to Satz.
"If you've got a choice of paying for some other bill or getting arrested, you're gonna pay to not go to jail,” he says.
That's what some health care providers — and the debt collectors they hire — are banking on. These hospitals, doctors and ambulance companies often sue patients who owe them money, and if the patient doesn't show up in court, which Satz says is often the case, a judgment is entered in favor of the creditor, who then tries to enforce the judgment by garnishing a patient's wages or bank account.
If that isn't possible, a creditor can ask a judge to order the debtor to appear to be interrogated about their assets, something called a "debtor's exam," according to Amy Hennen, managing attorney at Maryland Volunteer Lawyers Service and a former collections industry attorney. In some jurisdictions, debtors can be subjected to this exam every few months.
If the debtor doesn't appear for the exam, they can be ordered to a hearing to explain why. And if they don't appear at that hearing, a creditor can request the judge issue a warrant for their arrest, often called a "body attachment warrant," Hennen says.
Steve's warrant was requested by Idaho debt collection company Medical Recovery Services, which did not respond to several requests for comment. Mari says she and Steve owed around $20,000 at the time of Steve's arrest in 2009, mostly as a result of Steve's back issues and her battle with pancreatitis.
Technically, someone arrested under these warrants isn't being arrested for failing to pay their debt but for contempt of court, says Peter Holland, the former director of the Consumer Protection Clinic at the University of Maryland Law School, "but what we do have is a de facto debtors prison in many instances."
The collection industry disputes that characterization. "The 'debtors prison' concept is a fallacy, they do not exist in the U.S.," Elizabeth C. Terry, executive director, and Nathan Willner, government affairs officer of the National Creditors Bar Association, tell Law360 over email.
"This term is being misapplied to an instance where a judge decides to issue a bench warrant for a consumer ... who has shown complete and utter disregard for a court's order," they say. "It is in no way premised on any of the parties' failure to pay a debt."
The concept of holding someone in contempt of court is a long-standing principle and the power to do so rests only with judges, they add. Creditors have no ability to issue arrest warrants.
But when a medical debtor doesn't appear in court, it's often the fault of service issues, Hennen and Holland insist. In the Kruegers' case, Steve's notice was simply left at the door of their house while Mari was with him in the hospital, Mari says. They hadn't even seen it when the sheriff's deputies arrived.
"It is never that the court automatically enters a body attachment," Hennen says. "The court only enters a body attachment when the creditor requests it."
On top of that, judges often set the bond for an arrested debtor in the amount of their debt, and that bond is then turned over to the creditor, Holland points out.
"So when they say it's contempt of court, the actions belie that, because if it was contempt of court, you'd be ... appearing in court or apologizing to the court or something like that," Holland says. "It wouldn't be linked to the amount of the debt."
A Last Resort?
It's difficult to ascertain how prevalent the practice is nationwide, and the number of body attachments issued in cases over medical debt varies "state by state, jurisdiction by jurisdiction, and almost judge by judge," according to Holland.
But in Idaho, Medical Recovery Services, the collection company that sued the Kruegers, secured 345 of these arrest warrants between 2010 and 2016, according to an ACLU review of court records. The Maryland Consumer Rights Coalition found they were issued in about 14% of debt collection cases in Baltimore during a six-month period. And Nebraska judges issued 548 such warrants in 2016, according to the ACLU.
With many of those arrested being sick, these warrants can have devastating consequences.
In 2013, Lake County, Indiana, police arrested Denise Zencka in front of her three small children while she was recovering from cancer, according to a lawsuit she later filed accusing the local sheriff of "callous disregard" for her medical condition. Zencka was taken to jail, where she was housed in a men's unit because she was too sick to climb the stairs to the women's holding cell.
Zencka's suit was dismissed after the parties settled in October 2017, court records show.
Rex Iverson was arrested in 2016 by the city of Tremonton, Utah, over an unpaid city ambulance bill. Iverson, who was unemployed, had failed to answer a judgment in favor of the city, according to court documents. Shortly after being jailed, Iverson killed himself by taking strychnine.
While Iverson's case is extreme, Utah judges issued 5,831 civil bench warrants in the state in 2016, according to the ACLU.
"It's our last resort," Shawn Warnke, Tremonton's city manager, says of Iverson's arrest.
He adds that the city regrets what happened, but when "people ignore us, we do feel like there's a fiduciary responsibility for the city as a political subdivision when we collect taxes and provide services for the general good, that this was a way that we could bring Mr. Iverson back to the table."
Closing the Jailhouse Door
Some states, though, are starting to put a stop to, or at least limit, the practice. Washington enacted a law in July that, among other protections, prohibits creditors from seeking an arrest warrant for a debtor for any act or failure to act that results from a judgment for medical debt.
"Medical debt is very different than other types of debt," says Washington Speaker of the House Laurie Jinkins, D-Tacoma, who sponsored the bill.
"When you buy a hammer on credit from a hardware store, you typically know both how much the hammer costs and the interest rate you'll be charged," she says. "You don't know either with medical debt."
Washington was following in the footsteps of states like Illinois. That state in 2012 enacted its Debtors' Rights Act, banning creditors from requesting an arrest warrant for a debtor unless the debtor has unprotected assets. It also prohibits forcing debtors to make payments or appear in court for a debtor's exam each month, and prevents arrest warrants from being issued unless a debtor is served personally.
That law seems to be working. While the arrest of debtors was "prevalent" in southern Illinois several years ago, says Sandi Gordon, senior staff attorney at Land of Lincoln Legal Services, the legislation "has greatly reduced the number of cases we see."
In May, Maryland courts adopted a rule change that requires a summons for someone to appear concerning an unpaid debt to be delivered directly to the debtor rather than someone else, according to Hennen. It's a positive change, she says, but more still needs to be done to rein in the use of body attachments.
"The very fact of their use is still an abhorrent practice," she says.
In Idaho, where Mari Krueger lives, there have yet to be similar reforms. Ten years after her husband's arrest, and three years after he died, Mari is still battling with Medical Recovery Services. Though the couple declared bankruptcy in 2011 to escape the debt that got Steve arrested, Mari's own health problems have led her to rack up about $5,000 in new outstanding medical bills since, she says, much of that owed to MRS.
"I was so angry and so upset that I was having anxiety attacks," she says about her past experience with the company. "I would take the payment for MRS in personally and get a receipt because ... I was afraid that we were going to end up getting arrested again."
Have a story idea for Access to Justice? Reach us at firstname.lastname@example.org.
--Editing by Katherine Rautenberg.