Medical Debt Lawsuit in NC

Updated 9/23/2024

One thing few people realize is that medical debt is generally considered joint debt in North Carolina under the “Doctrine on Necessaries.” That means you are generally responsible for the medical bills of your spouse. This can pose real problems and allow a medical provider to obtain a lien against a marital residence owned jointly that otherwise would be exempt under Tenancy by the Entireties in NC. (But See NCGS 131E-91 below) Furthermore this can also extend to medical debt incurred by minors.  
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Generally speaking there is a three (3) year statute of limitation for medical debt in North Carolina. That being said, few providers wait that long to sue. In fact many medical providers in NC such as Novant have a general policy against filing a lawsuit for unpaid medical bills. 

Just because a medical provider elects not to sue does not mean you won’t have debt collectors harass you for payments. Carolinas Medical Center or “CMC” does on occasion sue patients and sometimes their spouse for medical treatment. I have even seen a widow sued for $80,000.00 after her husband died in the hospital. Talk about asking for a counter-suit for medical malpractice. Also be aware that many hospitals and medical providers like Atrium Health offer financial hardship assistance.

NC statute of limitations on medical bills

As stated the above the typical stature of limitations on most debt in NC is 3 years unless the contact is signed under seal. If signed under seal the statute, which is rare, the time period can extend for 10 years

Medical Debt on Credit Reports

The three major Credit Reporting Agencies (TransUnion, Experian, and Equifax) just announced major changes that go into effect July, 2022 that will remove 70% of medical debt on credit reports. The major changes are as follows:

• Medical debt that has been paid will be removed from credit reports
• Increase time when medical debt first appears on a credit report from 6 months to 1 year
• Starting sometime in 2023 medical debt under $500 will no longer appear on credit reports

How to protect yourself from medical bills

First you should never sign anything when taking a friend or relative to the hospital in which you guarantee payment. Second make sure you do not cancel health insurance on a spouse until after divorce. Some attorneys even recommending filing a separation agreement with the Register of Deeds to put hospitals on notice that you are not responsible for his/her medical bills. Third, realize that if you are sued you may be able to argue the medical treatment was not necessary depending on the nature of the care.  ​

Mecklenburg County can garnish wages for medical debt

The Charlotte Observer announced effective October, 2019 the Mecklenburg tax collector is about to step up efforts to collect unpaid medical bills. This might even include wage garnishment or bank account seizure. Bills more than 120 days old will be turned over to the tax collector for advanced collected efforts. This is a new policy due to mounting losses incurred by the county. Currently Atrium Heath and Novant Health operate Medic, which is the Mecklenburg Emergency Medical Services Agency. Per North Carolina statute the county has the same remedies to collect medical debt as tax debt.

NC medical bill collection laws

​The following statute is new as of October, 2013 and is poorly written and not yet fully interpreted by the Courts. That being said, it should certainly be raised as a possible defense where applicable.

Liens from medical debt on houses in NC

A  September, 2024 NBC news report about how Atrium Health was placing liens on patients houses for unpaid medical debt has actually led to policy change from at least one local hospital due to the public distaste for the practice. Despite this policy change from Atrium it is important to understand that this is still an option for medical providers. Be mindful of medical debt if you own a home as many hospitals and medical providers still seek to sue for money owed leading to a judgment lien on a primary residence.

Doctrine of Necessaries and medical debt

The ​Doctrine of Necessaries in North Carolina is for the creditor to affirmatively establish, not to be assumed, particularly as it has to meet certain criteria. In order to establish the debt is joint the medical services provider must show that:

1. The medical services were provided to the receiving spouse, 
2. The medical services were necessary for the health and well being of the receiving spouse, 
3. The person against whom the action is  brought was married to the receiving spouse at the time the medical services were provided, and 
4. Payment for the necessaries has not been made.

Wesley Long Nursing Center, Inc. v. Harper,  653 S.E.2d 256, 2007 WL 4233643 (N.C.App.).  Most medical service providers are unable or uninterested in proving all of the above and often would be prohibited from doing so because of privacy restrictions under HIPAA.  For this reason many of the larger hospital systems in North Carolina such as Charlotte-Mecklenburg Hospital, Duke Medical, and Wake Forest Baptist are generally no longer pursuing medical bills as joint debts.  

The bottom line is medical debt should always be disputed as joint debt, when the only basis is doctrine of the necessaries. Hiring a lawyer to properly file an Answer to any lawsuit before the deadline (usually 30 days after service) is critical to preserve any and all defenses.

N.C.G.S. § 131E-91. Fair billing and collections practices for hospitals and ambulatory surgical facilities.

(a)  All hospitals and ambulatory surgical facilities licensed pursuant to this Chapter shall, upon request of the patient, present an itemized list of charges to all discharged patients detailing in language comprehensible to an ordinary layperson the specific nature of the charges or expenses incurred by the patient. Patient bills that are not itemized shall include notification to the patient of the right to request, free of charge, an itemized bill. A patient may request an itemized list of charges at any time within three years after the date of discharge or so long as the hospital or ambulatory surgical facility, a collections agency, or another assignee of the hospital or ambulatory surgical facility asserts the patient has an obligation to pay the bill. Each hospital and ambulatory surgical facility shall establish a method for patients to inquire about or dispute a bill.

(b)  If a patient has overpaid the amount due to the hospital or ambulatory surgical facility, whether as the result of insurance coverage, patient error, health care facility billing error, or other cause, and the overpayment is not in dispute or on appeal, the hospital or ambulatory surgical facility shall provide the patient with a refund within 45 days of receiving notice of the overpayment.

(c)  A hospital or ambulatory surgical facility shall not bill insured patients for charges that would have been covered by their insurance had the hospital or ambulatory surgical facility submitted the claim or other information required to process the claim within the allotted time requirements of the insurer.

(d)  Hospitals and ambulatory surgical facilities shall abide by the following reasonable collections practices:

(1)  A hospital or ambulatory surgical facility shall not refer a patient's unpaid bill to a collections agency, entity, or other assignee during the pendency of a patient's application for charity care or financial assistance under the hospital's or ambulatory surgical facility's charity care or financial assistance policies.

(2)  A hospital or ambulatory surgical facility shall provide a patient with a written notice that the patient's bill will be subject to collections activity at least 30 days prior to the referral being made.

(3)  A hospital or ambulatory surgical facility that contracts with a collections agency, entity, or other assignee shall require the collections agency, entity, or other assignee to inform the patient of the hospital's or ambulatory surgical facility's charity care and financial assistance policies when engaging in collections activity.

(4)  A hospital or ambulatory surgical facility shall require a collections agency, entity, or other assignee to obtain the written consent of the hospital or ambulatory surgical facility prior to the collections agency, entity, or other assignee filing a lawsuit to collect the debt.

(5)  For debts arising from the provision of care by a hospital or ambulatory surgical center, the doctrine of necessaries as it existed at common law shall apply equally to both spouses, except where they are permanently living separate and apart, but shall in no event create any liability between the spouses as to each other. No lien arising out of a judgment for a debt owed a hospital or ambulatory surgical facility under this section shall attach to the judgment debtors' principal residence, or, if the land upon which the principal residence is located is greater than five acres, then no lien shall attach to the judgment debtors' principal residence and the surrounding five acres, held by them as tenants by the entireties or that was held by them as tenants by the entireties prior to the death of either spouse where the tenancy terminated as a result of the death of either spouse.

(6)  For debts arising from the provision of care by a hospital or ambulatory surgical center to a minor, there shall be no execution on or otherwise forced sale of the principal residence of the custodial parent or parents for a judgment obtained for the outstanding debt until such time as the minor is either no longer residing with the custodial parent or parents or until the minor reaches the age of majority, whichever occurs first.

(e)  The Commission shall adopt rules to ensure that this section is properly implemented. The Department shall not issue or renew a license under this Article unless the applicant has demonstrated that the requirements of this subsection are being met.  (1991, c. 310, s. 1; 2013-382, s. 13.1; 2013-393, s. 2.)

Case Law on N.C.G.S. § 131E-91

See Sykes vs. Vixamar (830 S.E.2d 669, N.C. App. 2019) which holds:

"The issue in this case is whether Section 131E-91(c) prevents a hospital from choosing to rely solely on a medical lien on a future liability judgment, rather than also billing the patient’s health insurer.

As explained below, we hold that hospitals may make this choice without abandoning their medical liens. First, the text of the applicable statutes permits it. Second, a contrary interpretation would frustrate the purpose of Section 131E-91(c) by forcing patients to pay unnecessary deductibles and other charges upfront—even though the hospital would have been content to wait and recover those costs from a court judgment or settlement later.

Accordingly, the trial court did not err by permitting Sykes to introduce evidence of the hospital’s lien and underlying medical charges, and by rejecting counter-evidence seeking to show that Section 131E-91(c) barred the hospital from billing Sykes directly for those charges."