Could LSU sell uncollected hospital patient accounts to another collector?

Plain-English summary

LSU’s Health Care Services Division asked whether it could sell patient accounts it had billed, sent to a collection agency, and received back unpaid. The AG said it knew of no law prohibiting a properly negotiated sale of those apparently uncollectible receivables. Its conclusion required the division to exhaust reasonable collection avenues and receive payment commensurate with the accounts’ value. The opinion did not approve a particular buyer or sale price.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could LSU sell the returned unpaid patient accounts?
The AG found no prohibition for the described accounts if reasonable collection avenues had been exhausted and the sale produced value commensurate with the accounts.

Did the opinion approve a fixed discount or particular buyer?
No. It gave conditions about collection efforts and value but did not approve a specific transaction.

What collection steps had LSU already described?
The request said patients were billed and unpaid accounts were sent to a commercial collection agency, which returned them after 180 days.

Background and statutory framework

The opinion discussed the division’s billing and collection sequence and focused on whether the returned receivables could be sold. It cited no statute or case for a particular sale procedure.

Citations and references

• The provisions and authorities discussed appear in the reproduced opinion below.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/02-0104

Original opinion text

DEPARTMENT OF JUSTICE
One Amencan PJace
301 Mare Street, Suite 600
CIVIL DIVISION
P.O. Box 94005
BATON ROUGE
TEL.: (225) 342-7013
FAX: (225) 342-2090
RICHARD P. IEYOUB
70804-9005
ATTORNEY GENERAL

APR 0 8 2002
Opinion Number 02-0104

61 - LAWS - general

LSU Health Care Services Division can properly negotiate a sale of uncollected and apparently uncollectible accounts Dr. William M. Jenkins, President receivable, such as those described, as long as the Health Care Louisiana State University System Services Division has exhausted all reasonable avenues for the
3810 Lakeshore Drive
collection of these accounts and as long as the Health Care
Services Division will receive payment for the accounts
Baton Rouge, Louisiana 70808
commensurate with their value.

Dear Dr. Jenkins:

This office is in receipt of your opinion request, on behalf of the LSU Health Sciences Center’s Health Care Services Division, regarding certain uncollected accounts receivable.

We are advised that patients presenting to an LSU medical facility are screened during the admission process to determine if they are "medically indigent" or able to pay all or a portion of cost of the medical services they receive. Patients who are able to pay for their medical care are billed by the medical facility that renders the care. If payment is not made, the Health Care Services Division refers the account to a commercial collection agency for further action. After one hundred and eighty days, the collection agency returns the uncollected accounts to the Health Care Services Division.
Currently, no further action is taken to collect these accounts. Most are written off as "Bad Debt Expense" in accordance with the Division of Administration and State Treasury Policies and Procedures Manual, section 13-1-1. In this posture, the accounts are of no value to the Health Care Services Division, which considers the accounts, at that point, uncollectible.

The accounts apparently have some value, however, to one in a position to continue collection measures. Your correspondence indicates that according to the Accounting Principles Board, accounts that are more than six months old are worth fifty to sixty cents on the dollar, while those that are more than one year old are worth-about t~rty cents on the dollar.’

Specifically, the Health Care Services Division seeks to determine whether or not the sale of these uncollected accounts receivable, which have been billed and then been referred to a collection agency and returned, is permissible.

Please be advised that this office is unaware of any provision of law that would prohibit the LSU Health Care Services Division from properly negotiating a sale of uncollected

Page 2

Opinion Number 01-0104
Dr. William M. Jenkins, President
Louisiana State University System
Page -2-

and apparently uncollectible accounts receivable, such as those described above. In our opinion, as long as the Health Care Services Division has exhausted all reasonable avenues for the collection of these accounts and as long as the Health Care Services Division will receive payment for the accounts commensurate with their value, in accordance with the accounting standards referred to in your correspondence.

We trust the foregoing to be of assistance. Please do not hesitate to contact us if we can be of assistance in other areas of the law.

Yours very truly,

RICHARD P. IEYOUB
ATTORNEY GENERAL

BY
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"A~s~ta nt Attorney

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