The final version of the state’s omnibus tax reforms passed last month omitted an early provision that would have reenacted the Set-Off Debt Collection Act (SODCA).
The original law was enacted in 1979 and repealed in 2013. It allowed state agencies to collect unpaid debt — including hospital patient debt — by seizing tax returns and lottery winnings.
Before the law was repealed, the East Carolina University Physicians group and UNC Health Care collected about $12.6 million from tax returns in 2011-2012, according to a legislative report.
But Adam Linker, a health care policy analyst at the N.C. Justice Center, said the old policy was unfair to patients, who did not have to be notified before their tax returns were collected.
“I’m sympathetic to the health care providers to wanting to make up lost revenue and not wanting to get these kind of multimillion dollar cuts, but I think the money should be made up in other ways other than allowing them to engage in these aggressive collection practices,” he said.
When the provision was enacted in 1979, it had no statute of limitations on when the patient debt could be collected — the money taken from tax returns could be used to pay even decades’ old medical bills.
Needing more funds
But Dr. Nick Benson, vice dean of the Brody School of Medical Administration at ECU, said he thinks it is appropriate to use patients’ income tax refund to cover their medical debts.