Jessica M. Karmasek Jul. 31, 2013, 3:00pm

CHARLESTON, W.Va. (Legal Newsline) -- West Virginia Attorney General Patrick Morrisey said Tuesday a hospital and a collection agency will each pay the state more than $7,000 as part of an agreement to end unlawful debt collection practices.

Morrisey's Consumer Protection Division began investigating Hampshire Memorial Hospital and Mosaic Finance Solutions after learning that the hospital required consumers to sign a consent form subjecting them to certain collection practices if their accounts became delinquent.

The hospital allegedly required patients to sign the form as a condition of receiving medical care.

"Catastrophic medical bills sometime push consumers already facing difficult circumstances over a financial cliff," the attorney general said in a statement. "My office will remain vigilant to ensure that only lawful means are used to collect legitimate debts and that all companies collecting debts in West Virginia are properly licensed to do so."

The investigation discovered 11,541 West Virginia consumers signed the form, which required them to agree to several conditions, including:

- Waiving their homestead exemption;

- Allowing their accounts to be subject to an interest charge of 7 percent on the unpaid balance;

- Being liable for Hampshire's attorney fees of 25 percent of the balance due plus collection expenses; and

- Receiving autodialed and prerecorded debt collections messages on their cell phones.

According to Morrisey's office, Hampshire employed Mosaic, a North Carolina company that was not licensed to collect debt in West Virginia at the time, to pressure consumers with delinquent accounts to sign credit agreements that converted the Hampshire account into a debt that accrued interest at the rate of 7 percent per month.

Records disclosed by Mosaic indicated that 277 state consumers had signed the credit agreements.

"Mosaic did become licensed to collect debts in West Virginia after our office became involved," Morrisey said. "But the company has signed the assurance (of discontinuance) as a promise to refrain from certain other unlawful debt collection tactics it engaged in as well."

Hampshire and Mosaic also each agreed to pay $7,500 to the state.

The money may be used by the attorney general for a variety of consumer protection purposes or be held for appropriation by the Legislature, Morrisey noted.

"This assurance of discontinuance is a positive step for the state and should serve as a reminder to debt collection agencies that they need to follow the laws if they want to do business in West Virginia," he said.

In an assurance of discontinuance, a business owner assures the state in writing that neither he nor his company will engage in conduct that has been deemed as questionable in the future.

Businesses enter into the assurances voluntarily, and they are not an admission that the business violated any laws.

From Legal Newsline: Reach Jessica Karmasek by email at

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