Daryl Krauza Comments on Estate of William C. English

Hospital’s Mistake Causes It to Lose Claim Filed Against Estate

An unusual probate case that resulted in a hospital being unable to collect on a bill shows the importance of proper training for collections employees and in following the right procedures for alerting estates to claims, according to Dean Mead attorney Daryl J. Krauza.

The issue in the case, Estate of William C. English, decided in the Fifth Judicial Circuit in Hernando County in October 2018, was whether the hospital was a “reasonably ascertainable creditor” under the law. Such creditors are entitled to direct notice of a decedent’s death in order to give them the opportunity to file a claim on the estate. When creditors receive Notice to Creditors, Florida law gives them 90 days to file a claim. If the estate does not give notice, reasonably ascertainable creditors have two years to file a claim. In this case, the hospital did not receive a notice and argued its claims should remain viable within the extended two-year statute of limitations.

Case Had Unusual Twists

A reasonably ascertainable creditor is one that would be discovered by a personal representative who made a reasonable search, said Krauza. This might include looking through bills and contacting businesses where it was known that a decedent received services. Generally, medical providers would be regarded as reasonably ascertainable creditors, said Krauza, an experienced litigator who has represented creditors in probate actions. But this case had unusual twists, he said.

The personal representative seems to have made a good faith effort to fulfill his fiduciary duties to creditors, including filing a newspaper notice to creditors about two months after the death. However, he did not send a notice to a hospital where the decedent had been treated.

A week before the death in March 2016, the individual who would become personal representative sent an email to the hospital asking about potential bills, adding that medical bills not covered by insurance could be a “big problem.”

The hospital, through a patient liaison, reassured the personal representative in her email response that the patient’s charges were covered by insurance, and deductibles and copays were covered by a previous hold on a credit card. “No need to worry about this at all,” she wrote. Apparently, this understanding of the patient’s account extended to the billing department; no bills were sent to the estate following this email exchange.

The personal representative then submitted an affidavit to probate court in August 2016 saying that he had conducted an extensive search for creditors. Satisfied with the efforts of the personal representative, the court issued an order of discharge in September 2016.

Hospital Files Claim After Telling the Estate There Were No Unsatisfied Bills

A year later, in August 2017, the hospital filed a Petition for Further Administration, indicating it was an unsatisfied creditor. A claim followed in March 2018, and in April 2018 the personal representative asked the court to strike the claim, asserting that the hospital was not a reasonably ascertainable creditor entitled to the two-year window to file a claim. Thus, the case turned on whether the hospital should be regarded as a reasonably ascertainable creditor.

The Fifth Circuit ruled in favor of the estate, rejecting the hospital’s position that it should have been regarded a reasonably ascertainable creditor. In doing so, the court relied on a 2006 Fifth Circuit decision in Simpson v. Simpson, in which it distinguished between claimants and claims. “It is not just the claimant’s identity, but its ‘claim’ that must be reasonably ascertainable,” the court said in Simpson.

In another case, Soriano v. The Estate of Manes, decided in the Third District Court of Appeal in 2015, the court distinguished between a reasonably ascertainable creditor and a “conjectural” creditor, holding that the latter is entitled only to notice by publication.

Given that the personal representative had identified the hospital as a possible creditor and been reassured there was no claim, the court said that the hospital was only a conjectural creditor and therefore not entitled to notice.

Law Usually Supports Creditors

Krauza said there is a large body of case law that supports creditors’ rights in similar cases where a medical provider or other likely creditor was regarded as a reasonably ascertainable creditor for the purposes of making claims on an estate. But in this case, the court was unable to ignore the fact that the personal representative identified the hospital as a possible creditor, made contact and was assured there would be no claims. The court also seemed to be impressed that the personal representative had followed the law in giving notice and making a good faith effort to find creditors. In addition, the court noted that the hospital did not send any bills to the estate, giving the personal representative no reason to doubt the reassurance conveyed through the email.

While the facts of this case limit its impact, Krauza said medical providers and other creditors should not assume that courts will side with them if they make mistakes in the billing process, especially if they make an affirmative statement to an estate that there are no claims. Train your employees and make sure your billing process accurately reflects claims in order to avoid the fiasco that thwarted the collection of claims in this case, warns Krauza.