One of the more difficult things to do following the completion of successful, affirmative litigation is to collect on a judgment.

By Vincent F. Gerbino (Article originally posted at CLM Magazine)

You filed suit and were successful in either obtaining a default judgment from the medical provider who failed to appear or you are attempting to collect post-settlement using a confession of judgment. So what’s the problem? Experience shows that one of the more difficult things to do following the completion of successful, affirmative litigation is to collect on a judgment.

Efforts to collect either post-default judgment or post-settlement are complicated by the need to locate viable assets of a medical provider, which is why a thorough asset check should be conducted prior to the start of litigation. A thorough asset check requires the use of an investigator who will determine if the individuals own any real property and/or any tangible assets. Once the financials are clear, it is easier to seek collections post-settlement or post-judgment. Do the work upfront.

It also is recommended to determine whether or not the individual medical provider is still engaged in an active practice. If the professional corporation is still active, it will be easier to settle and seek collections upon conclusion of an action. If the professional corporation is no longer operating and is only in collections, it becomes more difficult. Knowing where the potential deep pockets are prior to filing litigation is essential in a successful outcome.

It also is important to determine whether or not the medical provider in question is employed by or owns other professional corporations. Again, this will provide an avenue for collections following the completion of the action.

Should you find yourself in a collection posture, you will be required to conduct further discovery in order to attempt to locate assets. This is done through the use of information subpoenas, which also can be used to bring individual providers in to testify about where viable assets are located and attach them to the judgment. Keep in mind that information subpoenas can be used more than once, and there can be multiple information depositions of the provider to verify and locate assets. The service of such subpoenas usually brings the provider to the table to work out the judgment.

Attempt to be thorough in your information subpoena process and uncover each and every possible asset, leaving no stone unturned. Should you identify a viable asset, seek to determine whose assets are potentially comingled in the funds available in the bank or investment accounts, as many courts will stop the process if any other interested party has a right to the property or assets. It is imperative to get the witness who is sitting before you at the information subpoena deposition to identify the assets, provide account information via statements, identify funds coming in and out, and identify any other relevant individual’s funds so that if you are going to attach to the asset, you can identify the necessary monies or funds that belong to the individual specifically in that account.

For instance, recent efforts to collect on a bank account were blocked by a provider because it contained funds that were comprised of the medical provider’s personal monies as well as monies the medical provider’s children were receiving from Social Security benefits. The court stopped the collection efforts, requiring an additional information subpoena and follow-up deposition.

Another important tool to use are actual discussions with the medical provider and the medical provider’s counsel. Advise the medical provider that the judgment, if filed correctly, will last over 20 years. This means that they cannot move any real property assets or purchase any homes with the judgment in their background. This can strike fear in the provider and can bring them to the table.
Marshals and sheriffs are helpful, too. Should you be able to locate the necessary bank or investment accounts, they can be liquidated and forwarded to you for payment of the judgment upon use of a sheriff or marshal. The marshal or sheriff will execute these judgments, but they will require you to identify the viable assets and charge a fee.

Recently, we also have been involved in the use of a receivership. The court in question ordered the client carrier appointed as receiver of the assets of the corporation associated with the individual provider in default. This effort has, so far, proven complex. A receiver of the assets would be required to collect funds associated with that corporation in an effort to pay off creditors and secure the remaining funds.

It also is possible, with respect to other professional corporations owned by the individual medical providers, to seek to attach the judgment to those corporations, have any funds owed to those corporations paid to the court, and then have the court provide guidance as to payment of judgment creditors of that professional corporation, inclusive of the client carrier who has the judgment.

While there are many collection tools at an investigator’s disposal, it is critical to keep in mind that you are spending your client’s money to obtain the funds secured through judgment. Collection efforts can get costly, so keep your client informed of actions and incremental costs. Keeping the cost-benefit analysis in mind, be prepared to advise clients as to what assets are viable, what assets are worth going after, the costs of going after those assets, and the reality of what actually can be collected.

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