County to forgive $630K in bad debts

More than $630,000 in past-due bills have been written off this year by Tuolumne County.

The Board of Supervisors voted Tuesday to forgive the debts under the recommendation of the local Office of Revenue Recovery, because they are more than four years old and likely won’t be collected.
 

 Most of those who owe the money — generally the result of court fines and hospital bills — are either disabled, in prison, bankrupt or dead and therefore unable to pay up, according to county Assistant Treasurer Shelley Piech, who spoke to supervisors on behalf of the Office of Revenue Recovery.

Supervisors write off debt once annually. Depending on the year, the amount collected may be less or exceed the $630,000 the supervisors discharged Tuesday.

Piech dropped a big number at Tuesday’s meeting that left some supervisors scratching their heads. She said uncollected bills from Tuolumne General Hospital, which the county closed in 2007, come to $11 million. In other words, supervisors should expect more write-offs.

“I don’t see the collectability on TGH accounts increasing,” Piech said when asked by Supervisor Dick Pland if she thought the outstanding hospital bills would be repaid.

County Auditor-Controller Debi Russell gave further insight into the figures in an interview following Tuesday’s meeting. She said the $11 million is actually a gross figure, meaning that though it’s what was billed, it’s not what the hospital would have collected.

“You were never going to collect that to begin with,” she said.

Russell explained the convoluted process of medical billing. The way it works, she said, is a hospital will bill a client, but generally the figure is negotiated down by the patient’s insurance company or an entitlement program like Medicare.

"The only people who pay the full amount are people who pay cash,” Russell said, adding that very few people do that.   

At best, she said, the hospital would have gotten 30 cents on the dollar. That figure, if everyone paid up now, would likely even be lower, she added.

Russell noted that the Tuolumne General Hospital closure fund was zeroed out earlier this year, meaning the county’s liabilities related to past operational expenses of the hospital are no more.

Because the hospital was running in the red to the tune of millions of dollars over several years — a situation exacerbated as medical bills went unpaid — the county had been borrowing from the worker’s compensation fund to cover hospital overruns.

Russell said the process was similar to the way the federal government has borrowed from Social Security to pay for various bills over the years. But there’s a difference, she stressed. Unlike the federal government, the county was obligated to pay back the borrowed money.

The zeroing out of the hospital closure fund was the end result of that repayment process. The loan from the workers compensation fund was largely paid for by general fund dollars, Russell noted, though late collections efforts contributed some funding.

Ideally, the money that was being used for debt service can now be put to other uses.

“There will be less transfer from the general fund and therefore those monies can be used for other things,” she said. 

 In the past, the transfer from the general fund to pay off the debt could add up to $3 million in a given year, Russell noted.    

But with the state possibly cutting aid to local governments to deal with budget issues and a decrease in tax revenue, Russell said the extra money might not be a boon to the county.