Decision Memo to the Director of Revenue Cycle: Why the Collection Lawsuit Proposal Was Not Approved, and What Happens Next
Student Name
American College of Education
HLTH5603: Legal and Ethical Decision Making in Healthcare Administration
Module 5 Assignment
Instructor Name
February 7, 2028
The Decision
To: Director of Revenue Cycle. From: Chief Executive Officer. Date: February 7, 2028. Re: Proposal to file suit on 212 aged patient accounts. The individuals and hospital in this memo are composites written for this assignment.
After review by the executive team and the board's finance and community benefit committees, the proposal to file lawsuits and pursue wage garnishment on 212 accounts with balances over $1,000 has not been approved as submitted. In its place, every one of the 212 accounts will first be checked for likely charity care eligibility, balances will be forgiven where patients qualify, offer the remaining patients interest-free payment plans and file suit only in narrow circumstances described below. The hospital will not use wage garnishment. I want you to hear this decision from me, with the reasons, rather than read it in the minutes.
What Your Proposal Got Right
Your proposal was carefully prepared and correct on the facts that matter most to your department. Unpaid balances are real losses in a year when the hospital has operated at a deficit, and someone has to be responsible for recovering what can fairly be recovered. Your team documented that every account had received the notices and financial assistance information that federal rules require before any collection action (Internal Revenue Service [IRS], 2024), and the legal review confirmed that the proposal was lawful. Nothing in this decision questions your team's diligence or its compliance.
You also raised a point that the executive team agreed with: if the hospital does not collect what patients are able to pay, the cost falls on other patients and on the staff whose positions depend on a sustainable budget. That concern shaped the alternative. The decision is not a choice to stop collecting; it is a choice about whom the hospital pursues and how.
Why the Decision Went the Other Way
The review of the 212 accounts showed that for 74 patients, the income data we already hold points to eligibility for our charity program, and that many of the notices had been returned or unanswered. Nationally, unpaid medical bills fall hardest on people in lower-income areas (Kluender et al., 2021), and our accounts follow that pattern, with most of these patients, 131 in all, living in the lower-income half of the county's ZIP codes. Suing patients who were probably eligible for our charity care would comply with the rules and still contradict the mission the board has asked us to carry out and the community benefit our tax exemption assumes.
The finance committee also weighed the amounts. The expected net recovery was about $560,000, less than 0.2 percent of our operating budget. The harm to patients, to the hospital's standing in the community and to staff who have told us they would find the practice hard to defend was judged to outweigh that sum. People accept decisions more readily when they understand the reasons behind them and are treated with respect in how the decision is communicated, a pattern consistently found in research on fairness in organizations (Colquitt et al., 2001). I have tried to give you the reasons in full, because you will need to explain this decision to your own team.
What This Means for Your Department
Your team will lead the new process. First, a likely-eligibility check across every account, drawing on public benefits records and third-party income estimates, to be completed within 60 days. Second, interest-free payment plans for patients who do not qualify for assistance, with monthly payments capped at 5 percent of documented monthly income. Third, a lawsuit only where a patient's documented household income is more than four times the poverty guideline and the patient has turned down a payment plan after two contacts, with each filing approved by the chief financial officer. Your department's recovery target for these accounts will be revised to reflect the new approach, and the revision will not count against your team's performance evaluation this year.
Support and Next Steps
The hospital will fund the screening service for the first year, and the patient financial services team will add one financial counselor position to support payment plan enrollment. I would like to meet with you and your managers within two weeks to hear what else you need and to agree on how we report results to the board. If after a year the payment plans recover far less than expected, I want you to bring that evidence forward; the decision is firm, but it is not closed to what we learn. Thank you for the care your team put into the original proposal. It made this decision better informed than it would otherwise have been.
References
Colquitt, J. A., Conlon, D. E., Wesson, M. J., Porter, C. O. L. H., & Ng, K. Y. (2001). Justice at the millennium: A meta-analytic review of 25 years of organizational justice research. Journal of Applied Psychology, 86(3), 425-445. https://doi.org/10.1037/0021-9010.86.3.425
Internal Revenue Service. (2024). Requirements for 501(c)(3) hospitals under the Affordable Care Act: Section 501(r). U.S. Department of the Treasury.
Kluender, R., Mahoney, N., Wong, F., & Yin, W. (2021). Medical debt in the US, 2009-2020. JAMA, 326(3), 250-256. https://doi.org/10.1001/jama.2021.8694
How this HLTH 5603 Module 5 example is structured
HLTH 5603 Module 5 typically writes the decision toward the party it goes against; your classroom's instructions decide the audience and format. This example is written as the memo the chief executive would send. It opens with the decision, then acknowledges the merit of the director's case, explains the reasoning in terms the director will recognize as fair, states what the decision means for the department's work and targets, and ends with what support the department will receive. Writing to the losing party, rather than to a neutral audience, is what the module tests: the decision has to hold up when read by the person it disappoints.
HLTH5603 Module 5 questions, answered
What does HLTH5603 Module 5 usually ask for?
HLTH5603 Module 5 typically asks students to write up a legal or ethical decision addressed to the person or group it goes against, such as a family, a physician, a department or a patient. The goal is a document that explains the reasoning clearly and respectfully. Your classroom's instructions decide the audience, the format and the length.
How should a decision be written for the person who loses?
State the decision first, acknowledge specifically what was right in their position, explain the reasoning in terms they will recognize, describe what the decision means for them in practice and say what support or recourse they have. A respectful explanation does not soften the decision, but it makes it easier to accept and to carry out.
Should the decision memo include citations?
Include them where they support a specific factual claim or where the reasoning rests on a rule or a body of evidence, but keep them few. The memo is written to a colleague, not a journal, so citations should support the reasoning without overwhelming it. Your instructor may require APA formatting even for a memo.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official American College of Education document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.