Alabama Attorney General Opinion 1979-0031

# THE ATTORNEY GENERAL STATE OF ALABAMA · MONTGOMERY, ALABAMA 36 CHARLES A. GRADDICK ATTORNEY GENERAL January 23, 1979 File # 27 Mr. J. F. Bynum Administrator Hale County Hospital First and Green Streets Greensboro, AL 36744 79-00031 County hospital may not charge interest on unpaid bills unless the hospital complies with pro- visions of the Mini Code. Dear Mr. Bynum: I am writing in response to your letter requesting an opinion from this office. 'For clarity, your request in its entirety is set out below: Enclosed is a copy of an indebtedness filed in the Probate Office of Hale County, Alabama which I think is self-explanatory. The Attorney for the estate said that he had never heard of interest charges on a hospital bill. I asked him if it was illegal and he said, "I don't guess so." To my definite knowledge, I know of estates not being settled for a few years, wills not being probated and I think it good business practice to promptly file indebtedness against an estate within thirty days after a person expires. By following such a practice a hospital is never left out of an estate settlement for not having presented a record of the claim against said estate. We are a county hospital, and request that you advise if this claim is illegal in any respect as filed and recorded. Mr. J. F. Bynum January 23, 1979 Page 2 Insofar as I can determine, there would not appear to be any problem with the hospital filing a claim in probate court against the estate of a deceased patient. However, charging interest on the indebtedness may well bring the hospital under the provisions of Alabama's Consumer Finance Act, commonly known as the Mini Code, codified as Code of Alabama 1975, Section 5-19-1 through Section 5-19-31. Section 5-19-1 (1) defines finance charge as follows: FINANCE CHARGE. Such term shall include all charges payable directly or indirectly by the debtor and imposed directly or indirectly by the creditor as an incident to the extension of credit, including interest . . . Section 5-19-1 (3) defines creditor as follows: CREDITOR. Such term refers only to creditors who regularly extend or arrange for the extension of credit for which the payment of a finance charge is required whether in connection with loans, sales of property or services or otherwise. The provisions of this chapter apply to any such creditor irrespective of his or its status as a natural person or any type of organization. [Emphasis Supplied] If the hospital proposes to routinely charge interest on the unpaid indebtedness of the estate of a deceased patient, then the hospital would apparently be a creditor under the definition quoted above. This would mean that the hospital would have to comply with all the provisions of the Mini Code, including filing with the Superintendent of Banks and the payment of an annual fee to the State Banking Department. Furthermore, since the hospital would not be able to determine in advance which patients might expire before the indebtedness is paid, the hospital would have to enter a creditor-consumer contract with all patients admitted to the hospital. This contract would have to meet the requirements of the Mini Code, specifically Section 5-19-6. In view of the above considerations, it is the recommendation of this office that the hospital not attempt to charge interest on unpaid indebtedness. Should you decide to do so, you should work very closely with the attorney for the Hospital Board to insure full compliance with all provisions of the Mini Code. Section 5-19-30 makes violation Mr. J. F. Bynum January 23, 1979 Page 3 of the provisions of the Mini Code a misdemeanor punishable by a fine of $500, or one year imprisonment, or both. If you have further questions on this matter please do not hesitate to contact this office. Sincerely, CHARLES A. GRADDICK ATTORNEY GENERAL By- L. G. KENDRICK ASSISTANT ATTORNEY GENERAL LGK:ln