Medical provider billed me incorrectly and sent me to collections

Posted in r/legaladvice and someone suggested I try here as well.

Hello everyone, throwaway account here. Sorry for the long story, bear with me.

A few months ago my wife delivered our baby at a hospital in AZ. She had an OB (in-network) who was supposed to be at the delivery but she showed up late, even though my wife was in triage for an hour and in the labor room for about 5 hours prior. The baby was delivered and stitched up by the hospitalist, and the OB arrived about 10 minutes later.

When I received the bill from the OB, they had billed $2,300 for delivery and post-partum. My insurance covered $252.45. And the balance was being billed to me. I had made a prepayment of $1,485 which was partially allocated to this bill and a few other smaller bills. After those allocations, the balance outstanding, according to them, was $844.57.

I of course received a separate bill from the hospital which I was also expecting and have no issues with. My issue was with the fact that the OB did not perform the delivery, so how could they be billing me for it?

Being new to the US, I informed my insurer to try and understand if this is normal and they said to check with the provider for an itemized breakdown of the bill, that they shouldn’t be charging for a service they didn’t provide, and to try to resolve it with them before filing a dispute with the insurer.

I tried to get the itemized breakdown from the OB’s billing office but they kept saying it’s all billed as one package “delivery and post partum” and that they don’t have a breakdown between the two. When I raised the point about the OB not being there, the billing rep claimed that they would have settled between them and the hospital for the hospitalist’s services and that the OB has the right to charge me for it. They also asked for the bill I received from the hospital to show that the hospital billed me for it (even though that was irrelevant to the fact I was questioning the OB’s bill). Regardless, I was willing to cooperate to try and get it resolved.

It took a few months to discuss with my insurer and the OB’s office, and then to get the itemized bill from the hospital. We received the hospital breakdown on the same day we were also notified that the file with the OB was being sent to collections.

A week later, I receive a letter from the collections agency. The “debt” in question was $844.57, and they added 456.28 in “collection fees”. That’s 54%!

We send a letter to the collections agency requesting a breakdown of the amounts owed as well as the collection fees. I also ask how the collection fees are authorized within the agreement or how they’re permitted by law.

The agency sends me the statement from the OB’s office, and ignores my question about the fees. In reviewing the statement again, I noticed something that I missed a few months back. I notice that my insurer’s Explanation Of Benefits for the $2,300 that was billed, had only $995 as “allowed charges”, $1,305 as “disallowed (contract discount)”, and that my responsibility is $743 from the $995. So the OB’s office billed me an additional $1,305 that was disallowed by the insurer. So it turns out they’ve billed it incorrectly, and since I had made a prepayment on the account, they in fact owe me a refund. And this is aside from the fact that the OB was not present for the delivery and that they probably only should have billed for the post partum. I am going to be sending the EOB to the collections agency as proof that they billed incorrectly.

My questions:

Am I correct in understanding that we should only be paying according to the insurer’s EOB? or is the OB allowed to still bill me for the disallowed charges?

Is there any validity in my claim that the OB should not be billing for a delivery they did not do (and neither did any other OB from the same clinic)?

Delivery issue aside, they’ve billed us incorrectly and we are actually owed a refund. But they sent us to collections, and cancelled my wife’s scheduled pap smear due to the “debt”, and my wife is having to find a new OB, which is disruptive when she’s given birth 5 months ago. Are there potential grounds to sue the OB’s office for the nuisance and stress of dealing with collections, and the disruption in my wife’s post partum health check ups? Is it worth it? If so, what kind of lawyers deal with this type of stuff?

Are these amounts of collection fees legal? It’s over 50% of the debt and it had only been a few months (aside from the fact that it’s wrong). If there is a possibility that it’s illegal, where can I report them?

Thanks in advance