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Court halts debt collection during crisis

On April 15, Judge Steven L. Shaffer issued an emergency order stopping seizure of bank account and stimulus funds to pay old debts of a Preston County family during the COVID-19 crisis. Judge Shaffer explained that “[s]eizure of personal property during the court closure and stay at home order and related state of emergency . . . violates due process of law.” The Judge also stated, “[s]eizure of the Federal CARES Act payments violates Plaintiffs’ right to life, liberty, and property,” under the due process clause of the West Virginia Constitution.

The Federal CARES Act payments were authorized by the federal government to ensure that Americans in crisis have the essential funds to pay for necessities, such as food, shelter and medicine. The funds began to be deposited into individuals’ bank accounts on April 11. Some recipients, have already reported that this money that they desperately need was snatched up to pay debts, providing taxpayer dollars to banks and debt collectors, in contravention of the funds’ congressional purpose.

Preston County residents Cheri Long and Seth Long filed the lawsuit to prevent seizure of their entire bank account balance and their federal stimulus checks by WVU Hospitals to pay an old medical debt. Seth, who at the time worked as a coal miner, thought that his hospitalization would be paid for through his health insurance. When it was not, WVU Hospitals obtained a judgment against him for the bill.

On March 23, Cheri — who works as a nurse at an assisted living facility — learned her bank account was frozen by WVU Hospitals when her debit card was declined while she tried to purchase groceries for her family. With the freeze on her account and inability to access the courts to seek to lift the freeze, the Longs fell behind on their house payments and utilities. Cheri had to bring home food from her workplace and ask for gas money from her co-workers.

“I can’t begin to explain the hurt and embarrassment I felt by the way I was treated when I called, begging in desperation to help me or lead me in the right direction so I could provide for my children while working as a nurse on the front lines,” she said. “I couldn’t even afford to purchase fabric to make myself a mask due to the shortage of personal protective equipment.”

On Wednesday, the day Shaffer’s order was issued, the Longs were able to access their funds, including the CARES Act stimulus payments that were deposited that day.

“We are so glad that the Longs finally have access to the money that is rightfully theirs,” said attorney Jennifer Wagner of Mountain State Justice, who represents the Longs. “We are extremely alarmed, however, that WVU Hospitals continues to collect on debts, including through asset seizure, during this crisis,” she said. “WVU Hospitals does not pay taxes but is trying to line its pockets with tax-payer funds intended to get West Virginians through this crisis. We call on them to cease this illegal and unconstitutional conduct immediately.”

Earlier this week, the West Virginia Bankers’ Association, Community Bankers of West Virginia, and others sent a letter to Gov. Jim Justice and Chief Justice Tim Armstead of the Supreme Court of Appeals of West Virginia requesting swift action to protect individual stimulus payments, also known as federal pandemic survival funds, from seizure to pay old debts. Advocates also contacted the W.Va. Division of Financial Institutions to request that guidance be issued to state licensed banks that the pandemic survival funds should not be used to pay overdraft fees or other debts owed to the banks.

Prior to the COVID-19 crisis, more than 40% of West Virginians had debts in collections. The majority of these debts are for hospital and medical bills incurred for necessary care. The letter requests the governor and the West Virginia Supreme Court “immediately issue appropriate emergency orders to prohibit debt collectors from seizing the federal pandemic survival payments,” stating “[t]hese measures are necessary for these unprecedented times in order to safeguard the integrity of taxpayer funds designated for individual West Virginians, not debt collectors.”

Other states, including Texas, Ohio, Illinois and Massachusetts, have issued orders or guidance to protect the federal pandemic survival payments and other necessary funds from seizure during the COVID-19 crisis.