Idaho’s richest man pledges to fight debt collection firm led by GOP activist

Idaho’s richest man, Frank VanderSloot, and his wife, Belinda, are setting up a fund to defend eastern Idahoans from a debt collection agency with ties to a state representative and prominent libertarian lawyer.

The debt collection agency, Medical Recovery Services, or MRS, of Idaho Falls, has charged debtors excessive supplemental attorneys’ fees, which it says are necessary to discourage people from evading collection, according to a report published this week by East Idaho News, which was funded originally by Frank VanderSloot.

“These guys use tactics to run up the bill,” VanderSloot told the Idaho Statesman in a phone interview.

The faces of Medical Recovery Services are prominent figures in the Idaho Republican Party’s libertarian wing: Rep. Bryan Zollinger, an Idaho Falls Republican, and Bryan Smith, a lawyer who has run for office and who argued in the Idaho Supreme Court against Medicaid expansion on behalf of the Idaho Freedom Foundation.

Smith was one of the founding managers of Medical Recovery Services. Bryan Zollinger is the company’s registered agent and lawyer, but says he is not an owner of the firm.

Attorneys for Medical Recovery Services have sometimes taken debt collection cases all the way to the Idaho Supreme Court, the East Idaho News reported.

In a statement Thursday, VanderSloot said he decided to establish the fund after one of his employees at Melaleuca, the health-products direct-marketing company he founded in 1985, was charged with $5,864 in legal fees over a medical expense worth $294.

“Idaho laws don’t protect these people,” VanderSloot said. “Our laws are written to protect the business of course, but these guys have found a loophole as to how they can find the laws or benefits.”

The $500,000 fund will pay for East Idahoans’ attorneys’ fees. VanderSloot also called for updated Idaho laws to protect citizens from unscrupulous practices.

“Belinda and I have decided that we simply cannot stand by and allow our neighbors to go through the kind of financial duress and emotional pain that is apparently being perpetrated by MRS,” VanderSloot wrote in an open letter. “Dozens or perhaps even hundreds of local families have been the targets of these aggressive tactics.”

In a statement responding to the allegations, Smith wrote: “In representing the interests of our clients, we always ensure to follow all applicable rules, regulations and statutes — as well as our professional ethical obligations. When collecting owed debts – earned by medical professionals — our practices are fully supported by the applicable laws of our highly regulated industry, and the court determines post-judgment fees on a case-by-case basis. The fees in question are for the time and resources we have invested in these cases to best support our clients.”

Zollinger told the Idaho Statesman in a phone interview that VanderSloot’s “facts are false.”

“I don’t own any share of the company,” he said. “I’m simply the attorney that they hire.”

VanderSloot, a fellow Republican, has used the spoils of Melaleuca to become a major donor to the Republican party. In 2018, he endorsed Russ Fulcher in his successful campaign for Congress in Idaho’s 1st District. He was a national finance co-chair for Mitt Romney’s 2008 and 2012 presidential campaigns. Donald Trump Jr. also visited the Melaleuca headquarters in Idaho Falls in 2016 for a closed-door meeting with VanderSloot, the East Idaho News reported at the time.

VanderSloot invited East Idaho residents struggling with MRS to call confidentially to 208-534-2208, email, or post publicly on the Facebook site “Idaho Medical Debt.”

Idaho GOP Debate
Idaho Falls lawyer Bryan Smith takes part in a GOP primary debate in Twin Falls in April 2014. Smith unsuccessfully challenged incumbent Mike Simpson for the Republican nomination to the U.S. House. Ashley Smith Times-News/AP file

State Rep. Bryan Zollinger, R-Idaho Falls, attends a session of the Idaho House of Representatives in March. Darin Oswald

Business Editor David Staats contributed.