Idaho billionaire announces another $500K to fight debt collection firm led by GOP activist

Idaho’s richest man, Frank VanderSloot, and his wife, Belinda, announced on Tuesday they would double their original donation of $500,000 to defend eastern Idahoans from a debt collection agency with ties to a state representative and prominent libertarian lawyer.

In April, VanderSloot created the legal defense fund, called Idaho Medical Debt, to fight on behalf of clients of the debt collection agency Medical Recovery Services, or MRS, of Idaho Falls. The firm charges debtors excessive supplemental attorneys’ fees, which it has said are necessary to discourage people from evading collection, according to a report published by East Idaho News, a publication founded by Frank VanderSloot.

“These guys use tactics to run up the bill,” VanderSloot previously 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. 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.

The legal defense fund aims to make sure doctors and hospitals are paid in full without patients having to face unreasonable fees associated with debt collectors.

“We will not be helping people avoid paying legitimate bills,” Frank VanderSloot said in the release. “But we are defending people from unscrupulous, unreasonable, or unnecessary attorney fees.”

In a phone interview with the Statesman, VanderSloot said he is drafting a bill to present to legislators next week that would protect Idaho citizens from being exploited by medical debt collectors.

Late medical bills coming from multiple sources — hospitals, doctors, pharmacies and more — can confuse patients and lead them to ignore pressing bills.

“Those are some problems we’re going to try to resolve — this late-billing thing, these bills coming in from everywhere,” VanderSloot said.

The VanderSloots also anticipate funding a consumer advocacy and education campaign throughout Idaho.

Idaho GOP Debate
Bryan Smith Ashley Smith Times-News/AP file

Rep. Bryan Zollinger, R-Idaho Falls Darin Oswald

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

In the five months since the fund was created, 483 people have contacted its attorneys, according to the release. Idaho Medical Debt has agreed to take on 140 cases, nearly all of which involve Medical Recovery Services. Of those cases, VanderSloot said 35 have reached settlements.

VanderSloot has already spent $400,000 on the fund, which has employed the Salt Lake City-based offices of the Snell & Wilmer law firm to handle most of the cases.

While most of the money has been used to defend patients, VanderSloot said the fund will also start paying for certain debtors to turn around and individually sue Medical Recovery Services.

“I am not announcing any class action lawsuits today,” VanderSloot said, but did not rule out the possibility of a future class action case.

Zollinger, in a text to the Idaho Statesman, said VanderSloot had not won any of the 35 cases for which VanderSloot said settlements had been reached. VanderSloot told the Statesman that court orders had been issued against the defendants before Snell & Wilmer got involved, and that more favorable settlements were reached after, and despite, the court orders.

VanderSloot 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.”

This story was updated Monday, Oct. 14, 2019, to add comment from Bryan Zollinger.

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Kate reports on West Ada and Canyon County for the Idaho Statesman. She previously wrote for the Louisville Courier-Journal, the Center for Investigative Reporting and the Providence Business News. She has been published in The Atlantic and BuzzFeed News. Kate graduated from Brown University with a degree in urban studies.