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Small Claims: Big Injustice

It's supposed to be a user-friendly township court to help settle small claims. But 13 Investigates found a system some say is out of order and failing to deliver justice.

It's supposed to be a user-friendly township court to help settle small claims. But 13 Investigates found a system some say is out of order and failing to deliver justice.

Deputies and constables deliver orders to appear in township courts in Marion County, courts not like any other in the state, or the entire country.

"I received a court summons," said Ashley Wilson, describing the day a Madison County deputy showed up at her door.

But it's what happened after that that has her talking to 13 Investigates.

"I just felt more victimized than I ever have in my life," she said, recounting her Marion County Small Claims Court experience.

"I didn't know anything was going on until the garnishment note arrived," said Gina Hoggs, who learned a small claims court was trying to take money directly from her paycheck in response to a collection lawsuit.

70,000 Lawsuits Filed Annually in Township Small Claims Courts

Ashley and Gina are among more than 70,000 who face lawsuits in township small claims courts each year. They both opted for their day in court, a chance to go before a judge to face off with medical debt collectors who were seeking money for old, forgotten doctor bills.

No one is arguing they shouldn't pay what they owe. It's how collectors are going after the money that is prompting concerns at the Indiana Supreme Court.

Those who have gone through Marion County's township system tell 13 Investigates it amounts to a money grab by collection attorneys. Worse yet, they say, Decatur Township Small Claims Court is a willing participant.

"I was like, 'What just happened?' I couldn't believe it," said Ashley, referring back to how her case was handled.

Wilson's medical debt dates back to 2006. An x-ray shows the tumor on her spine before surgery. It was a difficult period for her family.

"All of our bills were way behind, our house was in foreclosure we couldn't afford groceries. It was, I mean, a financial nightmare," she recalled.

Ashley completed stacks of hospital paperwork to show her inability to pay. She thought everything, except one payment plan, was written off as charity.

Then, three years later, she got the summons.

Ashley was being sued by Med Shield.

How The System Works

The medical collection agency buys up unpaid hospital bills at a reduced rate, tracks down patients and then orders them to township small claims courts. The company turns a profit by demanding full payment.

Med Shield said Ashley owed $200, but when she called to settle up, she tells 13 Investigates, "It was up to $800 and something dollars."

Basically, four times the amount she owed.

She drove miles from Anderson down to Decatur Township, showing up as ordered. But instead of getting a court hearing, she says she got the attorney for Med Shield, who took her aside and tried to get her to pay nearly $800 without ever seeing a judge.

She refused.

A second court date came weeks later, this time before a judge.

"It was like going to the chopping block. Every single case lost," she recalled.

She was hopeful the judge would look at her paperwork and hear out her case. But within minutes, she said her case was over.

She lost, too, and was ordered to pay Med Shield $200, plus $51 interest, $81 in court costs and $450 in attorney fees for a total of nearly $800!

Outrage Over Excessive Charges

"This shouldn't happen," said Gina Hoggs, who was ordered to Decatur Township Court, too.

She owed $72 on a six-year-old hospital bill and a $200 co-pay. She moved and says she never got the bills.

Gina is now on the hook for nearly three times as much.

"$856. It's a lot of money," she told 13 Investigates.

In court, she contested the $450 attorney fee, calling it "excessive," but was ordered to pay anyway.

"This happens," 13 Investigates said, informing Gina of our findings. "Your case is not unique."

"Something's wrong with that. Wow!" she said, stunned to hear about the practice.

Allegations of Forum Shopping

Last year the Wall Street Journal found the courts inviting trouble, through what's called "forum shopping."

Simply put, it means collection attorneys filing most if not all of their cases in a single court with little oversight and all but guaranteed favor.

It's a concern in Marion County, where there are no taped or transcribed records of what happens in small claims courts.

And money is a motivation on both sides of the bench, not just for attorneys. Township courts are financed by filing fees. More cases equals more money.

Concerned, Indiana's Former Chief Justice Randall Shephard ordered a review. State Appeals Court Judge John Baker led the task force that discovered astounding practices.

"There wasn't even a judge in the building and the people were led to believe that they had to do what they were told by the lawyer for the collection company," said Baker in disbelief.

And equally disturbing, "the appearance that the courts were there for the creditors and not for a sense of fairness," Baker said, summing up the task force findings.

13 Investigates took a closer look, starting in Decatur Township

In Decatur Township, we discovered the attorney who filed judgments against Ashley and Gina is a regular.

Derek Johnson's name and attorney number are tied to massive bulk filings for two medical collection agencies there, even though the hospitals he represents are no where near Decatur Township.

Records show Johnson also collects a $450 fee each time he wins a judgment, no matter how small the amount.

"I think what concerns me is when you have a $250 claim and the attorney's fees are almost twice that," said Baker, who could not speak about any case specifically.

"Derek, I want to ask you about your filing practices here. Why do you file in a township where there are no hospitals and no easy access?" 13 Investigates asked as Johnson prepared to leave court.

More than once, we asked Derek Johnson to sit down and talk about his work in Decatur Township. He said he didn't have time. So we caught up with him after court.

"You're actually charging them more than what they owe?" 13 Investigates questioned as Johnson walked quickly away to unload a box of documents. "So Derek, would you say that you're forum shopping?"

"I'm not interested in speaking with you," Johnson retorted.

Derek Johnson isn't talking, but records speak volumes.

13 Investigates found between 2011 and 2012, Johnson filed nearly 7,000 medical collection cases in Decatur Township. Those cases generated more than a half-million dollars in court filing fees. More than a quarter-million of that stayed in Decatur Township.

We asked Judge Myron Hockman about the filings. He declined an on-camera interview, but insists no laws are being broken. Hockman says people come to his court because of good service and says there's no evidence of forum shopping.

But even Hockman has a difficult time explaining away the millions of dollars up for grabs by Derek Johnson. Hockman says the collections attorney wins nearly all of his judgments. Even if Johnson won just 75 percent, or three out of every four cases filed during the two years questioned, he would net $2.3 million from fees alone.

Fees that in cases we found exceeded the amounts patients owed.

"That's disgusting. That doesn't look right," said Gina.

"People that can't afford their medical bills, can't afford to pay attorneys for collection agencies five times the amount of their original bill," added Ashley.

So why are Marion County Township Courts operating under different rules? Top legal minds say it boils down to a political mistake.

Small Claims Task Force Report

Small Claims Court – Indiana Law

Coming up Friday on Eyewitness News the Supreme Court Task Force calls for an overhaul for justice.