If a patient died with medical bills, whether or not the medical office is paid depends on whether or not the estate is solvent.
A solvent estate is one that has enough assets to pay off the decedent's bills. In other words, when added up, the value of all the decedent's individual assets exceeds the amount of bills owed. If the estate is solvent, then the Personal Representative of the decedent's estate is responsible for paying all the bills from the assets owned by the estate.
For example, if all the decedent's individual assets equal $100,000 and the credit card and medical bills equal $50,000, then the decedent's estate is solvent and can be used by the Personal Representative to pay the bills in full. What's left, in the example, $50,000, will go to the decedent's beneficiaries named in his or her Last Will and Testament or Revocable Living Trust if the decedent had an estate plan, or to the decedent's heirs at law if the decedent didn't have an estate plan.
An insolvent estate is one that does not have enough assets to pay off all of the decedent's bills. If the estate is insolvent, then the Personal Representative must prioritize payment of the bills as provided by federal law and the laws of the state where the decedent died.
For example, if all of the decedent's individual assets equal $100,000 but the credit card and medical bills equal $150,000, then the deceased person's estate is insolvent in the amount of $50,000. In this situation, the Personal Representative must look to state and federal laws to determine which creditors will get paid in full, which creditors will receive only a partial payment, and which creditors will get nothing.
Using the example above, if the decedent's medical bills total $50,000 of the total debt and were incurred within 60 days of the decedent's date of death and the credit card bills equal the remaining $100,000 of the decedent's debt, then in Florida the Personal Representative will pay the medical bills in full and the credit card companies will have to proportionately share in the remaining $50,000 of the decedent's assets.
The beneficiaries or heirs at law won't be responsible for paying off the balance of the decedent's unpaid debts (unless the beneficiary or heir at law was a co-signor or co-guarantor on the debt). The companies that were not paid in full will have to write off the bad debt.
A physician may secure a guarantee of payment from a spouse or an individual who jointly owns property with the patient before the patient dies. To guarantee a patient’s obligations, a potential guarantor must execute a written guaranty. If a potential guarantor executes the guaranty at the same time the patient contracts with the health care provider (for example, upon the patient’s admission), the services provided to the patient furnish sufficient consideration for the guaranty, and no additional consideration is required.