Training Primer - Bad Checks

[Danni R.]

This is AMAZING!!!! I thought I was the only one this happened to. One time my paycheck from the doctor bounced. A couple co-worker's paycheck also didn't make it through the bank that day. Some of the more boisterous "voices" complained in the locker room;"This is illegal". The boss issued new checks and they went through. Somehow they had made a snafoo, perhaps the admin wife in the back office. The doctor was upset and embarrassed. It never happened again.

Some banks won't even cash government checks, or USA (government) savings bonds. They will post them to the account and wait for it to clear.

[Steve Verno]

A company I worked for many many years ago gave us our paychecks on the 5th and 20th of the month.  I took my check to their bank, ABC Bank and Trust, and cashed it.  I didnt have my own bank account because I dont trust banks.  I took my cash and paid my bills using cash for local business such as cable, electricity and for out of state, I used money orders from the Post Office or Walmart.  Now I buy mastercard debit cards and use that. 

One month, the bank, ABC Bank and Trust refused to cash my paycheck saying there was insufficient funds in the account.  I went back to work when my lunch break ended and i confronted by boss, who was the owner of the company.  He apologized and came back with cash.  Our checks were good after that incident.  One of my co-workers deposited her check and it bounced.  The boss made good on the check and bank fees.  We knew he had the money because we sa the checks come in for the work we did. 

My mother worked for a theme restaurant and cut her hand really bad.   The owners never reported her injury.  They asked all her doctors to send them the medical bills, which they never paid.  One month her paycheck bounced.  When she went to work, the doors were locked and inside was totally empty.  They left town literally overnight.  They had almost 100 employees who were never paid.  The medical bills for any employee also went unpaid.  Several employees found a local lawyer who sued the employers.  They received a judgement for their paychecks.  They placed leins on the employers fancy gated community home and other property.  The news showed up with the Sheriff when the homes, cars and porperty were seized as they tried to skip town in their u-hauls.  My mother needed additional surgery but couldnt get the employers to pay. They said she was never injured on the job.  The State couldnt help her because there was never a record of her being injured.  She did get her money for her paycheck after the property was sold at auction. 

The news had a story the other night about a local employer who never paid his employees.  It doesnt matter if it was an employer, insurance company or individual bounced a check.  The laws are there to protect you.  Only one man who wrote us a a check never made good on it.  I sent him to my State Attorney who went after him.  He is a tale in his own right.  Hint, Hint...  He gave us bad insurance information.  We verified before sending the claim.  The insurance company said he had coverage.  They denied the claim, they denied the appeals.  The patient became abusive accusing us of malfeasance.  We sent him to our collection agency.  He hired a lawyer to sue us for allegedly destroying his credit rating and for our alleged malfeasance. 

I'll do a post/article later on accord and satisfaction. 

[Danni R.]

Steve, that is so true. Sometimes we receive checks that do not clear the issuer's bank account. It could be an oversight, an error, or on purpose. In America, if you have an agreement and provided services or goods you have the right to get paid as agreed, whether the agreement was verbally, in a written communication (informal, such as email), or as signed in a contractual agreement. However, you also have to follow proper procedure since a check and a transaction is contingent on legalities. I think it is fair to say, a signed check is a legal document. Some people even have gone to jail for writing bad checks if it was proven that they committed fraud. As far as procedure, you have to go by what your state that you reside in and perhaps the state in which the payor resides in, stipulates.

In most cases, at least in my business (web development and Internet consulting) bad or late checks are merely an oversight. Typically, the first thing I do is shoot an email and send an invoice reminder and that has always done the trick. I guess I am lucky. If not, the next recourse I have as a developer, is to remove my work from the website. However, this doesn't mean the customer is scott-free. After all, I still have invested considerable time. I am still entitled to a certain amount of compensation and could, if I decided to do so, sue. However, that is all legal stuff that must be clearly communicated before hand. That's why it is important to spell everything out in a contract. Only then do I have a "leg to stand on".

However, billing for medical care is a little different. The health care provider has already rendered services, the coder has already coded, and the biller has already billed. Lot's of people have already invested a lot of time and money, and unlike a web developer, the doctor cannot remove the restored health benefits from the patient and make him/her sick again if the responsible party won't pay. The coder can't undo his coding and the biller cannot recall his bills; it's a totally different ball game where rules must be followed.


Great info, Steve. Thank you.

[Steve Verno]

Disclaimer:  I am not a lawyer.  I do not provide legal advice.  The following is presented by a layperson for training purposes only.


There is nothing more frustrating than getting a check, depositing it and then days later, you get notice from the bank that the check, whether it comes from a patient, employer, or insurance company, yes, insurance company, has bounced due to (a) insufficient funds or (b) payment was stopped.  The check that bounced may also be known as a Non Sufficient Fund Check or NSF Check.  Many States have laws regarding NSF Checks.  

It is important that you do not sit and wait for the person or company that issued the NSF check to make good on the check.  If you wait, you might grow old waiting.  The NSF check may be accidental or may be on purpose.  Your time limitations to recover may disappear if you wait.  When resolving an NSF check, it is best to communicate, in writing.  Your State law may provide you with directions as to how to communicate.  You not only lost the money you deposited, you also paid banking fees, and you spend your time trying to cure the NSF check.  

According to the Florida Attorney General:
Under Florida law, any checks returned “NSF” (non-sufficient funds), “Account Not Found” or “NSF Unless Otherwise Indicated is a worthless check subject to prosecution under Florida’s criminal statutes. Checks stamped “Refer To Maker” or Uncollected Funds” may require additional investigation before being charged criminally.
Checks Stamped “Stop Payment” may be subject to criminal prosecution, but are typically legitimate means of dealing with a contractual dispute. They are commonly resolved in a small claims court civil suit. Checks returned “Unauthorized Drawer’s Signature(s)” are usually forgeries signed by someone other than the owner of the checking account. These checks should be presented to the Sheriff’s Office or local authorities for investigations.
Florida law gives the authority to prosecute the crime of passing worthless bank checks to the State Attorneys of Florida’s 20 Judicial Circuits. The proper judicial circuit for the prosecution of this crime is usually the circuit in which the check was presented and accepted. The law requires that certain steps be taken by the recipient of a “worthless check” before the State Attorney begins prosecution.
If you are the victim of passing a worthless bank check, contact the State Attorney for the judicial circuit in which the check was accepted and they will assist you in the recovery process.
If you are the victim of a worthless check but the State Attorney cannot pursue the matter by prosecuting the crime, filing a civil suit in small claims court may be your best option. You should contact the Clerk of the Court for the county in which you accepted the check and he or she will assist you in the process.
What should I do to protect myself against being victimized by a worthless check?
Accepting a check as payment for goods or services is not mandatory. Insisting cash or certified checks and money orders is a legitimate option.
If you decide to accept check as a form of payment, follow these guidelines:
Do not accept post-dated checks (checks dated for future or indeterminate dates).
These checks cannot be prosecuted for the crime of passing a worthless bank check if a bank dishonors them, but such checks may be resolved by a civil suit in small claims court.
Do not agree to hold a check, even for a few hours.
Accepting a check and agreeing to hold it indicates there are insufficient funds in the checking account lat the time the check was presented, and if the check is dishonored by the bank, the matter cannot be prosecuted for the crime of passing a worthless bank check. The situation may be resolved in a smal claims court civil suit.
Do not accept third-party checks.
If the person who wrote the check is not the person responsible for payment, the check may stolen or forged.
Ask for a form of picture identification—Driver’s License or identification issued by a governmental agency.
Examine the card carefully to make sure it has not been altered, and that the person on the ID is the same person from whom you are accepting the check. Note: Fake ID cards can be purchased through the mail or over the internet. Pay close attention to holograms and minor details to ensure the legitimacy of the ID.
Look for personal information on the check. If it is not already there, you may ask the person to write the following information on the front of the check:
Name:
Home address:
Home telephone number:
Date of Birth:
Race:
Height:
Place of employment:
Employer’s telephone number:
Make sure that information appearing on the check is the same as the information appearing on the ID card.
Make sure there is a signature on the check, and compare it with the signature on the ID card.
Review the check carefully. Make sure the check is made out for the proper amount, and that the amount of the check written by numbers is the same as the amount in words.
If the check presented is a company check or temporary check with no name or address printed on the check, have the person presenting the check PRINT their name under the signature line.
Verify available funds by calling the financial institution that maintains the checking account.
Remember: It is possible for there to be sufficient funds at the time of a call, but insufficient funds before the check is processed.

Any communication I made regarding an NSF check was done, in writing, and by certified mail/return receipt.  I never sent the original check or bank notice to the person or company that sent an NSF check.  The original will be needed in the event of any legal action.  I never called because the person, if an individual, could take your call out of context and respond in an intimidating and possibly violent manner.  
When the person or company who issued the NSF check never responded, I followed my State law direction by contacting my State Attorney.  
If an insurance company presented an NSF check or stopped payment, the State law requirements were also followed, but, I sent my letter to the company CEO, by Certified Mail/Return Receipt.  

If you look at Florida Statute 832.07, you can see that it provides you with language to send to the NSF issuing person or company.  It is as follows:

"You are hereby notified that a check, numbered _____, in the face amount of $_____, issued by you on (date) , drawn upon (name of bank) , and payable to _____, has been dishonored. Pursuant to Florida law, you have 15 days from the date of this notice to tender payment of the full amount of such check plus a service charge of $25, if the face value does not exceed $50, $30, if the face value exceeds $50 but does not exceed $300, $40, if the face value exceeds $300, or an amount of up to 5 percent of the face amount of the check, whichever is greater, the total amount due being $_____ and _____ cents. Unless this amount is paid in full within the time specified above, the holder of such check may turn over the dishonored check and all other available information relating to this incident to the state attorney for criminal prosecution. You may be additionally liable in a civil action for triple the amount of the check, but in no case less than $50, together with the amount of the check, a service charge, court costs, reasonable attorney fees, and incurred bank fees, as provided in Florida Statute 68.065."

It is important to follow the letter of the law.  Whether the NSF or bad check had insufficient funds or was stopped on purpose or by accident, that is for the legal minds to determine.  It is important that you require the check issuer to make good on their check and to make you whole again.