Dental and Medical Counsel Blog

6 Tips on What to Do Upon Receiving a Demand Letter

November 20, 2019
Demand Letter - Business Litigation

Have you ever received a letter from a dental insurance company, medical or dental board, or a disgruntled employee asking for something or asking you to respond? Did you know what to do? These letters can be intimidating and can create fear of litigation.

A demand letter is simply a letter drafted by another party (the obligee) or their attorney to tell you that they object to something that you have done and why. In addition, demand letters often request some type of relief in the form of money damages and threaten some type of legal action if the demand is not met within a certain time frame.

The most common instances where a doctor or a dentist might receive a demand letter involve someone who believes that they are owed money, either on the basis of a contract you had with them or because they believe that negligence or unlawful activity on your part has caused them to suffer a loss. This includes:

Contesting these issues can be costly and may result in protracted litigation. Thus, upon receipt of a demand letter, you have to determine whether your strategy will be an early resolution or a contested dispute in litigation.

If you are convinced that the obligee cannot win a lawsuit against you, especially if you have a counterclaim, then your strategy might be litigation. But, if you are uncertain, or even if it looks pretty clear that the obligee will win, your strategy may be an early resolution.

Similarly, if you are seeking investors or selling a dental practice, it may be in your best interest to settle the dispute as soon as possible. On the other hand, the demand letter may simply represent the inevitable progression of an ongoing dispute between you and the obligee, who has now hired an attorney to help resolve the issue. 

Each of these factors can influence how you respond and your ultimate objective when doing so. That being said, here are several steps you should take if you have received a demand letter:

1.  Don’t Ignore the Demand Letter

You have two options when you receive a demand letter. Your first option is to ignore it. But ignoring it won’t help you deal with the issue––it may very well complicate the matter. Your second option is to respond to the demand letter. This will communicate to the obligee your position on their demands and how you wish to resolve the issue.

2.  Assess the Validity of the Demand Letter’s Arguments

Determine if the letter is a scam. Some attorneys make money by “scaring” people into paying. So, they try to write demand letters as scary as possible. But don't be frightened by the tone of the letter. For now, just read it to assess the validity of its arguments and to make sure that it's not a scam.

After you have assessed the validity of the demand letter's arguments, develop a strategy for handling the issue. To do this, it may be helpful to determine what your worst-case scenario is. In other words, what is the worst thing that can happen if you don't submit to the obligee's demands? This will give you perspective on the issue so that you can make an economically sensible decision.    

3.  Understand the Obligee’s Motives for Sending the Demand Letter

Essentially all lawsuits are about money. Consequently, following the money is important if you want to understand the obligee's motives. You may want to engage in some limited fact-finding to better understand the financial motives behind the demand letter, but we generally advise against investigating the party sending the demand letter on your own. Any inappropriate investigative activities you engage in can be harmful to your case should a legal action be commenced.

4.  Hire a Lawyer to Help You Respond to the Demand Letter

It’s important to seek legal counsel when responding to a demand letter. An experienced attorney can help you in ways over and above simply evaluating the merits of the demand letter and drafting a response.

First of all, an experienced attorney will be able to conduct a more thorough investigation into the obligee and their claims. And the information you share with your attorney during his or her investigation may be entitled to the protection of attorney-client privilege.

Furthermore, the act of retaining legal counsel will often signal to the obligee that you are taking their claims seriously. This will aid you in settlement negotiations and please the court, should the dispute go that far.

What's more, if you have incurred losses due to the obligee's conduct, your attorney can assist you with making a counterclaim. Filing a counterclaim against the obligee will often leverage pre-settlement negotiations in your favor.

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5.  Respond to The Demand Letter

Responding to the demand letter will be seen as a sign of good faith on your part if the issue ends up going to trial. But, you should also be aware that what you say in your conversation with the obligee can be used against you later. Therefore, you should resist the temptation to contact the obligee before first consulting with an attorney.

When drafting your response, it is important to take the matter one step at a time. For each claim, express whether you agree, disagree or need more information. If you disagree, you should state why. You can also use your response to the demand letter to assert defenses to the claims it presents, as well as, to make a counterclaim against the obligee if you believe they owe you money or some other type of relief.

6.  Continue to Work With Your Attorney and Preserve Evidence

In addition to your response to the demand letter, there may also be other correspondences between you and the obligee. For example, in California employment law cases, you have 21 days to turn over certain employment records after receiving a demand letter. It is in your best interest to allow an attorney to handle these correspondences as well.

Finally, you and your attorney should keep track of everything you do and say that is related to the demand letter. In fact, you should make sure that you retain and preserve all information potentially relevant to the obligee's claims. Don't throw anything away. Any information that is lost, deleted, or destroyed may result in an adverse ruling if the issue goes to trial.


A demand letter is often a precursor to an impending lawsuit and can generally be regarded as an attempt to resolve a dispute before getting the courts involved. Experience suggests that only a minority of demand letters result in the filing of a legal action. And even if a legal action is filed, only a very small percentage of them ever proceeded to a trial.

If you have received a demand letter, it is extremely important that you engage the services of an experienced attorney. An experienced attorney can help you evaluate the merits of the obligee's demand, advise you on how to respond to the demand letter, and assist you with resolving the matter with the best possible outcome.

Perhaps most importantly, your medical or dental attorney can insert themselves between you and the obligee's attorney so that you can continue to focus on your business. Contact Dental and Medical Counsel to learn more and to schedule a complimentary consultation with healthcare attorney Ali Oromchian.

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