How can I fight a collection agency that ruined my credit for a bill insurance should have paid, but denied?

My husband went in 2000 for a sleep study. We got preauthorization through our HMO. We got a bill for $400 right after the procedure and when I called the hospital said to wait, that it hadn't gone through insurance yet and that they would pay. We never got another bill. A few months later, we moved, but had our mail forwarded. I forgot about the account-I have the preauthorization that says, "Do not bill patient". Anyways, 4 years later, I get turned down for an auto loan and look up my credit. I see a $5000 bill from the hospital and think we'd been identity thefted! After researching it, the collections agency decided never to get in contact with me, but just to post this to collections. I attempted to resolve with them, calling the insurance agency, who denied it because the hospital submitted it incorrectly. Now the hospital wants me to pay the amount. What should we do?

We are Borg-Thank you so much. The insurance company said that the provider should write it off, and when I told the provider that, they stopped returning my calls. Your answer has been so helpful! I really appreciate your input!

I work for a medical ins company. When we get claims submitted by the facility, we will request they rebill if its not billed correctly. If they never do, that is their fault and they should write it off. They legally can not bill you for that amount. I would call the ins company. If the facility was a contracted provider, the insurance company can call them and demand they write it off.