There are several issues here. First, if the debt collector has not purchased the debt, and is just trying to collect it, then it is doubtful that the collector can charge you interest. A separate question is whether the creditor (the owner of the debt) can charge interest. The answer depends on a number of things, including whether there is an agreement to charge interest, and the nature of the debt.
Another question is whether the collector misrepresented to you information on the debt. If the debt was incurred for personal, family, or household purposes (like most medical debt is, of course), and if the person who told you that is a "debt collector" as defined by federal law, then you may have a claim against the collector under the Fair Debt Collections Practices Act.
I suggest you contact a qualified attorney to discuss the details. You should be aware that all claims must be brought within certain times.
I have seen this several times in the past. As stated by another poster here, I suggest that you verify that you did not sign some agreement with the original provider calling for interest. Also, sometimes these medical bills will state that if a balance is not paid within 30/60/90 days, the account begins to accrue interest. If you had ever paid any bills to that provider in the past, you may have tacitly agreed to the interest.
I will say, however, that if the collection agency is trying to collect on an account where no interest was agreed to (e.g., 8% statutory interest), such an act is not authorized, and there is no law that magically gives them this right.
I should also add that if the collection agency has obtained a judgment, they can collect that 8% statutory interest quoted above. Without that judgment, though, such a right does not exist yet.
Generally, courts allow a successful creditor to be awarded interest in a lawsuit to recover an unpaid debt, with interest at the legal rate from the date that the debt first became due and payable, unless an enforceable contract specifies a higher rate of interest.
The reason is to compensate the creditor for the loss of use of "their" money during the time that the debt was due, but unpaid.
Example: If you rent a car for one week, but don't return it until after 2 weeks, the rental company is entitled to another week of rent, right?
Charging interest is kind of like rent, but in this case it applies to money. You should investigate whether the law in your state allows for this, and determine what the legal rate of interest is in your state. They might be overcharging you. The creditor is not allowed to tack on any rate of interest that they feel like charging.
The interest rate has to be provided for under the terms of a legally enforceable contract, and consistent with the laws of the state where the contract is to be enforced. I am guessing that if you look at the hospital admittance form, it probably specifies that you are going to pay a certain rate of interest on unpaid charges.
If it's a huge bill, or if you have other pressing debt problems, you might want to start looking into your rights under bankruptcy.