Debt Collector

Last year in April I visited the hospital and "paid" my bill with my medicaid insurance. Three months later, without receiving a bill and under the impression that I owed nothing for the visit, I moved to another state because my husband is in the military. In May of this year I received a phone call from a debt collector stating that I owed on that visit. After a lot of run around it turns out that the woman who took my billing info at the hospital put the wrong last name for the insurance, and insurance denied the claim. The debt collector told me that they would reprocess the claim under the right last name and that she would put a hold on the account so it wouldn't hit my credit report. Later I get another call from the collectors telling me I still owed money. I explained the situation and was told that too much time had passed so the reprocessed claim was denied, but that they would put in an appeal because the name was wrong the first time. Then I get another call a week later saying I owed money. After explaining the situation, I was informed that this had been put on my credit report in April of this year, a month before I was ever contacted by the debt collector! And I still have not gotten anything in writing from the debt collector, even though they have had my new address since May. Is that legal? I was under the impression that you had to be contacted before they could put anything on your credit report, and they obviously had my phone number which has never changed. If this is resolved properly and the bill taken care of and they remove the account from my credit report, will that undo the damage that was done to my credit score?