Judge Denies MTD in Class Action Over Wrongful Billing and Collection Claims

A District Court judge in Alabama has denied a defendant’s motion to dismiss after it was sued for allegedly wrongfully billing and collecting payments from insured patients and collecting payments that exceeded what the defendants were entitled to recover from insurance companies.

A copy of the ruling in the case of McAteer v. DCH Regional Medical Center, DCH Health Systems, and Avectus Healthcare Solutions can be accessed by clicking here.

The plaintiff accused the defendants of not informing him that the hospital would not accept his insurance, that it never explained it would attempt to collect the balance from him personally, and that it would seek a lien on his property if the bills were not paid.

The defendants filed their motion to dismiss arguing that the Class Action Fairness Act’s home-state exception should be applied, which would preclude a federal court from hearing the case. The home-state exception applies if “two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.” While two-thirds of the proposed members of the class in this case are from the same state, Avectus is not based in Alabama. The defendants attempted to argue that the company is not a “primary defendant,” but Judge Madeline Hughes Haikala of the District Court for the Southern District of Alabama, disagreed.

Because Avectus “evaluated [the plaintiff’s] file, contacted him about a potential settlement, negotiated a settlement amount with him, and agreed to accept that amount as payment for his medical expenses, despite having knowledge that he had health insurance coverage,” the company qualifies as a primary defendant, Judge Haikala ruled.

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