Appeals Court Overturns Certification in FDCPA Case Over False Threat in Letter

The Court of Appeals for the Fifth Circuit has reversed a lower court’s certification of a class action and questioned whether the class even has standing to sue in the first place in a Fair Debt Collection Practices Act case over whether a collection letter contained a false threat to sue for an unpaid debt.

A copy of the ruling in the case of Flecha v. Medicredit can be accessed by clicking here.

The plaintiff received medical care that she did not pay for. The account was placed with the defendant, which sent a number of letters to the plaintiff. The letter at the heart of the suit included the following passage:

Your seriously delinquent Seton Medical Center Hays account remains unpaid despite past requests for payment.

At this time, a determination must be made with our client as to the disposition of your account. Your failure to cooperate in satisfying this debt indicates voluntary resolution is doubtful. However, if it is now your desire to clear your account, you need to promptly remit the balance in full.

The plaintiff contacted the medical facility — the original creditor — and was informed she could enter into a payment plan if she made an upfront payment, which she could not afford. The plaintiff claims that she was given the impression during this conversation that if she did not pay the debt, she would be sued.

The plaintiff filed suit, alleging the letter violated the FDCPA because the defendant never intended to sue to collect on the unpaid debt.

Both sides filed for summary judgment, which were denied. But the District Court judge did certify a class of plaintiffs that included 7,650 people in Texas who received a similar letter from the defendant.

The individualized nature of whether a creditor decides to sue someone for an unpaid debt means the class in this case fails the commonality, typicality, and predominance requirements in order to be certified, the Fifth Circuit ruled.

“To establish liability under the FDCPA, the class must prove not only
that Medicredit’s letter threatened legal action, but that it did so despite the fact that Seton did not intend to pursue legal action,” the Fifth Circuit wrote. “Yet Flecha failed to provide any evidence concerning Seton’s intent to sue (or lack thereof) — let alone any evidence of class-wide intent. This lack of evidence concerning Seton’s class-wide intent is fatal to class certification here.”

The Appeals Court went on to discuss why “many unnamed class members” in this case lacked standing to sue because it includes people who received the letter, thought it was junk mail, and threw it out without ever opening the envelope and reading the letter.

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