Judge Grants MSJ for Defense in Overshadowing Case Over Insurance Release in Letter

A District Court judge in New York has granted a defendant’s motion for summary judgment after it was sued for violating the Fair Debt Collection Practices Act because it allegedly overshadowed the validation notice in a collection letter by including a release that offered to check whether any of the unpaid debt might be covered by the plaintiff’s health insurance.

A copy of the ruling in the case of Jackson v. POM Recoveries can be accessed by clicking here.

The plaintiff received a collection letter from the defendant. In the letter, there was a disclosure, which appeared before the validation notice. The disclosure stated, “This debt may be covered entirely or in part by your insurance carrier (e.g., Blue Cross/Blue Shield, Medicare/Medicaid, your union or other) — provided you are qualified. If you feel that you may qualify, please complete the back portion of this letter and return it in the enclosed return envelope. If you do not qualify please enclose your payment.”

The release on the back of letter said, “I hereby assign any and all benefits to which I may be entitled, to the creditor indicated, on the reverse side of this page, and authorize said benefits to be paid directly to said creditor or to its agency or representative who will be acting on their behalf. I understand further that I am financially responsible to said creditor for all charges not covered by this assignment.”

The plaintiff filed suit, alleging the release and authorization violated Sections 1692g of the FDCPA because it overshadows the 30-day validation notice, as well as Sections 1692e(5) and 1692e(10) of the FDCPA because it made false or misleading representations in attempting to collect on a debt.

Applying the least sophisticated consumer standard, Judge Ann Donnelly of the District Court for the Eastern District of New York was hard-pressed to find anything that was confusing or deceiving about the letter in question.

“…the plain language of the letter refutes the plaintiff’s claim that the least sophisticated consumer could be tricked into believing that an insurance company would pay the alleged debt,” Judge Donnelly wrote. “The collection letter says that an insurer ‘may’ pay the recipient’s debt ‘provided’ the recipient is qualified and invites the debtor to provide carrier information; on the reverse side of the letter, the reader is advised that an insurance provider may not pay the entirety of the debt, and that the debtor would be responsible for paying any amount that his insurance did not cover.”

Judge Donnelly also denied a motion by the defendant for attorney’s fees and costs pursuant to Section 1692k(a)(3) of the FDCPA.

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