Appeals Court Affirms Ruling for Defendant in FDCPA Case Over Healthcare Debt

In a case that was defended by the team at Malone Frost Martin, the Court of Appeals for the Eighth Circuit has affirmed a lower court’s ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act because it did not include a copy of the original creditor’s financial assistance plan when it sent the plaintiff a collection letter. The Appeals Court ruled that collection agencies are not bound to comply with a regulation from the Treasury Department requiring healthcare providers to include its financial assistance policy with their billing statements.

A copy of the ruling in the case of Klein v. The Affiliated Group; Credit Management can be accessed by clicking here.

The plaintiff incurred a debt to a healthcare provider. She applied for financial assistance, but was denied. The debt was placed with The Affiliated Group (TAG) for collection. TAG sent a letter to the plaintiff informing her that it was attempting to collect on the account. The letter did not mention the financial assistance policy. TAG merged with Credit Management (CMLP), which were both wholly-owned subsidiaries of The CMI Group. CMLP then sent a letter to the plaintiff that was substantially similar to the letter TAG sent.

The plaintiff sued, saying that TAG and CMLP violated the FDCPA because they did not have a written contract with the healthcare provider — which was required as part of an agreement the provider had with the Attorney General of Minnesota, by making false statements in the letter CMLP sent to the plaintiff, and for failing to include information about the provider’s financial assistance policies.

Like the District Court judge, the Eighth Circuit panel did not side with the plaintiff on any of her arguments related to the alleged FDCPA violations. As anyone would see, the collection agencies are not healthcare providers and are therefore not bound to comply with the Treasury Department’s regulations regarding financial assistance policies, the Eighth Circuit concluded.

“… debt collection letters sent by third party debt collectors are not billing statements issued by a ‘hospital organization’ — the explicit subject of the relevant regulations,” the Eighth Circuit wrote in its ruling.

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