The Court of Appeals for the Seventh Circuit has affirmed a lower court’s ruling that a collector did not violate the Fair Debt Collection Practices Act by attempting to collect attorney’s fees and fees-on-fees after filing a collection lawsuit against an individual.
A copy of the ruling in the case of Robbins v. MED-1 Solutions can be accessed by clicking here.
The plaintiff incurred a medical debt that was not paid and was placed with the defendant for collection. The defendant filed a lawsuit against the plaintiff to collect on the debt. The plaintiff paid the debt after the suit was filed, but refused to pay the attorney’s fees, which was required by the agreement she signed when the treatment was provided. The defendant then incurred additional fees attempting to collect on the original attorney’s fees, referred to as fees-on-fees. The plaintiff was ordered to pay all the fees, a decision which the plaintiff appealed. While that appeal was pending, the plaintiff filed her suit against the defendant, alleging it violated the FDCPA by attempting to collect the fees and fees-on-fees, which were not contractually owed. The appeal was eventually dismissed for failure to prosecute. The plaintiff filed a motion for summary judgment in her case, arguing that the dismissal of the appeal for failure to prosecute precluded her from having to pay the fees. A Magistrate Court judge, however, ruled in favor of the defendant.
Legal wrangling aside, the issue at hand came down to the wording of the agreement that the plaintiff signed with the original creditor, in which the plaintiff agreed to bear the “costs of collection.” The plaintiff argued that the phrase is limited to the unpaid medical bill, which would include the original attorney’s fees, but did not include the fees-on-fees. The defendant argued that the phrase includes all of the costs, including the fees-on-fees.
The Seventh Circuit agreed with the defendant. ” … reading ‘costs of collection’ to exclude fees-on-fees would ‘not fully compensate [the hospital] for enforcing its rights’ ” the Seventh Circuit wrote. “The phrase ‘costs of collection, including attorney[’s] fees’ is comprehensive; nothing hints that fees incurred in collecting attorney’s fees are excluded.”
Even if the Seventh Circuit was wrong in how it interpreted the contract, that does not mean that the defendant necessarily violated the FDCPA, the Court wrote. “The Act is a debtor-protection statute, not a device to provide a windfall for debtors who prevail against debt collectors who bring nonfrivolous collection suits. A debt collector who unsuccessfully sues a debtor has not necessarily made a false, deceptive, or misleading representation in violation of § 1692e, nor engaged in an unfair or unconscionable debt collection practice in violation of § 1692f.”