Compliance Digest – August 29

I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit, email John H. Bedard, Jr., or call (678) 253-1871.

Every week, brings you the most important news in the industry. But, with compliance-related articles, context is king. That’s why the brightest and most knowledgable compliance experts are sought to offer their perspectives and insights into the most important news of the day. Read on to hear what the experts have to say this week.

Appeals Court Affirms Rulings for Defendant in FCRA Cases

The Court of Appeals for the Eighth Circuit has affirmed lower court rulings for the defendants in a pair of Fair Credit Reporting Act cases, ruling that injuries allegedly suffered by the plaintiffs because of issues related to bankruptcy notations on their credit reports were not sufficient to confer standing or create a genuine fact dispute on damages. More details here.

WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: The 8th Circuit continues the trend of Midwest courts setting the Article III parameters in consumer litigation. What is different and more important about these cases is that they address FCRA claims as opposed to FDCPA ones. Standing challenges in FCRA cases have been more difficult, although the Ramirez v Transunion case helped change the course in FCRA cases.

On the same day, the 8th Circuit issued two similar rulings in favor of the defendants. The trial court ruling in one case was based on a motion to dismiss and the other was on a summary judgment record. Interestingly, the Article III issue was raised on appeal for the first time. What also is interesting is that the rulings cover a wide array of common FCRA claims: failure to conduct a reasonable investigation, conduct that causes alleged financial harm, and conduct that causes emotional distress. These are items that often survive the pleading and summary judgment stages. However, in light of these rulings, plaintiff’s are going to have to do a better job of pleading and proving how the defendant’s conduct implicates these and does so in a way that satisfies Article III.


Judge Grants MTD in FDCPA Case Over Balance, Check Processing Disclosures

A District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit, ruling that disclosures related to check processing and the balance that was due did not violate the statute. More details here.

WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: Federal decisions opining on whether a letter is “confusing” are becoming more rare. A lot of federal courts might have dismissed this one for lack of Article III standing, so it is a bit of a pleasant surprise to see this one decided on the merits. This is a nice decision, and a correct one given that the balance was clearly stated and there was nothing false, deceptive, or misleading about the electronic-fund-transfer disclosure. 

Judge Grants Motion to Remand FDCPA Class Action Back to State Court, Orders Defendant to Pay Attorneys’ Fees

I don’t know if the dance that defendants in Fair Debt Collection Practices Act cases have to do around the issue of standing is a tap dance or more of a soft-shoe number, but there is definitely some graceful movements that are required. One defendant is being required to pay for trying to remove an FDCPA case from state court to federal court, with a District Court judge in Wisconsin granting the plaintiff’s motion to remand the case back to state court and ordering the defendant to pay the plaintiff’s attorneys’ fees to fight the removal. More details here.

WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: Judge Pamela Pepper of the United States District Court, Eastern District of Wisconsin, recently remanded an FDCPA case to Milwaukee County Circuit Court. Judge Pepper also ordered the removing defendant to pay the plaintiff’s attorneys’ fees and costs incurred due to the attempted removal. 

Pursuant 28 U.S.C. § 1447(c), district courts always have discretion to award remand fees: “An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” In practice, remand fee requests are typically denied as long as there was a colorable basis to remove the case. Here, Judge Pepper found that “[i[t was objectively unreasonable for the defendant to remove the case to federal court, because established case law was clear at the time of removal that the plaintiff had not alleged a concrete injury sufficient to confer Article III standing.” The Judge found it “troubling” that the defendant had failed “to address any of the Seventh Circuit’s decisions finding no concrete injury in similar cases.” The Judge also noted that just days after removal (which requires an injury in fact sufficient to confer Article III standing) the defendant filed with its Answer an Affirmative Defense stating just the opposite – i.e., “that Plaintiff has not incurred an injury in fact” and lacks “standing under Article III,” a contradiction the Judge found “curious.”  

Removal is an important tool and it should be seriously considered in FDCPA cases as long as a colorable basis for removal exists. A few things have happened in the last few years, however, that have shifted the considerations for whether to remove. First, a new body of Article III standing case law case developed in the FDCPA context, especially heavy in the Seventh and Eleventh Circuits (and I’ve come across quite a few in the New York district courts as well). This case law has started to chip away at the pool of allegations that FDCPA plaintiffs previously relied on to assert actual harm, such as feeling confused, misled, aggravated, or spending time and money to consult an attorney regarding available rights. Second, plaintiffs’ attorneys are increasingly filing FDCPA lawsuits in state court, adjusting their allegations to carefully avoid Article III jurisdiction, and fighting to stay in state court even if that means, as was the case here, the plaintiff needs to openly admit that there was no concrete injury. 

Today, a defendant needs to carefully assess the governing case law in the applicable jurisdiction. There may be a colorable argument for why the allegations you face are different than those that resulted in remand in a previous case. If so, that can be incorporated into and previewed in your removal papers to show a good faith basis to remove. Counsel also may consider (even if not required by local rules) requesting the plaintiff’s attorneys’ position prior to a removal attempt. In my experience, many will openly advise as to whether they will oppose and why, and may even offer to send you the case law they’d cite in a motion to remand, which may change your mind or might help you solidify an argument as to why the allegations you face are different and really should be removed to federal court. Finally, if you decide to remove, make sure to remove any contests to Article III standing from your answering allegations and affirmative defenses, as those would support a remand. 

Appeals Court Overturns Dismissal in Whistleblower Lawsuit Filed Against Collection Operation

The Court of Appeals for the Seventh Circuit has overturned a lower court’s dismissal of a whistleblower lawsuit filed against a collection agency that was accused of writing off bad debts owed to Medicare without undergoing reasonable collection efforts, while affirming the dismissal in favor of the healthcare provider and the billing company that were also sued. More details here.

WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: Medical debt is rapidly becoming one of the most difficult and liability-laden debt verticals to collect. States continue to enact laws that materially impact medical providers and their servicing and collection partners. Self-pay debt portions continue to rise.  Caps on contact numbers and strategies make it even more challenging to reach consumers to resolve these debts. Consumers may request a cease and desist but yet billing laws still require continuing collection efforts. The healthcare system remains in peril and collectors often find themselves footing the bill for noncompliance by others. Companies engaged in medical collections must remain up to date on the ever changing requirements of federal and state law in order to minimize potential risk, legal expenses,  and exposure in the current legal and regulatory environment.

Collection Law Firm Not Subject to State Lending Law, Maryland Appeals Court Rules

A Maryland Appeals Court has issued a ruling in a case being heard in federal court, determining that law firms engaged in debt collection activities on behalf of a client are not subject to the Maryland Consumer Loan Law. More details here.

WHAT THIS MEANS, FROM RON CANTER OF THE LAW OFFICES OF RONALD S. CANTER: This case came to the Maryland Court of Appeals on a certified question from the United States District Court for the District of Maryland. The Maryland court decided a case of first impression as to whether attorneys who negotiate settlement agreements with consumers that included confession of judgment terms are required to obtain a Maryland Consumer Loan Law license. The Court determined that the Defendant law firm was not “in the business of making loans” as defined by the statute and therefore not required to be licensed.

This case attracted the interest of the Maryland State Bar Association which filed an Amicus Brief pointing out that under the interpretation of the Maryland Consumer Loan Law suggested by the consumer, “every Maryland lawyer who represents a creditor/client that agrees to settle a claim…through settlement payments made over time, and drafts a settlement agreement that memorializes such terms, would be required to be licensed.”

This rationale offers a refreshing result that contrasts with other recent Maryland court rulings that have sided with consumers in cases filed against Maryland debt collection lawyers.

Appeals Court Vacates Class Certification in FDCPA Case

In a case that was defended by the team at Malone Frost Martin, the Court of Appeals for the Fifth Circuit has overturned certification of a Fair Debt Collection Practices Act class action, ruling that the plaintiff lacked standing to file her lawsuit because she did not suffer a concrete injury after receiving a collection letter that failed to disclose the statute of limitations on the underlying debt had expired. More details here.

WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: This is another standing case that follows other recent precedent to find that a consumer who cannot demonstrate actual harm from an alleged FDCPA violation lacks standing to sue. In this unusual case, the Fifth Circuit takes up the standing issue that the District Court resolved in favor of the consumer, but that defendant did not raise on appeal, and vacates a class certification order. The consumer alleged that the lawyers collecting debt for the City of College Station in Texas attempted to collect it after the statute of limitations had run, but she did sufficiently argue on appeal that she suffered some concrete injury because of the letter. The court referenced the Supreme Court’s Ramirez decision, as well as SpokeoHunstein and other recent cases to review standing and find that this Plaintiff lacked standing under the FDCPA to sue in federal court. It is good to have another federal appellate court require plaintiffs to demonstrate a concrete injury resulting from any alleged FDCPA violation before allowing the case to proceed.

Judge Rules Against Industry in Suit Over Arizona Garnishment Initiative

A state court judge in Arizona yesterday rejected an industry-led challenge to a voter initiative that is scheduled to be on the ballot this November that would raise the limits on what can be shielded from wage garnishments while also lowering the judgment interest rate, leading the group to quickly file an appeal with the state Supreme Court. More details here.

WHAT THIS MEANS, FROM CARLOS ORTIZ OF POLSINELLI: An Arizona state court dismissed a challenge to a voter initiative that is scheduled to be on the November ballot in that state. Some of the key terms of the initiative include placing limitations on wage garnishments, effectively banning wage garnishment for anyone earning less than $50,000 per year. The initiative would also raise the exemption threshold in bank accounts from $300 to $5,000. Additionally, judgment interest rates on unpaid medical debts would be capped at 3%. The initiative, if added to the November ballot, is forecasted to pass, resulting in added consumer protections in Arizona, and a potential elimination of up to 70% of existing garnishments. The group that initiated the legal challenge in court has appealed the dismissal. Companies that collect in Arizona should watch this closely to ensure that they remain compliant with the collection laws in that state.

Colorado AG Publishes Memo Detailing New Medical Collection Requirements

The Colorado Attorney General’s office has sent a memo to licensed collection agencies in the state, making sure they are aware that a new law is going into effect on September 1 that will change how medical debts are collected in certain situations. More details here.

WHAT THIS MEANS, FROM HEATH MORGAN OF MALONE FROST MARTIN: The Colorado Attorney General memo provides guidance to collection agencies on what their responsibilities under the new law which updates C.R.S. 6-20-201 & 202 and is called Health Care Billing Requirements for Indigent Patients.

The law itself establishes requirements for hospital discounted care for low income patients where they are given the opportunity to apply for financial assistance or charity care programs at the health care facility where they receive care. If they qualify, service charges will be the greater of either the Medicare rate or Medicaid base rate. Additionally, payment plans that are established to pay the bills may not exceed four (4) percent of the patient’s monthly household income. For bills from health care professionals, the limit is two (2) percent of the monthly household income. Once 36 payments have been made, the remainder of the bill is forgiven.

The Health Care Billing Requirements for Indigent Patients also sets rules for hospitals that limit collections against a​​ patient including a prohibition on collections if a notice is not sent by the provider to the patient that details information about the debt and the date that the debt may be sent to a collection agency or start to be reported to a credit reporting agency.

The memo clearly outlines the new law and it’s effect on debt collectors and debt buyers.  Some highlights include:

  • 6-20-202(1)(a) states: “when a person has health benefit coverage to provide payment for care or treatment rendered by a health-care provider and the person has notified the health-care provider of coverage within thirty days after the date the care or treatment was rendered, and if the health coverage plan, as defined in section 10-16-102(34), C.R.S., pays only a portion of the debt, prior to the assignment of the debt to a licensed collection agency, the health-care provider shall mail written notice to the last-known address of the person responsible for payment of the debt at least thirty days before any collection activity on any amount due and owing the health-care provider.” 

The notice must include:

  1. the amount due and owing;
  2. the name, address, and telephone number of the health-care provider;
  3. where payment may be made;
  4. the date of service;
  5. and the last date or number of days after the date of the notice the health-care provider will accept payment prior to the debt being submitted to a collection agency or reporting adverse information to a consumer reporting agency for the debt for which notice was provided.
  • Other provisions that affect debt collectors include 6-20-202 which states that medical creditors, including collection agencies and debt buyers, are prohibited from initiating foreclosures on an individual’s primary residence and may not place a lien on a residence or individual’s bank account.
  • Additionally 6-20-201(5) states that permissible extraordinary collection action, including litigation and credit reporting now cannot take place for 182 days after the patient receives hospital services.
  • 6-20-203(3)(a) states that beginning September 1, 2022, at least thirty days before taking any permissible extraordinary collection action, [a health-care provider or health-care provider’s billing office] collecting on a debt for hospital services shall notify the patient of potential collection actions and shall include with the notice a statement developed by the department of health care policy and financing that explains the availability of discounted care for qualified individuals and how to apply for such care.”

For those agencies and debut buyers who collect on medical accounts and hospital services in Colorado, it is important to review the memo and the new law to ensure that both you and your provider clients are in compliance.

I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit, email John H. Bedard, Jr., or call (678) 253-1871.

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