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Every week, AccountsRecovery.net 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.
Judge Grants MSJ for Defendant in Early Out Billing Lawsuit
For a lot of companies that work with healthcare providers, collecting bad debt may just be one component of what that company does for its client. Many companies, for example, offer billing services or early-out collections, working accounts before they go into default and are considered to be bad debt. One such company was sued for allegedly violating the Fair Debt Collection Practices Act by sending a communication to an individual who was represented by counsel and making a false or misleading representation, but the debt in question was not yet in default and therefore not subject to the FDCPA. Which is why a District Court judge granted the defendant’s motion for summary judgment. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: This is a good defense win for a first-party collector not bound by the FDCPA, albeit an expensive one. The case also highlights the pitfalls of trying to straddle the line between first- and third-party collections. R1, the early-out/first-party collector, used similar language from the FDCPA on its statements to the patient which inevitably led the patient to be confused about whether R1 was acting as a first- or third-party collector. The fact that R1 included a very clear statement about the debt not being in default should have mitigated the confusion and the Court found that it did (which is good). Of course, if R1 had not included language similar to the FDCPA on the statement it could have also faced an FDCPA action for failing to include such language. Ultimately, R1 and its attorney did a very good job of gathering specific facts through discovery and from the hospital to prove that the debt was not in default at the time it was provided to R1 for servicing.
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Judge Denies Motion for Reconsideration in FDCPA Case Over Bank Levy
Does a plaintiff suffer an injury when $278.75 is taken from his bank account to satisfy a judgment of approximately $12,000, even if the defendant attempted to collect more than it was entitled to? A second District Court judge has ruled in favor of the plaintiff, denying the defendant’s motion for reconsideration in the Fair Debt Collection Practices Act case. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: When you find yourself arguing to a judge that they got it wrong the first time, you do not have an easy road ahead. Unfortunately, this is where the defendants found themselves in Tomaine v. Selip & Stylianou, LLP, but got to argue to the judge’s colleague instead.
As background, defendant attempted to collect on a judgment of about $12,000 where the issuing court incorrectly added an accrued interest amount twice to the judgment. In collection, it filed a motion for turnover and obtained a levy of $278.75 in Plaintiff’s bank account. At summary judgment, Defendant argued Plaintiff did not have Article III standing as he suffered no concrete and particularized injury-in-fact. Plaintiff challenged this by claiming an “informational injury” and that his bank account could be garnished for more than he owed. The Court agreed with Defendant that Plaintiff did not suffer harm from the proposed writ, certification, and collection letter containing the wrong amount, but did have standing due to the larger bank levy as it created a “lack of access to assets.” Defendant challenged this finding with a motion for reconsideration that there was no harm due to Plaintiff not contesting owing the money that was still due.
While I tend to agree with Defendant’s argument, the original decision stacked the deck against them. The reviewing judge backed the original judge’s finding that the incorrect bank levy created an injury due to excessive restrict of Plaintiff’s assets was not a clear error of law nor did it create a manifest injustice. The opinion almost reads that the reviewing judge could see it go either way. However, having to ask a different judge in the same courthouse to review his colleague’s decision, and a lack of specific case law on point unfortunately did not steer this to an industry-favorable decision.
Judge Rules Plaintiff has Standing in FCRA Case Over Disputed Debt, but Still Dismisses Case
Reporting errant payment obligations to a credit reporting agency may be enough for a plaintiff to have standing to sue under the Fair Credit Reporting Act, a federal judge has ruled — joining a growing number of courts to make such a determination — but it still isn’t enough for the plaintiff to state a claim, leading the judge to dismiss the suit. More details here.
WHAT THIS MEANS, FROM JAY TILLMAN OF FROST ECHOLS: Standing, the ability to stand in and bring a complaint in a United States District Court, per Article Three of the U.S. Constitution, requires the assertion of a real and palpable injury.
Each U.S. Appeals Court has established its own definition of and standard for what it considers to be real and palpable and sufficiently concrete for the purpose of standing, especially in view of the U.S. Supreme Court’s recent decision in TransUnion LLC v. Ramirez, 594 U.S. 413, 425 (2021). Judge Martin, ruling from his District Court bench in New Jersey, one of the courts covered by the U.S. Court of Appeals for the Third Circuit, determined that the Plaintiff asserted in her complaint a concrete harm in the form of the alleged misreporting of information and that this is a close enough relationship to the cause of action of defamation to show and injury and to therefore grant her standing. However, Judge Martin dismissed Plaintiff’s complaint because she failed to state a claim that is plausible on its face because she admitted in her complaint that she still owes the debt to the defendant and that her allegation that defendant’s mischaracterization of her debt is not enough for her claim of a violation of the Fair Credit Reporting Act to survive summary judgment. As we all learned in life, and especially law school, attention to detail is very important as the devil is always in the details.
Judge Denies Motion to Compel in Hunstein Case
It’s been a while since we have seen one of these … A District Court judge in Alabama has dismissed a Fair Debt Collection Practices Act case for lack of standing because the plaintiff did not suffer a concrete injury after the defendant was accused of disclosing her information to a third party when it engaged a vendor to print and mail a collection letter. That’s right, it’s a Hunstein case, albeit with what appears to be a slight wrinkle. More details here.
WHAT THIS MEANS, FROM DAVID SHAVER OF SURDYK DOWD & TURNER: As federal judges continue to weed out cases based on alleged statutory violations without an attendant concrete harm, like Judge Haikala in Curry v. Convergent Outsourcing, Inc., consumers and their counsel will continue to look for alternate venues to press these kinds of claims. Though Hunstein-style allegations may seem like they’re out-of-style at this point, they are still being brought by some attorneys in some state courts to this day. Agencies must remain diligent about compliance, work with their counsel to stay abreast of current trends showing up in the case law, and continue to closely analyze whatever allegations of harm are being made when finding themselves on the receiving end of a complaint.
CFPB Proposes Rule Prohibiting Fees on Instantly Declined Transactions
The Consumer Financial Protection Bureau yesterday issued a Notice of Proposed Rulemaking that would prohibit banks and financial services companies from assessing non-sufficient funds fees on transactions that are declined in real time. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: The CFPB has made clear over the last three years that it is on a crusade against consumers fees across the entire consumer financial services industry. The prevailing theory as to why is because the CFPB seems to fundamentally object to the “costs of credit” falling more heavily upon the credit distressed who fail to repay their loans. Instead, the CFPB seeks to allocate those risks and related costs equally across all credit tiers. Critics have repeatedly expressed concern that this approach actually will harm the very consumers the CFPB is charged to protect by reducing access to credit, raise the costs of banking services across the board, and ultimately, stifle financial innovation. But regardless of what critics say, the message is clear: for now, financial fees remain public enemy number one in the eyes of the CFPB’s current leadership and it is critical for stakeholders to engage and make their case.
Medical Debt Bills in Maine Target Credit Cards, Debt Buying
A pair of bills were introduced in the Maine legislature yesterday that both tackle the topic of medical debt. One would limit how medical debt credit cards are promoted and used and the other would give consumers the chance to buy their medical debts from a provider before they are sold to someone else. More details here.
WHAT THIS MEANS, FROM HELEN MAC MURRAY OF MAC MURRAY & SHUSTER: Perhaps sensing that medical debt might go the way of home repair credit cards, the most powerful legislator in Maine is proposing a bill that would prohibit the practice. In other settings, consumers frequently complain that they didn’t realize they were signing up for a credit card when agreeing to home repair, solar panels or the like. In Maine, it looks like they want to stay ahead of this practice picking up in that state. Similarly,
Judge Reduces Plaintiff’s Attorney Fee Award by 60% in FDCPA Case
A District Court judge in Minnesota has awarded the attorney representing a pair of plaintiffs in a Fair Debt Collection Practices Act case $12,000 in fees, which was nearly 60% less than what the attorney was seeking. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: The bulk of the attorneys’ fees cut by the court were incurred in a related collection action, not in the FDCPA action itself. The fees incurred in the collection action could have been claimed as actual damages in the FDCPA case, but the defendants’ attorneys did a good job of drafting the offer of judgment so that it was clear that all actual damages were included within the $2,002.00 offer and the attorneys’ fees to be added to that amount were limited to those incurred in the FDCPA action.
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 www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.