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.
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.
Bills Introduced in Congress to Cancel All Medical Debt
A quartet of lawmakers, led by Sen. Bernie Sanders [I-Vt.] yesterday announced that they are introducing bills in the Senate and House of Representatives that would wipe out all existing medical debt and remove it from consumers’ credit reports, among other changes. The bill would create a federal grant program to cancel all existing $220 billion of unpaid medical debt, “prioritizing low-resource providers and vulnerable populations.” More details here.
WHAT THIS MEANS, FROM JOANN NEEDLEMAN OF CLARK HILL: The likelihood that either the House or Senate versions of these bills become law is highly unlikely. Their introduction, however, is very calculated for two reasons:
First, these bills represent the party narrative and will be used to help down ballot Congressional candidates during the summer and fall, as the election season goes into full gear.
Second, we know now that the Supreme Court has upheld the CFPB’s funding mechanism. However on May 8, 2024, supporters of the CFPB were maybe not so sure. In the event the Supreme Court affirmed the 5th Circuit decision, the current FCRA rulemaking would have been in jeopardy.
Nonetheless, there has been a lot of traction with medical debt relief bills in the states. In Pennsylvania, a bill passed the state house which established a medical debt relief program within the Pennsylvania Department of Health. Pennsylvanians would be eligible for relief if they have a household income at or below 400 percent of the federal poverty guidelines or medical debt equal to 5 percent or more of the individual’s household income. 16 other states have some sort of legislation pending with respect to either the elimination of medical debt or prohibitions against collection and credit reporting.
Ironically, a recent survey by the Institute for Economic Policy Research (SIEPR) at Stanford University found no evidence that forgiving medical debts improved on average beneficiaries’ finances, access to credit, or their physical or mental health. People were even less likely to pay existing medical bills after their debt was eliminated.
Forgiving medical debt will do nothing to reduce the cost of healthcare, much like forgiving student loan debt will do nothing to reduce the cost of college. Ironically, if Congress would permit the collections industry to do the job they know how to do, (in a compliant way, of course), the recovery would go much farther in reducing health care costs as well as ensuring that health care can be provided for all who seek it. The current bills, as proposed, will only hurt those who need healthcare the most.
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Judge Grants MTD in FCRA, FDCPA Case
A Magistrate Court judge in Texas has granted a defendant’s motion to dismiss after it was sued for violating the Fair Credit Reporting Act and the Fair Debt Collection Practices Act among other statutes, ruling that the plaintiff — who represented himself and did not respond to the defendant’s motion to dismiss — did not provide enough facts or evidence to back up his claim. More details here.
WHAT THIS MEANS, FROM COOPER WALKER OF FROST ECHOLS: With the number of pro se claims rising, this is a good opinion to be aware of. Magistrate Judge Andrew Edison is recommending dismissal here because Plaintiff failed to properly plead his claims. For example, Plaintiff brought an FCRA (15 U.S.C. § 1681s-2(b)) claim against a furnisher defendant. In order to prevail on such a claim, a plaintiff must allege that the credit bureau provided the furnisher with a copy of a dispute. This was not done here. And, as this is an essential element of the FCRA claim, failing to include such an allegation is fatal.
These types of pleading issues will not occur as often when there is an attorney on the other side. And, if they do happen, a decent plaintiff’s attorney will simply amend the complaint after time and money is spent on filing a motion to dismiss. However, when you are dealing with a pro se, it is always worth considering seeking a dismissal on these grounds. It was certainly the right choice here.
Judge Grants MTD in FDCPA Case Over Reported Debt Following Cease-and-Desist
A District Court judge in the District of Columbia has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case filed by a pro se plaintiff, ruling the plaintiff did not provide sufficient evidence in his complaint to state a claim. It appears as thought the plaintiff’s argument is that a cease-and-desist notification he sent to the defendant meant the defendant had to stop reporting the debt to a credit reporting agency. More details here.
WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: At the last two conferences I’ve been to there were audience comments about the increase in pro se claims. We too have seen increases in pro se lawsuits and filings in arbitration forums. Similarly, the complaints to the CFPB have increased significantly. It is hard to identify the reason but an internet search on suing debt collectors (or something similar) results in a lot of information.
This Long v Transworld case is somewhat indicative of what we see. The complaint was too vague to state a claim (and he misstated FCPA law) so the court dismissed it. What is somewhat interesting is how the pro se responded to the motion to dismiss; he filed: (1) a motion for sanctions and to compel discovery, (2) a motion for default judgment, (3) two motions to add new exhibits, and (4) a motion for summary judgment and sanctions. Not surprisingly, all of those motions were denied but they show the aggressiveness of some pro se plaintiffs. We have recently seen different pro se filings to strike affirmative defense. They are not successful, but that kind of tactic is what is happening. I’m not sure what will slow this most recent wave but hopefully the courts crack down on the weak filings.
Judge Denies MTD in FDCPA Case Over Unpaid Rent
A District Court judge in California has denied a defendant’s motion to dismiss a Fair Debt Collection Practices Act suit, ruling the arguments raised by the defendant were not applicable at this stage of the proceedings. More details here.
WHAT THIS MEANS, FROM AYLIX JENSEN OF MOSS & BARNETT: This case highlights the important distinction between a motion to dismiss and a motion for summary judgment. At the pleadings stage of the case, the court must accept the allegations contained in the plaintiff’s complaint as true, which can often shield claims from immediate dismissal. Moreover, documents referenced or relied upon in a pleading can generally be submitted without converting a motion to dismiss into a motion for summary judgment. Therefore, if a claim is unlikely to be dismissed via a motion to dismiss, the other option is to file a motion for summary judgment as soon as permissible. In cases in which the claims are entirely meritless, another option is to serve a Rule 11 motion for sanctions.
Bill Introduced in House to Amend FDCPA
A bill has been introduced in the House of Representatives to amend the Fair Debt Collection Practices Act in order to include additional information when sending the validation notice while also expanding the requirements before filing collection lawsuits. More details here.
WHAT THIS MEANS, FROM ETHAN OSTROFF OF TROUTMAN PEPPER: On May 1, 2024, U.S. Representative Suzanne Bonamici [D-Ore.] and six other House Democrats introduced HR8196, the Securing Consumers Against Misrepresented (SCAM) Debt Act. The bill would amend the FDCPA to affect debt litigation practices in multiple ways. First, the bill would define legal action to include any arbitration, enforcement of security interests, garnishment, liens, and mediation. Second, amendments to the validation of debts section would require debt collectors to provide detailed itemization of the debt, including the total amount owed, the most recent date of default, and a breakdown of payments, interest, or fees accrued since that date. It would also mandate the disclosure of the original creditor’s name, the creditor on the most recent date of default, and the current creditor’s name, along with the account number of the debt and all possible contact methods for the debt collector. Finally, the bill would require debt collectors to provide written notice to the consumer at least 30 days before commencing legal action, which must contain specific information about the debt. The initial pleading filed to commence legal action would be required to include detailed information about the debt, admissible documentary evidence of the debt’s validity, and a sworn affidavit confirming the statute of limitations has not expired and that the debt collector has reviewed all relevant documents.
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.
