Court finds that federal regulations require hospital facilities, not collection agencies, to include in billing statements a conspicuous written notice of the hospital facility’s/creditor’s financial assistance policy.
11/18/2019 8:30
Over the last several years, those in the accounts receivable management industry have seen a lag in enforcement actions by the Consumer Financial Protection Bureau. However, the industry has also seen an uptick in actions by state attorneys general resulting in agreements that impose certain legal requirements on parties’ collection practices involving third-party collectors.
Clear rules, clearly violated, deserve swift action that holds those responsible for the violation accountable. But violating broad rules, enforcement actions or state AG agreements that require a decoder ring to somehow know about and/or interpret should not rise to the level of statutory liability. This case is an example of a consumer’s attempt to capitalize on an agreement made by a state AG on behalf of that state’s citizens, by arguing that it as well as separate irrelevant federal regulations are binding on all parties operating in the health care space.
In a contentious summary judgment battle, the U.S. District Court for the District of Minnesota declined plaintiff’s efforts to use broad federal rules and an AG agreement as vehicles to legislate through enforcement. In this case, ACA International member collection agency attempted to collect a debt incurred by the plaintiff and owed to a hospital facility. The plaintiff claimed that the collection letters violated the FDCPA when they did not include a conspicuous written notice of the hospital facility’s/creditor’s financial assistance policy pursuant to federal regulations. In addition, the plaintiff said firm attempted to collect a debt from the plaintiff for its creditor-medical facility client allegedly without a written contract in violation of an agreement between the medical facility and the Minnesota attorney general.
“The claims alleged in this lawsuit were going beyond the boundaries of the FDCPA and laws related to medical debts,” said Xerxes Martin, a partner with the law firm Malone Frost Martin, PLLC who represented the defendant. The district court agreed. “We are very happy the Court found the correct result and it will hopefully prevent similar baseless allegations down the road."
The district court found in favor of the defendant collection agency on all counts against it. Importantly, the court found that federal regulations require hospital facilities, not collection agencies, to include in its billing statements a conspicuous written notice of the hospital facility’s/creditor’s financial assistance policy. The court opined that even if the creditor hospital facility had an internal policy that required it to include a conspicuous notice of its financial assistance policy on billing statements it sends to consumers, this does not in turn extend to unsuspecting collection agencies.
“This case was yet another attempt by the plaintiffs’ bar to fashion disclosure requirements out of whole cloth. Fortunately—with the help of great litigation counsel and the support of ACA—we were able to convince the Court that 501(r) does not apply to debt collectors merely because they operate in the health care space,” said Chris Meier, general counsel and chief compliance officer at The CMI Group, the parent company of defendants.
ACA is delighted by the court’s decision in this case and is proud to have supported its members in defending against the allegations in this case by providing Industry Advancement Fund funds to help defray the cost of litigation. ACA is likewise proud of the effort put forth by its members in this lawsuit. Because of their vigorous defense, the accounts receivable management industry has sent a clear message that there is no appetite for regulation through enforcement where there is no clear evidence of a prohibited practice that would violate the law.
ACA’s efforts to proactively support the accounts receivable management industry are part of the association’s Industry Advancement Fund and are made possible by funding through ACA’s Industry Advancement Fund. If you want to read more about the most recent significant judicial decisions involving the credit and collection industry, ACA members can always find concise case summaries on the Industry Advancement Fund website.