The Sept. 2 oral argument focused on the appeal to the Nevada medical debt law from the Nevada Collectors Association and other stakeholders. A recording of the argument is available, and ACA has initial coverage here.
09/06/2022 2:45 P.M.
3 minute read
A three-judge panel in the 9th Circuit Court of Appeals heard arguments on Nevada’s medical debt law on behalf of debt collectors and the Nevada Financial Institution’s Division (NFID) last week.
The appeal stems from the lawsuit pending in the U.S. District for the District of Nevada challenging S.B. 248.
The case is currently going through an appeal after the Nevada Collectors Association (NCA) and other stakeholders (plaintiffs-appellants) filed an appeal brief with the 9th Circuit Court of Appeals challenging the district court’s order denying their motion for a temporary restraining order and preliminary injunction to delay enforcement of S.B. 248, ACA International previously reported.
Appearing on behalf of the NCA and the plaintiffs-appellants during the oral argument Sept. 2, Patrick Reilly, shareholder at Brownstein Hyatt Farber Schreck, focused on arguments related to the law’s restrictions on debt collectors’ free speech and preemption of federal laws that already address the issues Nevada sought to fix with its state law.
Brownstein Hyatt Farber Schreck and Sessions, Israel & Shartle, LLC filed the original lawsuit last June, before S.B. 248 went into effect, on behalf of ACA, NCA, and other stakeholders in the U.S. District Court for the District of Nevada against Sandy O’Laughlin, commissioner of the NFID. The lawsuit seeks to prevent S.B. 248 from taking effect unless and until the state provides clarity on the bill’s requirements and apparent conflicts with federal law, including the Fair Credit Reporting Act, Fair Debt Collection Practices Act, and the U.S. Constitution.
The appeal brief on behalf of the NCA and other stakeholders was filed with the 9th Circuit Court of Appeals in April 2022.
The plaintiffs’ original lawsuit argues that S.B. 248 prohibits debt collectors from engaging in truthful communication with consumers and is preempted by federal law, ACA previously reported.
“What’s standing in their way is S.B. 248, which is an unconstitutional restraint on speech, which undermines and conflicts with federal law,” Reilly said during the oral argument. “I can’t think of a single thing that a debt collector does when it’s trying to collect a debt that doesn’t involve speech, either with the debtor … in terms of a phone call or letter or with a consumer reporting agency furnishing information about a debt.”
During questioning for Reilly and counsel for the NFID the panel, 9th Circuit Court of Appeals Judges William A. Fletcher, Jay S. Bybee and Lawrence VanDyke, also largely focused on free speech and preemption of the FDCPA and FCRA as well as the impact of the timing S.B. 248 sets on when debt collectors can communicate with consumers about a medical debt.
The regulations require, as originally stated in S.B. 248, that debt collectors provide medical debtors with a 60-day notice of placement or assignment before taking any “action to collect” a medical debt, ACA previously reported. The law requires that a 60-day notice be sent by certified or registered mail. In addition, the law restricts certain medical debt collection practices, including limitations on civil actions (lawsuits) to collect medical debt, restraints on credit reporting medical debt, and caps on collection fees (including attorney’s fees) that creditors may collect on delinquent medical debt balances sent to legal collections.
According to an initial summary of the oral argument from Sessions, Israel & Shartle, LLC, the case was submitted for further consideration. While the timing of the decision is unknown, the firm says it hopes a decision will be issued by the end of the year. Read more on the case arguments in the summary, and a recording is available here under Aargon Agency, Inc. v. Sandy O’Laughlin.
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