A California Appeals Court has upheld a summary judgment ruling in favor of a creditor that was sued for violating the Rosenthal Fair Debt Collection Practices Act, ruling that a medical service provider that uses an unaffiliated third-party billing service to collect payments for services renders does not meet the statute’s definition of “debt collector.”
A copy of the ruling in the case of Olson v. La Jolla Neurological Associates can be accessed by clicking here.
The widow of a former patient of the defendant filed suit, alleging the practice and the doctor in charge of it violated the RFDCPA by sending “multiple” bills and making “incessant” phone calls seeking payment for services provided to the plaintiff’s spouse before he died. The plaintiff claimed to request the defendants stop contacting her and that payment should be obtained through Medicare and the Department of Veterans Affairs. The defendant used a pair of different companies for its third-party billing services, and those companies sent invoices to the plaintiff, who sent unsigned correspondence back saying that payment should be received from the federal government. The correspondence, however, did not include any identification for the plaintiff’s husband nor did it indicate that he was deceased. Ultimately, payment was received from the government. The plaintiff filed suit a month later. A state court judge granted the defendant’s motion for summary judgment, ruling the defendant did not meet the statute’s definition of a debt collector.
On appeal, the Court noted that the RFDCPA applies to those who collect debts on behalf of themselves, those companies “must regularly and in the ordinary course of business engage in debt collection.”
“The undisputed evidence is that [the defendants] used unaffiliated, third-party billing services, which they selected based on online advertising, customer reviews, interviews, and referrals. There is no evidence that [the billing services] were affiliated with one another, operated under common ownership, or were otherwise part of a single economic enterprise. The mere fact that [the defendant’ provided [a billing service] with certain basic information for [the billing service] to perform its billing services — such as CPT codes and time spent with each patient-does not transform [the defendant] itself into a debt collector. Nor does the one phone call [the defendant] placed to the Olson household seeking Mr. Olson’s insurance information.”
