The Washington Court of Appeals has overturned a lower court’s ruling in favor of a collection operation that was sued because the original creditor — a healthcare provider — did not screen the plaintiff to see if he was eligible for charity care, but there is a lot of back-and-forth between both sides over the contract between the collector and the healthcare provider.
The Background: The individual was involved in a car accident in July 2016 and was unaware of his debt to Morton General Hospital, later Arbor Health, believing insurance had covered all costs. He received a collection notice from the plaintiff in November 2017, warning of added fees for unpaid bills.
- In December 2017, Turner’s unpaid medical bill of $7,432.42 was assigned to the plaintiff, which claimed to send collection notices including a higher fee percentage than initially stated. The defendant, unaware of these communications, was sued in January 2021 for the principal and inflated collection fees.
- Turner countered Fairway’s lawsuit in February 2021, alleging violations of consumer protection laws due to Fairway’s failure to offer charity care screening before debt collection. His debt was later reduced after qualifying for charity care, but disputes arose over the terms of a proposed settlement.
- Legal proceedings continued through 2021 into 2022, with Turner challenging Fairway’s right to collect more than the agreed 35% fee and the discovery of a contract error confirming his stance. The court, however, ultimately ruled in favor of Fairway, dismissing Turner’s counterclaims.
The Appeal: There are no copies of the letters that were sent to the individual by the healthcare provider’s billing company or the collection operation named in the suit. So while there are no issues of fact whether the letters violated state law in Washington or the Fair Debt Collection Practices Act, attempting to collect more than what was owed would mislead a least sophisticated consumer, the Appeals Court ruled.
- The collector argued it was the healthcare provider’s obligation to inform the individual about charity care options, but a law that went into effect in Washington in 2018 requires that notices about charity care options be included in communications with former patients.
- Regarding the collection fees, the letter that was sent to the individual, the contract between the hospital and the collector, the complaint filed by the collector to collect on the unpaid debt, and a declaration do not reconcile with one another, the Court ruled.
