For a lot of companies that work with healthcare providers, collecting bad debt may just be one component of what that company does for its client. Many companies, for example, offer billing services or early-out collections, working accounts before they go into default and are considered to be bad debt. One such company was sued for allegedly violating the Fair Debt Collection Practices Act by sending a communication to an individual who was represented by counsel and making a false or misleading representation, but the debt in question was not yet in default and therefore not subject to the FDCPA. Which is why a District Court judge granted the defendant’s motion for summary judgment.
The Background: The plaintiff was injured in an automobile accident and was treated at a healthcare facility. The defendant sent the plaintiff a statement that informed him of the balance on the account. The statement also said that the balance was not currently in default. The bottom of the statement included a notice, giving the plaintiff 30 days to dispute the validity of the amount owed. The statement also included other information, such as a ledger of costs, instructions on how to pay the balance, and a letter explaining the facility’s relationship to the defendant.
- The plaintiff contacted his attorney, who sent two letters to the defendant, informing it that the plaintiff had retained legal counsel and advising it to cease communications with the plaintiff.
- The defendant nonetheless sent the plaintiff another letter, which was mostly identical to the first statement.
- Now stressed out and without any confidence in his attorney, the plaintiff borrowed money from a friend and paid the balance on the account.
- The plaintiff subsequently filed suit, accusing the defendant of violating sections 1692c and 1692e of the FDCPA.
The Ruling: Ultimately, there is nothing the plaintiff can do to prove that the debt was in default when he received the statements, and thus the FDCPA does not apply in this situation, ruled Judge Mary M. Rowland of the District Court for the Northern District of Illinois. The plaintiff tried to convince Judge Rowland to apply a different test — whether the cumulative effect of the communications from the defendant would make a reasonable recipient believe the debt was in default, but the statements provided multiple assurances to the plaintiff that the debt was not in default, the judge ruled.
