I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
Every week, AccountsRecovery.net brings you the most important news in the industry. But, with compliance-related articles, context is king. That’s why the brightest and most knowledgable compliance experts are sought to offer their perspectives and insights into the most important news of the day. Read on to hear what the experts have to say this week.
Judge Grants MTD in FCRA Case Over ‘Reverse Identity Theft’ Claim
In a case where Xerxes Martin of Martin Golden Lyons Watts Morgan represented one of the defendants, a District Court judge in Texas has granted a defendant’s motion to dismiss a Fair Credit Reporting Act case where the plaintiff claimed to be the victim of “reverse identity theft” and denied filing for bankruptcy protection five times, which the credit reporting agencies included in her credit report. More details here.
WHAT THIS MEANS, FROM SARAH DOERR OF MOSS & BARNETT: The Ahaghotu decision confirms that CRAs can rely on and disclose that which is already in the public domain, e.g. bankruptcy filings, without fear of FCRA exposure. This positive outcome provides CRAs further certainty surrounding reporting and the scope of requisite investigation contemplated by the FCRA, and should temper the plaintiffs bar’s enthusiasm for these sorts of frivolous suits.
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Judge Grants MSJ for Defense in FDCPA, TCPA Case Over Attorney Representation
A District Court judge in Nevada has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act and Telephone Consumer Protection Act case that dealt with a new debt being placed with the defendant for collection after the plaintiff had notified the defendant she was being represented by an attorney with respect to other debts the defendant was already trying to collect from her. More details here.
WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: The issue in this case, scope of representation, is not new and has always posed a problem for collectors. In this matter Medicredit received three different accounts from its client over the course of several years. The first two were transferred in 2019 and 2020, Woodman retained counsel in April 2021, which then notified Medicredit of the representation as to the two accounts. The third account was transferred on June 4, 2021. Medicredit then contacted Woodman in regards to the June account. The dispute between the parties was when was notified that Woodman was represented by counsel in regard to the June account. It appears that actual notification of representation occurred after the initial contact from Medicredit regarding the June 2021 debt.
Woodman argued that Medicredit should have known from the first two debts that she was represented. The Court relied on the infamous 3rd Circuit decision in Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir.1991) (overruled on other grounds) where it was held “debt collector does not automatically violate Section 1692c(A)(2) by communicating with a debtor regarding new debts, even when the debtor is represented by counsel on an earlier debt.” Nothing new under the sun.
But this case does raise a question, how does your office handle the same or similar situations. I would argue that the better method is that situation would be to contact the attorney and ask if the representation would now be including the new debt. Sometimes you may get a response that they do and sometimes, believe or not, they don’t. A carefully worded inquiry should save on future legal fees and one less headache to the management. The treatment should be the same even when there are several years between the initial representation and a new account.
Oh yes, there was also an issue regarding automated calls to a cell phone. Whether the calls were automated or not was in dispute but the Court found that Woodman provided her cell number to the hospital on her admission form, agreeing to be contacted on that number and that constituted “prior written consent.” This another reason why those admission forms are important to obtain as part of the placement file. With that form and a short memo sent to Plaintiff’s counsel, one could either get rid of the claim early or set the table for a subsequent sanctions motion. Something to think about.
Medical Debt Bill Would be ‘Top Priority’ if Dems Retake House, Sponsor Says
Earlier this year, Rep. Gabe Vasquez, a Democrat from New Mexico, introduced a bill in Congress that would, among other provisions, prohibit hospitals from sending unpaid medical debt accounts to collection agencies unless certain circumstances are met. While the bill hasn’t moved an inch in the six weeks since it’s been introduced, it’s what could happen months from now that may be of concern for the healthcare and accounts receivable management industries. During a meeting in Albuquerque last week to discuss the bill and the state of medical debt, Rep. Vasquez made a comment that if Democrats regain control of the House of Representatives, Rep. Frank Pallone [D-N.J.], currently the ranking member of the House Energy and Commerce Committee, would make passing Rep, Vasquez’s bill a “top priority,” according to a published report. More details here.
WHAT THIS MEANS, FROM LAURIE NELSON OF AUTOSCRIBE: As the article notes, if Democrats retake control of the House, the Patient Debt Relief Act (H.R. 9129) could become a legislative priority, given the widespread concern over medical debt. For debt collectors, it’s critical to understand the bill’s nationwide implications, not just in New Mexico.
Stricter Regulations on Medical Debt Collection
The Patient Debt Relief Act is a federal bill that, if passed, would impose stricter regulations on hospitals participating in Medicare. For debt collectors, any medical debt tied to Medicare patients—particularly lower-income individuals and seniors—would be managed under tighter rules. Hospitals must comply with more rigorous financial assistance guidelines, ensuring patients are informed of aid options before their debts can be transferred to collectors.
This could significantly reduce the number of unpaid debts available for collection. Hospitals must improve their financial assistance offerings and work proactively with patients earlier in the billing cycle, leaving collectors with fewer accounts to pursue.
Debt Forgiveness through Nonprofit Involvement
A vital feature of the act is creating a grant program that allows nonprofit organizations to purchase and forgive medical debt. Similar programs, such as RIP Medical Debt, have already successfully eliminated billions of dollars in medical debt through donations. For debt collectors, this trend suggests a shrinking market for medical debt, forcing companies to shift focus to non-medical debts or adjust their strategies to operate in a landscape with fewer accounts.
Compliance with New Rules and Tighter Oversight
The act mandates that hospitals notify patients about financial assistance programs and curb aggressive debt collection tactics. This presents a significant shift for debt collectors, as it will result in increased oversight and regulation of how unpaid medical debts are pursued. Collectors must adjust their practices to comply with these new restrictions, likely leading to higher operational costs related to compliance, training, and legal oversight.
Potential for Additional State-Level Protections
With the increased focus, beyond the federal level, states like New Mexico, Colorado, and California could follow with added reforms, such as capping interest rates on medical debt or limiting wage garnishment for unpaid bills. These state-level regulations would add another layer of complexity for debt collectors, particularly for those operating across multiple states. Ensuring that practices align with both federal and state laws will be critical to maintaining compliance and avoiding potential penalties.
Conclusion
Debt collection companies specializing in medical debt must be proactive about the potential changes introduced by the Patient Debt Relief Act. With fewer debts to collect, stricter rules to follow, and increased regulatory oversight, the industry must adapt its strategies and explore new areas to sustain growth. Remaining vigilant about federal and state regulations will be essential for maintaining compliance and navigating this shifting landscape.
Judge Grants MSJ for Defendant in FDCPA Case Over Debt Verification
Nearly a year after getting the ball to the one-yard-line, a District Court judge in Connecticut has finally crossed the goal line, granting a defendant’s motion for summary judgment on the last remaining claim in a Fair Debt Collection Practices Act case over how it attempted to collect on an unpaid credit card debt. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATHIAS: Plaintiff, proceeding pro se, commenced an action against the Defendant asserting various violations of the Fair Debt Collection Practices Act and all but one of those assertions were disposed on Defendant’s Motion to Dismiss. The claim that survived was whether Defendant sufficiently validated Plaintiff’s American Express account. Plaintiff received an initial Section 1692g communication from Defendant alerting Plaintiff to the fact that American Express had placed his account with Defendant for collection. Instead of demanding validation from Defendant, Plaintiff wrote directly to American Express requesting validation. American Express forwarded Plaintiff’s letter to Defendant and Defendant sent a letter to Plaintiff enclosing 7 monthly credit card statements. In opposition to Defendant’s motion for summary judgment, Plaintiff contended that Defendant sent him monthly statements for a different account than the account Defendant was collecting on and suggesting in prior communication with Defendant, that monthly statements were insufficient to validate an account. The Court rejected Plaintiff’s assertion that Defendant provided Plaintiff with the incorrect monthly statements because Defendant produced a copy of the cover letter and the monthly statements that included Plaintiff’s name, address and pertinent account number and Plaintiff was unable to provide any evidential support for his position. The Court ruled consistently with other jurisdictions that monthly statements are sufficient to comply with a debt collector’s obligation to validate a credit card account.
Judge Denies MTD in FCRA Case Over Investigation into ID Theft Claim
Investigating disputes, especially in a situation where an individual is claiming to be the victim of identity theft, is important. A District Court judge in Minnesota has denied a defendant’s motion to dismiss after it was sued for violating the Fair Credit Reporting Act because it failed to investigate a dispute filed by the plaintiff, who had her identity stolen by the girlfriend of her brother in order to purchase a used car. More details here.
WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: This decision underscores the critical need for strong policies and procedures when investigating consumer claims of identity theft. The court found a factual question regarding whether the agency adequately examined the consumer’s allegations of fraud and forgery. Consequently, this ruling elevates the standard for what constitutes a “reasonable investigation” in identity theft disputes. The court pointed out that the agency did not sufficiently evaluate the evidence provided by the consumer, which should have triggered a more thorough inquiry. Moreover, while the court suggests that the agency had access to additional relevant information, it does not specify what that information was. This ruling establishes an expectation that agencies must act on all available evidence, placing a greater responsibility on them to go beyond merely considering what is presented. Ultimately, this highlights the need for comprehensive policies and procedures that clearly define an agency’s investigative practices when it comes to identity theft claims.
Comment Period Opens on FCC AI-Generated Calls
The comment period officially opened yesterday on a Federal Communications Commission proposal to regulate the use of artificial intelligence in robocalls and robotexts. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER: On August 8, 2024, the Federal Communications Commission (“FCC”) issued a Notice of Proposed Rulemaking addressing the growing use of AI-generated robocalls and robotexts. In response to complaints regarding unwanted and illegal robocalls and robotexts, the FCC proposes and seeks comment on measures designed to ensure that its rules keep up with the developing changes in AI technologies. The proposed rule would define AI-generated calls as “a call that uses any technology or tool to generate an artificial or prerecorded voice or a text using computational technology or other machine learning, including predictive algorithms, and large language models, to process natural language and produce voice or text content to communicate with a called party over an outbound telephone call.” The proposed rule also would require callers using AI-generated messages to include clear and conspicuous disclosure that the consumer’s consent to receive artificial and prerecorded calls may include consent to receive AI-generated calls. Such disclosures would extend to autodialed text messages using AI-generated content. At the beginning of a call, the proposed rule would require the caller to clearly disclose to the called party that the call is using AI-generated technology. The proposed rule, however, would exempt artificial or prerecorded voice calls made by an individual with a speech or hearing disability using any technology, including AI, designed to facilitate the ability of the individual to communicate over the telephone. While the FCC intends to protect consumers from potential AI abuses, it also recognizes the potential benefits for accessibility. The FCC seeks comments on technologies that can detect, alert, and block unwanted or illegal AI-generated calls and texts. The proposal was published in the Federal Register on September 10, and initial comments are due by October 10 with reply comments due by October 25.
These changes are likely to impact those clients using automated calling and text message systems. Such clients will need to update their disclosures to include reference to AI-generated content. We expect this change to result in a new slew of cases targeted at AI-generated content, and are prepared to advise clients preemptively on compliance and should any such litigation arise.
Plaintiff Loses Motion to Remand FDCPA Case Back to State Court Over Postage, ‘Productive’ Time
The price of a stamp and “loss of productive time” were enough for a federal judge in Oklahoma to deny a plaintiff’s motion to remand a Fair Debt Collection Practices Act case back to state court where it was originally filed, saying those monetary losses were sufficient for the plaintiff to have standing to sue. More details here.
WHAT THIS MEANS, FROM KHARI FERRELL OF FROST ECHOLS: In this case, the plaintiff’s alleged damages included monetary damages stemming from alleged financial losses such as the costs for postage and lost productive time. The court denied the plaintiff’s motion to remand, stating that the plaintiff had standing based on her alleged monetary damages. In reaching this decision, Judge Russell emphasized that any form of monetary damage is typically sufficient for courts to recognize standing, reinforcing the notion that financial losses are a critical component in legal claims. As a litigator, this case serves as a reminder of the importance of thoroughly reviewing all allegations related to a plaintiff’s claimed damages when removing a case to federal court and using any allegations of monetary loss (including an alleged loss of productive time) to establish a concrete injury for the purposes of Article III standing.
I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.
