A Maryland Appeals Court has vacated the dismissal of a class-action complaint accusing a healthcare provider of violating state collection law, ruling that the common law litigation privilege does not shield debt collectors from liability under the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA). The ruling emphasizes that collectors are not immune from liability when attempting to collect debts they allegedly know are not owed by consumers.
The background: The case stems from a class-action lawsuit filed by patients who underwent surgery at a healthcare provider’s facility. The plaintiffs alleged that the healthcare provider and its affiliated entities engaged in unfair and deceptive practices by filing lawsuits against them to collect money that was not actually owed.
- According to the complaint, the healthcare provider had previously assured the plaintiffs that they would not be responsible for any charges beyond what their health insurance paid. The plaintiffs claimed they had forwarded their insurance checks to the defendant as instructed, believing their accounts would then be “zeroed out.”
- Despite these assurances, the defendant filed lawsuits against the plaintiffs, seeking additional payments. The complaints included claims for services provided by entities that were not parties to the lawsuits, as well as allegedly inflated attorney’s fees.
- The plaintiffs filed a class-action lawsuit, alleging violations of the MCDCA and MCPA. The defendants moved to dismiss the complaint, arguing that the common law litigation privilege immunized them from liability for filing the collection lawsuits.
The ruling: On appeal, the Maryland Appeals Court vacated the dismissal, concluding that the common law litigation privilege does not apply to statutory consumer protection claims under the MCDCA and MCPA. The Court noted that the litigation privilege typically applies to shield individuals from liability for statements made during judicial proceedings, particularly in defamation cases. However, it emphasized that this privilege does not extend to cover conduct that violates consumer protection statutes.
- In its opinion, the Court highlighted that the MCDCA and MCPA are remedial statutes intended to protect consumers from unfair and deceptive practices, including false claims made in the context of debt collection litigation. The Court found that allowing the litigation privilege to bar such claims would undermine the legislative purpose of these statutes, which is to provide a remedy for consumers against abusive debt collection practices. The ruling also pointed out that previous Maryland case law had not applied the litigation privilege to shield debt collectors from liability under these consumer protection laws.
- By vacating the circuit court’s dismissal, the Appeals Court has allowed the plaintiffs’ claims to proceed, signaling that debt collectors cannot use the litigation privilege as a blanket shield against allegations of knowingly filing false debt claims.
