A collection operation has filed a petition with the Supreme Court for it to hear arguments in a Fair Debt Collection Practices Act case, seeking answers to three questions related to the work that should be done before starting collection activity on an account, and whether a medical debt incurred after someone was injured while working is considered a consumer debt.
The petition was filed by North American Credit Services, which is asking the Court to resolve what it calls “unworkable and conflicting standards” created by lower court rulings that, in its view, improperly expand a debt collector’s duties under the FDCPA.
The background: The case stems from a dispute over medical debts placed for collection after an individual was injured in a car accident while working as a courier. The hospital sent the bills directly to the individual, even though the treatment was covered by Florida’s workers’ compensation laws.
- When the debts were later referred to NACS for collection, the company sent two validation letters to the consumer, who then filed suit under the FDCPA.
- Both a district court and the Eleventh Circuit ruled in favor of the plaintiff, holding that NACS violated the FDCPA by sending collection letters on a debt the consumer did not personally owe.
- The courts also rejected the company’s attempt to invoke the FDCPA’s “bona fide error” defense, finding that NACS relied too heavily on information from the creditor and failed to maintain procedures capable of catching such errors.
The petition: NACS’s filing asks the Supreme Court to answer three questions:
- Whether the FDCPA requires third-party debt collectors to conduct an independent, preemptive investigation into possible defects or legal challenges to a debt before sending the validation notice required under Section 1692g.
- Whether the statute’s bona fide error defense is limited only to a collector’s internal policies, or if it may also include procedures developed in cooperation with the original creditor.
- Whether a medical debt incurred during employment and governed by a state’s workers’ compensation laws qualifies as a “consumer debt” under the FDCPA.
The company argues that the Eleventh Circuit’s ruling effectively forces collectors “to scan all possible issues — legal, factual, known, and unknown — before sending the federally mandated validation notice,” creating a no-win situation where even compliance with the statute’s notice requirements can result in liability.
In its brief, NACS wrote that “[n]othing in the FDCPA statutory framework requires a third-party debt collector to take any preemptive or investigative review of the debt obligation to vet all possible errors or inaccuracies before sending the 30-day validation notice,” emphasizing that Congress designed the validation process itself as the mechanism for identifying disputes.
The petition also contends that the Eleventh Circuit “erred in categorically determining that medical debt obligations are consumer debts…without conducting the required analysis to determine if the debt obligation was primarily for personal, family, or household purposes.” Because the debt arose from a work-related injury, NACS asserts, it was not a “consumer debt” under the statute.
