Garner v. ClaimAssist, LLC (Maryland U.S.D.C.)

Filed: August 9, 2018

Opinion by: Judge Hollander

Holding:  An entity seeking to collect a nondefaulted debt on behalf of another entity is not considered a debt collector as defined by the Fair Debt Collection Practices Act ("FDCPA").

Facts:  Plaintiff was injured in a car accident and received medical treatment for her injuries at a hospital ("Hospital"). Plaintiff retained a lawyer to pursue a tort case relating to the accident.

Hospital’s sole member (the "Member") hired defendant to identify and seek reimbursement from third-party payors in auto liability accounts. Member transferred these accounts before they were in default. Defendant would then reach out to the patient to determine the appropriate third-party payor.

Plaintiff’s medical account was transferred to defendant to identify the proper third-party payor. Defendant sent a letter to the attorney retained to notify the plaintiff of the unpaid medical bills and that a hospital lien had been filed and attached to any reimbursement of funds as a result of the accident.

Plaintiff’s medical bill related to the accident was $801.16. Plaintiff has medical insurance and U.S. Medicare. Plaintiff alleges that the Hospital should have received payment through her medical insurance. As of April 28, 2015, the Hospital has not processed the bill. Plaintiff alleges that the debt was therefore "plainly false, inaccurate, deceptive, and/or misleading."

The defendant moved for summary judgment arguing that they are not a debt collector under the FDCPA.

Analysis: The FDCPA was enacted to protect consumers from "false, deceptive, or misleading" debt collection practices. 15 U.S.C. § 1692(e). To establish a claim under the FDCPA, one must prove: “(1) the plaintiff has been the object of collection activity arising from consumer debt; (2) the defendant is a debt collector as defined by the FDCPA; and (3) the defendant has engaged in an act or omission prohibited by the FDCPA."

The FDCPA differentiates a debt collector from a creditor by looking at the status of the debt when assigned to the entity. The status of the entity will change depending on whether the debt was or was not in default when acquired by the entity.

The FDCPA defines a debt collector as

any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

15 U.S.C. § 1692a(6).

The FDCPA excludes as a debt collector "any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another . . . which was not in default at the time it was obtained." 15 U.S.C. § 1692a(6)(F)

The FDCPA defines a creditor as:

any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

15 U.S.C. § 1692a(4).

Courts have included within the term creditor, and not debt collector, entities collecting debts assigned to them before default. The intention was to exclude loan servicers of debt that was not in default to be included as a debt collector under the FDCPA.

There is no dispute of material fact of whether the account was in default when the Member transferred the account to defendant. Plaintiff failed to present any evidence showing the account was in default. Further, defendant was seeking to collect the debt of another, the Member. Defendant, therefore, falls under the 15 U.S.C. § 1692a(6)(F) debt collector exclusion reserved for an entity collecting nondefaulted debt of another.

Therefore, the Court granted the Summary Judgment Motion as to plaintiff’s FDCPA Claims.

The full opinion is available in PDF.