Every now and then, the issue of how to properly report medical debts pops up. Should each transaction for medical care provided be reported as a separate debt, or should they all be bound together as one? The Seventh Circuit Court of Appeals (7th Circuit)  previously found that the former is appropriate, and once again reiterated this position to the same plaintiffs' counsel.


For the sake of this article, here is an oversimplified overview of a complex and nuanced matter. When a patient receives medical care, they are billed for each medical-service charge separately. If unpaid, healthcare providers send these charges to debt collectors as separate debts. If the debt collector furnishes data to the credit bureaus, then each service charge is reported as a separate debt. This is exactly what happened in the case Zablocki v. Merchants Credit Guide Co. (7th Cir. Jul. 28, 2020)

In Zablocki, the plaintiff-appellants received multiple medical services within one visit to the provider—for example, one plaintiff-appellant had multiple x-rays done. When he didn’t pay off what he owed for the x-rays, the medical provider placed his accounts with a debt collector, who credit reported the remaining amounts for the services separately. Plaintiff-appellants filed lawsuits arguing that reporting the debts separately—rather than in the aggregate—misstates the character of the debt and is an unfair and unconscionable means of collecting a debt. Shortly after this lawsuit was filed, the 7th Circuit issued its decision in Rhone v. Medical Business Bureau LLC, which stated that reporting debts in the aggregate could be misleading.

The district court dismissed the lawsuit, and the 7th Circuit affirmed dismissal. The 7th Circuit turned to the definition of “debt” as outlined in the FDCPA, and found that it supports a “per transaction” approach (rather than the “per creditor” approach that plaintiff-appellants were pushing).

Next, the 7th Circuit turns to the other claim: that the practice is unfair and unconscionable:

Viewing Merchants’s separate reporting of debts from the perspective of an unsophisticated but reasonable consumer, we see the alleged conduct as falling outside the scope of these terms [“unfair and unconscionable”]. It is reasonable, and not at all deceptive or outrageous, for a collector to report individually debts that correspond to different charges, thereby communicating truthfully how much is owed on each debt. Some consumers may prefer to have their debts reported in a way that conceals debt-specific information, like how much is owed on individual debts, when specific debts were incurred, and which debts are stale. Those consumers may be willing to forego the more detailed information on their credit reports if the aggregated reporting increases their credit scores.  

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But a preference does not necessarily equal an injustice, partiality, or deception. And the debt-reporting rule that the plaintiffs propose would conceal debt-specific information that other consumers may prefer, or be entitled, to see on their credit reports. See Rhone, 915 F.3d at 439 (recognizing that aggregated reporting could be misleading). The case before us illustrates the point: had Merchants reported in the aggregate all the debts owed to each creditor, [plaintiff-appellants’] credit reports would not indicate the amounts of each separate debt; when each debt would be removed from the credit report; or other features specific to each obligation.

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Here’s a fun little fact: the plaintiffs in the instant case and the plaintiff in Rhone were represented by the same consumer attorney. This means that, shortly after this case was filed, plaintiffs’ counsel was aware that the 7th Circuit filed a precedential opinion that rejects the allegations made. And yet, they continued fighting this case: not only did they not give up when the district court dismissed the claim, they appealed and had the 7th Circuit reiterate the same ruling again. It is a waste of the judicial system’s already slim resources, all done with a hope that the debt collector will settle the case rather than defend—even if they are in the right. Does this sound fishy? It should, because it is. 

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