Recently, the Third Circuit Court of Appeals provided a reminder that demand letters subject to multiple interpretations violate the Fair Debt Collection Practices Act (FDCPA). Of perhaps more importance, despite pre-dating Reg F, the case illustrated the difficulties of collecting medical debt and accurately conveying medical debt balances to past due patients.
In Huber v. Simon's Agency, Inc., 22-2483 (3rd Cir. Oct 12, 2023) a patient filed a class action lawsuit alleging that a letter a debt collection agency sent to collect a medical debt was confusing and thus violated the FDCPA. The letter included an ‘Account Summary’ that provided the two figures: in one box, the specific debt the debt collector sought to collect, titled ‘Amount,’ and in another box, a second figure, titled “Various Other Accts Total Balance.” The patient alleged the two boxes were confusing because they could be read in multiple ways.
The letter at issue, sent September 6, 2018 was the fourth letter the debt collector sent. Previous letters were sent May 24, 2018, June 14, 2018, and July 12, 2018. The debt collector challenged the class allegations, the patient's standing to bring the action, and argued that the patient could have deduced the meaning of the letter by comparing the September letter with the May, June, and July letters. Specifically, the debt collector explained, “Each correspondence was about a separate account and the ‘Total Balance’ identified increased each time by the amount owed for that specific amount.”
The court rejected the debt collector’s argument. Noting that the fourth letter was sent nearly three months after the first and second letters and nearly two months after the third letter, the court opined that in those intervals a patient “may have lost the [prior letters] and forgotten the amount of the debt completely.” Thus, because the letter could be read two different ways, and one of those ways was inaccurate, the court found the letter was deceptive and violated the FDCPA
Though the letters sent in this case pre-date Reg F, the Huber case still provides a valuable lesson. Collecting medical debt can involve multiple doctor visits, multiple accounts, and detailed accounting and collection agencies have struggled to present accurate information both within the confines of the Model Validation Notice and without. With the disclaimer that you should always consult with your own counsel, all debt collectors, and especially those who collect medical debt, should look at their letters through the eyes of the consumer or patient. Make the letter as clear as possible and spend time evaluating whether your letters can be subject to multiple interpretations, whether or not your agency chooses to use the Model Validation Notice.