In Flecha v. Medicredit (Flecha v. MEDICREDIT, INC., Dist. Court, WD Texas 2017), Texas District Court Judge Lee Yeakel has denied a request by Medicredit to dismiss the case on grounds that there is no basis for the Plaintiff’s complaint. The case is allowed to continue. Nina Flecha has alleged, in a class action case, that Medicredit threatened her with litigation to scare her into paying her medical bill, without any real intent to sue, which, if true, would constitute a violation of the Fair Debt Collection Practices Act (FDCPA).


In June 2016, Nina Flecha (“Flecha”) filed a class action suit under the FDCPA alleging that Medicredit had sent her a letter containing a false threat to sue. Flecha argued that since Seton Medical Center Hays (“Seton” is Medicredit’s client and the original creditor on an unpaid $5,166.71 medical bill)  does not sue consumers for medical debts, the collection letter caused an FDCPA violation.  Medicredit filed an instant Motion for Judgment on the Pleadings in the fall of 2016, citing Federal Rule of Civil Procedure 12(c), alleging that Flecha did not have a valid claim for relief under the FDCPA because the collection letter did not contain an explicit threat of litigation.

The court denied Medicredit’s motion, finding that a dismissal would only be appropriate  when/if it is apparent that not even a “significant fraction of the population would be misled” by the contents of a collection letter. A review of the purpose of the FDCPA is offered, reminding us:

15 U.S.C § 1692(e). Section 1692e generally prohibits "false, deceptive, or misleading representation[s] or means in connection with the collection of any debt." 15 U.S.C. §1692e. The section provides a non-exhaustive list of examples of such conduct, including "[t]he threat to take any action that cannot legally be taken or that is not intended to be taken," and "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." 15 U.S.C. §1692e(5) and (10). Congress "clearly intended the FDCPA to have a broad remedial scope" and "[t]he FDCPA should therefore be construed liberally in favor of the consumer." Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 511 (5th Cir. 2016) (quoting Serna v. Law Office of Joseph Onwuteaka, P.C., 732 F.3d 440, 445 n. 11(5th Cir. 2013)).

Importantly, Seton does not deny Flecha’s claim that it does not sue patients to collect outstanding medical bills. There is also no dispute about the contents of the collection letter in question, which states, in part: 

“…a determination must be made with our client as to the disposition of your account…voluntary resolution is doubtful…DO NOT IGNORE THIS NOTICE.” (emphasis in original) 

Medicredit argued (relying on Jenkins v. Union Corp., 999 F. Supp. 1120, 1136 (N.D. Ill. 1998) that Flecha has no claim under § 1692e(5) because the letter in question does not outright mention litigation, or imply the pursuit of litigation. However, many courts have established that explicit threat is not required in order to establish a violation of § 1692e(5), and Judge Yeakel noted that the Texas court is not bound by the Jenkins ruling, adding that the “the standard articulated by Jenkins is far from the controlling rule regarding what is necessary to state a § 1692e(5) claim.” 

Instead, the court decided that “a plaintiff is permitted to offer evidence at a summary judgment or trial stage to show that indeed the language confuses the unsophisticated consumer." In the eyes of the judge, at this stage of the case, Flecha has brought a plausible claim that Medicredit violated 15 U.S.C. § 1692e(5) by threatening legal action it had no intention of pursuing. The case will proceed to its next stage.

insideARM Perspective

This case is still in the pleading stage, and we’ll continue to watch it unfold. However, Flecha v. Medicredit already holds a gift for the healthcare provider community. 

This is an auspicious moment in the history of the modern healthcare business: With the rise of high deductible health plans, an unprecedented influx of insured healthcare consumers are bound to enter third-party collections too hard and too soon thanks to overdue, unmanageable and surprise self-pay medical bills. Although better patient financial service options are proliferating, and both billing and collection agencies are seeing excellent results from a softer and more flexible revenue cycle approach, traditional collection methods like Medicredit’s are still most common. We expect to see many more cases of the same ilk in the near future as a result.

How can the provider community shunt the infection? 

I wrote a series not long ago for insideARM about how providers can take steps to audit their collection agencies to ensure the presence of a solid compliance protocol. Many collection agencies have call monitoring programs in place (many using voice analytics software to flag potential call center compliance issues), and some even have dedicated audit teams that review flagged calls and address breaches by agents. A smaller number put their written communications under the looking glass, especially routinely, as would be prudent, since case law on these issues does evolve. 

It’s worth considering the guidance of the judge in Flecha, who re-capped a slew of written collection letter statements that have been sufficient to create a fact question on whether or not collection letters contained threatening language: 

  • "[i]tem has been referred for Collection Action" and "[w]e will at any time after 48 hours take action as necessary and appropriate to secure payment in full;” Pipiles, 886 F.2d at 25-26.
  • referenced settling matters "out of court" and "unless we receive your check or money order, we will proceed with collection procedures;” Baker, 677 F.2d at 778-79.
  • "[f]ailure to pay this debt immediately can result in involuntary resolution;” Samuel v. Approved Credit Solutions, 2015 WL 4548745, at *3 (S.D. Ind. July 28, 2015).
  • directing consumer to pay debt "so that further action by our office can be avoided;” Canlas v. Eskanos & Adler, P.C., 2005 WL 1630014 at * 2 (N.D. Cal. July 6, 2005)
  • if debtor did not "work with" creditor, "further steps would be taken.”  Perretta v. Cap. Acquisitions & Mgmt. Co., 2003 WL 21383757 at *4 (N.D. Cal. May 5, 2003).

What’s the key takeaway so far in Flecha v. Medicredit? Whether you engage third party collections or not, make sure there are established procedures and controls in place to ensure (both internal and vendor) compliance with the FDCPA. Written communications sent on your organization’s behalf at any point in the patient lifecycle are a reflection of your brand and part of the customer experience. They’re also fodder for litigation under the FDCPA. It’s never a bad idea to ask to see which letters your billing and collections vendors are using to communicate with patients. Make a good faith effort to review them in light of FDCPA examination criteria. Document your review. Repeat it routinely and involve other senior leaders in your organization in the effort. An ounce of prevention is worth a pound of cure.

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