Debt collection agencies must abide by federal regulations when contacting debtors. If they don’t, they may face lawsuits, litigation, and expensive restitution. One such case occurred in the U.S. Court of Appeals, Third Circuit.
Here are the details:
John Daubert received medical treatment from Wilkes-Barre General Hospital in Wyoming. He was charged $46, but his insurance paid $21, leaving him with a $25 bill. When he failed to pay the bill on time, the Radiology Associates of Wyoming Valley, who had given him an x-ray at the hospital, forwarded his medical report and cell phone number to Medical Billing Management Services (MBMS). MBMS then sent Daubert’s information to a debt collector agency, NRA.
NRA tried to collect the $25 debt in 2 ways. First, it sent Daubert a letter. According to Daubert, the letter included a bar code and a sequence of numbers of his collection account that was visible through the see-through window on the envelope. Second, NRA called Daubert’s cell phone 69 times in 10 months using a Mercury Predictive Dialer. He answered only once, and then sued NRA for violations of the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA).
Daubert claimed the barcode and account numbers in the envelope could have revealed his private information. NRA responded by filing a “bona fide error” defense. Daubert then modified his claim to include a TCPA complaint from the 69 calls to his cell phone. NRA answered with a “prior express consent” defense.
In the discovery process, NRA provided a deposition witness who testified that no human interaction was necessary to send the calls to Daubert’s cell phone. Thus, the dialing agency was solely responsible. Daubert then argued that he did not provide his cell phone number to Radiology Associates or give any permission to contact him. In an effort to halt the summary court judgment, NRA opposed with an affidavit that contradicted their original statement, saying that human interaction was, in fact, necessary to send the calls. The court used the “sham affidavit doctrine” and based its ruling on the original deposition testimony, ignoring the contradictory affidavit.
However, it refused to provide a summary ruling on the FDCPA claim (regarding the visible personal information on the envelope). Instead, the case went to a jury trial. During the trial, NRA requested a ruling of a matter of law.
Matter of law rulings put the burden of proof on the opposing party. Thus, NRA declared that Daubert lacked the evidence to prove they had acted intentionally to expose his personal information on the envelope. The jury found that the FDCPA violation was a bona fide error. After this, Daubert appealed the case to the Court of Appeals.
The TCPA Claim Appeal
The court first looked at the issue of prior express consent, and it examined other cases involving medical bills. It found that courts generally held that permission to call a cell phone was given when a patient filled out an admission form that included disclaimers stating the information may be used by others in the hospital. However, in Daubert’s situation, NRA could only show that he provided his cell phone number to the hospital, not directly to Radiology Associates. Thus, NRA’s claim of prior express consent was ungrounded.
Next, the Court of Appeals considered the district court’s decision to disregard the sham affidavit. It found that the court was within its legal right to ignore the contradictory testimony. NRA was unable to explain the discrepancy, and the court of appeals accepted the district court’s ruling of a $34,500 judgment in Daubert’s favor.
The FDCPA Claim Appeal
Regarding the FDCPA claim, the Court of Appeals discussed the district court’s judgment of a matter of law. Instead of focusing on other cases related to envelope incidents, the appellate court discussed the applicability of NRA’s defense of a bona fide error. In order to prove a bona fide error, the NRA had to prove its actions were not intentional, and that the error occurred despite proper procedures. A mistake or misunderstanding of FDCPA’s regulations regarding glassine windows on envelopes, however, would not qualify as a bona fide error.
The Court of Appeals found that other cases regarding glassine windows on envelopes had inconsistent rulings. It decided to reverse the district court’s decision in favor of Daubert. Thus, NRA could not escape liability by claiming bona fide error in this situation.
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