Church v. Accretive Health, Inc.
Order granting 91 MOTION for Summary Judgment filed by Accretive Health, Inc. The 108 MOTION to Exclude New Evidence Filed with Reply Brief filed by Mahala A. Church is denied. This action is dismissed with prejudice. Defendant is ordered by 12/8/2015 to file a supplemental memorandum re: Motions to Seal (Docs. 93, 102, 105 and 109). Signed by Chief Judge William H. Steele on 11/24/2015. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
MAHALA A. CHURCH, on behalf of
herself and all others similarly situated,
ACCRETIVE HEALTH, INC., aka dba
MEDICAL FINANCIAL SOLUTIONS,
CIVIL ACTION 14-0057-WS-B
This matter comes before the Court on defendant Accretive Health, Inc.’s Motion for
Summary Judgment (doc. 91). The Motion has been briefed and is now ripe for disposition.1
Motions to Seal.
Before turning the Rule 56 Motion, the Court examines a quartet of Motions to Seal
(docs. 93, 102, 105 and 109), through which the parties endeavor to place under seal their entire
summary judgment briefs and the vast majority of the accompanying exhibits. As grounds for
such a request, the parties contend that these filings “refer extensively” to matters marked
“confidential” in discovery pursuant to protective order, that “much” of the information so
designated “relates to personal health information,” and that these filings also contain “highly
confidential and proprietary information” relating to the “operations, business model and
financial information” of the defendant and/or nonparty Providence Hospital.
Movant has requested oral argument. Review of the papers confirms that the
parties have devoted in the aggregate more than 70 pages of briefing to a singular, narrow legal
issue on largely undisputed facts. Moreover, the parties have already been heard once in this
very case via another, similar set of briefs addressing precisely the same narrowly circumscribed
legal question, albeit without the benefit of a developed factual record. Under the circumstances,
oral argument would serve no constructive purpose; therefore, the Court in its discretion denies
defendant’s request. See Civil L.R. 7(h) (“In its discretion, the Court may rule on any motion
without oral argument.”).
Of course, federal courts have long recognized a strong presumption in favor of allowing
public access to judicial records. See, e.g., Chicago Tribune Co. v. Bridgestone/Firestone, Inc.,
263 F.3d 1304, 1311 (11th Cir. 2001) (“The common-law right of access to judicial proceedings,
an essential component of our system of justice, is instrumental in securing the integrity of the
process. … [T]he common-law right of access includes the right to inspect and copy public
records and documents.”). “Indeed, the common law right of public access to judicial documents
is said to predate the Constitution.” United States v. Byrd, 11 F. Supp.3d 1144, 1148 (S.D. Ala.
2014) (citation and internal marks omitted). The presumption of access extends to “[m]aterial
filed in connection with any substantive pretrial motion, unrelated to discovery,” and to any
“motion that is presented to the court to invoke its powers or affect its decisions.” Romero v.
Drummond Co., 480 F.3d 1234, 1246 (11th Cir. 2007) (citations and internal quotation marks
omitted). “Litigants may not override that presumption by simply referencing a protective
order.” Allstate Ins. Co. v. Regions Bank, 2015 WL 4073184, *2 n.3 (S.D. Ala. July 2, 2015);
see also Suell v. United States, 32 F. Supp.3d 1190, 1192 (S.D. Ala. 2014) (“[t]the mere
existence of a protective order does not automatically override the public’s right of access”).
The parties’ proffered justifications for the extraordinary “seal-everything” remedy they
seek are too general, too conclusory, and altogether too skeletal. Inspection of the briefs and
exhibits reveals minimal discussion of personal health information. While certain of Church’s
medical information and billing records are included, she has not requested that such materials
be sealed to protect her privacy interests; rather, it is defendant that appears to be leading the
charge on the Motions to Seal.2 And the blanket assertion that across-the-board sealing is
appropriate to safeguard “highly confidential and proprietary information” relating to the
business practices of defendant and Providence Hospital appears to be breathtakingly overbroad.
Not every internal billing procedure or policy of a company is automatically rendered “highly
confidential and proprietary.” Not every page from a company’s internal policy manual is a
To the extent that billing records concerning other patients have been included, it
appears that the requisite spreadsheet exhibits have redacted patient names and other identifiers,
such that there would be no “personal health information” justification to maintaining sealed
status for those exhibits. And the few billing letter exhibits that recite names of other consumers
could be easily redacted because those consumers’ identities are unimportant to the issues joined
in this action.
trade secret that would confer an unfair advantage to competitors if placed in the public file.
And not every word that a deponent utters in deposition testimony concerning corporate
practices and interactions between a hospital and its vendors is necessarily so sensitive and
proprietary that the public’s right of access must yield. Yet that is essentially all the parties have
said – in sweeping, blanket, non-specific terms – to justify their Motions to Seal.
Upon scrutiny of the materials in question, the Court has no doubt that these filings do,
indeed, divulge commercially sensitive information that Providence Hospital and/or Accretive
Health may have a legitimate interest in shielding from the public. For example, the inner
workings (and, specifically, the financial terms) of the Providence / Accretive contractual
relationship may well be commercially sensitive, thereby justifying sealed status. However, the
Court also has no doubt that the universe of information and documents as to which any
legitimate sealing interest under Rule 26 exists is considerably smaller than the parties have
represented via their “seal-everything” philosophy.
As the party seeking to have all briefs and hundreds of pages of supporting exhibits
restricted from public access,3 Accretive Health bears the burden of making a particularized
showing that the Rule 26 good cause balancing test is satisfied with respect to each sealed item.
See, e.g., Suell, 32 F. Supp.3d at 1192 (“The governing standard must be applied by the plaintiffs
to each document, and to each portion of each document, separately.”); General L.R.
5.2(b)(2)(B) (motion to seal must articulate “[t]he basis upon which the party seeks the order,
including the reasons why alternatives to sealing are inadequate”). If Accretive Health really
wishes to pursue sealed status for every word in every summary judgment brief, plus dozens of
exhibits spanning hundreds of pages, then it must make a particularized showing, on a documentby-document basis (and even more disaggregated than that, as to briefs or exhibits covering
multiple categories of information), why Accretive Health’s, Providence Hospital’s or a patient’s
By all appearances, Church’s sole reason for requesting sealed status of her
summary judgment submission was to accommodate Accretive’s wishes. See doc. 102
(justifying plaintiff’s Motion to Seal by saying that “Accretive has filed a motion,” that
information is included “which Accretive says is highly confidential and proprietary” and that
plaintiff is filing under seal “based on … Accretive’s representation that there is no alternative
means to protect against the disclosure of the information it deems confidential”). Nothing
before the Court suggests that Church independently seeks to have anything sealed; rather, her
request seems derivative of, and animated exclusively by, Accretive Health’s hardline stance.
interest in keeping that item/information sealed outweighs the public’s right of access. To date,
it has not done so, and the Motions to Seal in their present form appear overinclusive to the
In short, the parties’ proposed kneejerk “seal-everything” approach, while perhaps
expedient, is incompatible with Chicago Tribune, Rule 26, General L.R. 5.2, and this Court’s
obligation to preserve the public’s right of access to court proceedings absent a specific showing
that overriding private interests exist. Accordingly, Accretive Health is ordered to file a
supplemental brief, on or before December 8, 2015, setting forth in detail, on an item-by-item
basis, precisely which materials and categories of information it is claiming should be sealed,
identifying the specific grounds for that contention, and specifying the reasons why redaction or
other lesser measures are insufficient to protect those private interests in secrecy. Once
Accretive Health has identified the specific items and categories of information that it,
Providence or Church has a legitimate interest in keeping confidential, an appropriate remedy
can be fashioned to safeguard those private interests while preserving the public’s right of access
to the maximum extent practicable.
Nature and Procedural History of the Action.
Despite the voluminous briefs and evidentiary submissions by the parties on summary
judgment, this case is actually straightforward. Plaintiff, Mahala A. Church, received medical
treatment at a hospital in late 2012. More than a year later, Church received a letter from
defendant, Accretive Health, Inc., stating that she had an active balance of slightly below $2,000
and requesting payment. That letter lacked certain disclosures prescribed by the Fair Debt
Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”). In her Second Amended
The Court is mindful of its obligation under Rule 56 to construe the record,
including all evidence and factual inferences, in the light most favorable to the nonmoving party.
See Skop v. City of Atlanta, GA, 485 F.3d 1130, 1136 (11th Cir. 2007). Thus, plaintiff’s evidence
is taken as true and all justifiable inferences are drawn in her favor. Also, federal courts cannot
weigh credibility at the summary judgment stage. See Feliciano v. City of Miami Beach, 707
F.3d 1244, 1252 (11th Cir. 2013) (“Even if a district court believes that the evidence presented by
one side is of doubtful veracity, it is not proper to grant summary judgment on the basis of
credibility choices.”). Therefore, the Court will “make no credibility determinations or choose
between conflicting testimony, but instead accept[s] [plaintiff’s] version of the facts drawing all
justifiable inferences in [her] favor.” Burnette v. Taylor, 533 F.3d 1325, 1330 (11th Cir. 2008).
Complaint (doc. 81), Church brings a putative class action against Accretive Health. The sole
cause of action advanced in plaintiff’s pleading is a claim that Accretive Health violated the
FDCPA by “[f]ailing to make the disclosures required by 15 U.S.C. §§ 1692e and 1692g.” (Doc.
81, ¶ 35(a).)
For its part, Accretive Health denies liability to Church, on the ground that the subject
disclosures were not required because of a FDCPA exemption for “debt which was not in default
at the time it was obtained.” The only issue presented on summary judgment – and, indeed, the
only triable issue joined in this case – is whether Accretive Health’s letter concerned a debt that
was in default. Church says it did. Accretive Health says it did not. Defendant’s Rule 56
Motion hinges on resolution of that singular, narrow legal question. If the debt was not in
default, as movant argues, then Church’s FDCPA claim fails as a matter of law and this action is
properly dismissed. If, however, genuine issues of material fact exist as to whether Church’s
debt was in default, then this action must proceed to disposition of plaintiff’s pending class
certification motion and a trial on the merits.
The pending Motion for Summary Judgment, which defendant filed following the close
of discovery, marks the second time the “default” issue has been presented for adjudication in
this case. Last December, the undersigned entered an Order (doc. 56) ruling on Accretive
Health’s Motion to Dismiss and, in the Alternative, for Summary Judgment (doc. 43). That
Motion asserted, inter alia, that (i) Church had failed to state a plausible claim that her debt to
Providence Hospital was in default, warranting dismissal under Rule 12(b)(6), and (ii) Accretive
Health had submitted “undisputed facts” establishing that no such default had occurred. On the
former question, the Court concluded that the Amended Complaint contained “a plausible factual
predicate to support Church’s allegation that the account was in default at the time of the
transfer, so as to render Accretive a debt collector for FDCPA purposes.” (Doc. 56, at 7.) On
the latter question, the Court held that summary judgment was improper pursuant to Rule 56(d)
because “[t]o force Church to go forward with summary judgment now would be unfair because
it would deprive her of the tools and information she reasonably requires to prepare her
opposition.” (Id. at 24.) After a vigorous discovery period, Accretive Health has renewed its
Motion for Summary Judgment, contending that undisputed record facts establish that Church’s
debt was not in default at the time Providence Hospital transferred it to Accretive Health, such
that the FDCPA is inapplicable and no FDCPA disclosures were necessary in the solitary letter at
Plaintiff’s Dealings with Providence Hospital and Accretive Health.
The relevant facts are, in large part, undisputed and uncontroversial. In late 2012,
plaintiff, Mahala Church, was scheduled for an inpatient surgical procedure at Providence
Hospital in Mobile, Alabama. (Church Dep. (doc. 94, Exh. T), at 22.) Because of the nature of
her medical condition, Church underwent a regimen of preoperative treatment at Providence on
multiple occasions in November 2012, then returned to the hospital for surgery on December 18,
2012. (Id. at 22-24.) At the time she received this medical care, Church was covered by two
complementary forms of insurance, namely Medicare Part A and a BlueCross/BlueShield C+
Supplement. (Id. at 21.) Church had carefully planned the timing of her surgery to occur before
the end of the calendar year so that her insurance would cover it completely, with no deductible
payment required. (Id. at 28-29.) Consequently, Church did not expect to make any out-ofpocket payments for this course of treatment, including both preoperative care and surgery. (Id.
Upon her discharge from Providence, Church was neither presented with a bill nor asked
to make any payment. (Id. at 25-26.) Instead, Church received what is called a “courtesy
discharge,” because the hospital anticipated that insurance would cover the balance owed for her
medical care. (Bragg Dep. (doc. 94, Exh. B), at 22.) That is, Providence did not pursue payment
arrangements with Church at the time of her discharge because hospital officials expected that
there would be no remaining balance after payment by insurance. (Id. at 69-70, 98.) In fact,
Providence never sent Church a bill and never contacted her directly to collect on her account.
(Church Dep., at 26, 29.) Nonetheless, Providence assigned a balance of $31,724.66 to
plaintiff’s surgery. (Doc. 94, Exh. E.) Over the next few weeks, after Medicare allowances and
associated insurance payments, that balance was reduced to $656 as of early February 2013.
(Id.; Bragg Dep., at 80.)
For her part, Church was on the cusp of filing for bankruptcy protection for reasons
unrelated to her late-2012 medical treatment at Providence. While she understood that her
December 2012 surgery and related care would be fully covered by insurance, Church also
believed she owed Providence money for “something else” (i.e., for previous medical treatment
unrelated to the December 2012 surgery). (Church Dep., at 29-30.) So Church initiated contact
with Providence’s business office in February 2013 to inquire about the status of those other
charges. (Id. at 29-31.) At that time, Providence notified her for the first time that her account
for the December 2012 surgery had an outstanding balance of $656. (Id. at 31; doc. 94, Exh. E.)
On June 7, 2013, Church filed a Voluntary Petition under Chapter 7 in the U.S.
Bankruptcy Court for the Southern District of Alabama. (Doc. 94, Exh. X.) In her bankruptcy
schedules, Church listed Providence as a creditor, with a balance owed of $656. (Id. at 29;
Church Dep., at 35.) Unbeknownst to Church, however, two days earlier Providence had
unilaterally cancelled that $656 balance and zeroed out her account for the December 2012
surgery as part of BlueCross’s contractual allowance. (Doc. 94, Exh. E.; Bragg Dep., at 85-86.)
In point of fact, then, Church owed no money to Providence for the December 2012 surgery at
the time she filed her Chapter 7 petition. Be that as it may, the Bankruptcy Court granted Church
a discharge pursuant to 11 U.S.C. § 727 on September 9, 2013. (Doc. 94, Exh. Z.)
On January 10, 2014, some four months after Church’s discharge in bankruptcy, a
Providence employee observed that, while Church’s surgery account had a zero balance, a
separate account for Church’s preoperative lab charges incurred in November 2012 (in
preparation for the December surgery) still showed an outstanding balance “pending insurance.”
(Doc. 94, Exh. V.) At that time, Providence combined the two accounts into one, thereby
reactivating Church’s account and showing a balance owed. (Bragg Dep., at 31-33, 81, 85 and
98; doc. 94, Exh. E; Graves Dep., at 99.) For reasons not germane to the claims joined here,
Providence (or, more accurately, Providence’s automated systems) did not recognize that Church
had received a discharge in bankruptcy back in September 2013. Ultimately, a letter was
generated by a third party seeking payment of what Providence’s records showed to be an unpaid
balance of $1,944.80 on Church’s account. (Id. at 32-33.) Those charges related exclusively to
the November 2012 lab work performed antecedent to Church’s surgery. (Bragg Dep., at 99100.) Church had never previously been billed by Providence Hospital for those outstanding
amounts. (Church Dep., at 23, 25-26.)
The net result of the foregoing chain of events was that Church received a collection
letter dated January 17, 2014. That single, one-page item of correspondence is the raison d’être
for this litigation. The letter was sent by defendant, Accretive Health, Inc., and listed the sender
as “Medical Financial Solutions, a Division of Accretive Health.” (Doc. 102, Exh. B.)5 The
letter reflected a date of service of December 18, 2012, a balance owed of $1,944.80, and a due
date of “UPON RECEIPT.” (Id.) The January 17 letter read, in its entirety, as follows:
“Dear MAHALA CHURCH,
“You have an active balance of $1,944.80 with Providence Hospital. To assist
you in resolving this balance, Providence Hospital has sent your account to
Medical Financial Solutions. It is very important we hear from you.
“The hospital values you as a patient and would like to help you resolve this
unpaid balance. If you are unable to remit payment in full at this time, please
contact Medical Financial Solutions to discuss resolution options that may be
available to you:
“Please call Medical Financial Solutions at 251-631-3550 or remit payment
using the payment coupon above. Our office hours are listed at the bottom of this
letter. If payment in full was sent before the date of this letter, please disregard
this request and accept our gratitude.
“If this balance presents a financial hardship to you or your family, there are
programs available to help. Please call the number above to find out more.
“Medical Financial Solutions
“Medical Financial Solutions is a non-credit reporting, third party agency. Our
company works directly with Providence Hospital to ensure your account is
protected from moving further into collections.
“Inbound and outbound calls may be monitored or recorded for quality purposes.”
(Doc. 102, Exh. B.) Everyone agrees that the January 17 letter did not contain certain
disclosures mandated by the FDCPA, specifically 15 U.S.C. §§ 1692e and 1692g.6
Although the January 17 letter nominally originated from Accretive Health, in
fact it was generated and mailed by an Accretive Health vendor called Rev Spring. (Graves
Dep., at 21; Bragg Dep., at 32-33.) This appears to have been an entirely automated process.
In particular, nowhere did Accretive Health expressly state that the letter was sent
by a “debt collector … attempting to collect a debt and that any information obtained will be
used for that purpose.” 15 U.S.C. § 1692e(11). “This warning is sometimes referred to as the
‘mini-Miranda.’” Townsend v. Quantum3 Group, LLC, 535 B.R. 415, 420 (M.D. Fla. 2015)
(citation omitted). Nor did the letter, or any follow-up correspondence from Accretive Health,
alert Church that “unless the consumer, within thirty days after receipt of notice, disputes the
Prior to receiving the January 17 letter, Church had never heard of Medical Financial
Solutions or Accretive Health, and had never interacted with or been contacted by those entities.
(Church Dep., at 41; Graves Dep., at 74.) Upon reviewing the letter, Church surmised that its
purpose was “[t]o collect money” on a medical debt, and that the sender was not “a consumer
protections agency” trying to help her. (Church Dep., at 41-42.) She construed the letter as an
indication that Providence had “turned me over to a collection agency.” (Id. at 42.) Church was
“very angry and very emotional” to receive the letter. (Id. at 85.) She “cried a lot when this
happened” and “felt like [her] world crashed that day.” (Id.) So Church notified her bankruptcy
attorney. (Id. at 44.) She also called Providence Hospital’s business office to inform them that
she owed no money on the subject account; however, the business office representative
responded that Church actually did owe a deductible for the December 2012 surgery. (Id. at 46.)
Church did not contact Accretive Health. (Id. at 45.) The January 17 letter marked the entirety
of Church’s interactions with Accretive Health concerning the subject debt. Less than a month
later, on February 11, 2014, Church filed suit against Accretive Health alleging, inter alia,
violations of the FDCPA. (See doc. 1.)
By way of postscript, the outstanding charges on Church’s account were finally resolved
on April 23, 2014, when Providence Hospital “took the 1,944 and adjusted it to the Medicare
allowance.” (Graves Dep. (doc. 94, Exh. J), at 105; doc. 94, Exh. E.) To be clear, Providence
received no additional payment from Medicare, Church or anyone else; however, as a matter of
its contract with Medicare, “[t]hese charges should have been included in what Providence
Hospital initially billed to Medicare,” so they were written off as an allowance. (Graves Dep., at
105.) Aside from the January 17 letter, neither Providence nor Accretive Health made any
attempt to collect all or part of the $1,944.80 balance from Church at any time.
validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt
collector;” that if Church notified Accretive Health in writing “within the thirty-day period that
the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt
or a copy of a judgment;” or that if Church made a written request within 30 days, Accretive
Health “will provide the consumer with the name and address of the original creditor.” 15
U.S.C. § 1692g(a)(3)-(5).
Providence Hospital’s Policies and Practices Concerning Unpaid Debts.
While the foregoing describes the sum total of Church’s dealings with Accretive and
Providence Hospital giving rise to her FDCPA claims, the narrow legal issue presented on
summary judgment requires examination of Providence’s practices and policies concerning
patient accounts with outstanding balances.
As a matter of Providence’s written policy, the patient’s portion of a bill is due at the time
of service. (Bragg Dep., at 53-54, 64-65. 69-70.) Indeed, a form given to patients before
inpatient procedures specifically states, “The patient’s portion of the bill is due a [sic] the time of
service. We accept Visa, Mastercard, American Express and Discover cards. We also can
arrange a loan with a local bank.” (Doc. 102, Exh. C, at 37.)7 As a practical matter, where
insurance coverage is involved, Providence sends the patient a bill only after it ascertains the
patient portion (i.e., which charges insurance will not cover). (Bragg Dep., at 43-44.) Where a
patient’s insurance appears to provide full coverage, Providence does not and would not expect
any payment from the patient at the time of service. (Id. at 102-03.)
If Providence sends a bill to the patient and she does not pay, then Providence’s practice
is to follow up by sending another bill the following month. (Bragg Dep., at 44.) If, after 60
days and two billing statements to the patient, a balance remains outstanding, then Providence’s
automated system would change the account’s financial classification from an A to an I. (Id. at
45-46, 101.) Even with an “I” status, the patient account is still considered “an active open AR
[Accounts Receivable] account” at Providence, and is treated as neither bad debt nor defaulted
debt. (Bragg Dep., at 46; Graves Dep. (doc. 94, Exh. J), at 118.)
What does change with the transition from A to I financial class status, however, is that
Accretive Health becomes involved. (Graves Dep., at 114-15.) Accretive Health provides
“revenue cycle management services” to Providence, including “pre-collection of unpaid and
This point is echoed by Providence’s Policy & Procedure Manuals, which state,
“All patient balances are due and payable in full at the time of service (Emergency Room or
Outpatient) or at the time of patient discharge (Inpatient).” (Doc. 102, Exh. C, at 39.) Such
Manuals further specify that “[u]pon discharge, the patient and/or guarantor should be asked for
payment of the balance due in full.” (Id. at 40 & 41.) And the Manuals reflect that “[t]he patient
Accounts Representative will exhaust every effort to collect any balance due at discharge.”
(Doc. 102, Exh. D.)
outstanding patient account balances.” (Bragg Aff. (doc. 92, Exh. A), ¶¶ 2-3.)8 Pre-collection
activities are designed to “collect unpaid and outstanding patient account balances that are in the
current hospital accounts receivable and have not yet been placed with a collection agency.
These are active open accounts not yet in default.” (Id., ¶ 3.) When a patient account is assigned
from Providence to Accretive Health, the account enters the latter’s work flow for “early-out”
services. This means that Accretive Health performs the same functions that Providence’s
business office performs, and does so from a shared service environment. (Graves Dep., at 38.)
Thus, Accretive Health does “all the things a business office would do while the account is still
on the active AR, but after, usually, the hospital sent … two statements or waited 60 days.” (Id.
at 39.)9 This involves “collection of active AR accounts that have gone unpaid for, usually, 60
days that we try to help resolve in any way we can.” (Id. at 38-39.) During this process, the
account remains active on Providence’s accounts receivable ledger, physically at Providence,
and accessible to Providence, with the only difference being that it is assigned to Accretive
Health for servicing using a shared system. (Bragg Dep., at 34.)
Upon assignment of an account, Accretive Health performs pre-collection services in an
attempt to obtain payment of the unpaid account balance. Typically, Accretive Health sends
multiple billing statements to the patient, and otherwise works directly with the patient, the
insurance company, the hospital and others to try to resolve the balance. (Graves Dep., at 65,
116.) If such efforts do not succeed after some period of time, then Accretive Health notifies
Providence and recommends reclassification of the account from “active” to “bad debt.” (Bragg
Accretive Health’s literature defines a “revenue cycle” as “the process by which
charges are generated and payments are collected for an organization. It includes revenue, such
as insurance payments and adjustments, patient payments, and financial assistance programs.”
(Doc. 94, Exh. N, at 2.)
Donna Bragg, the Director of Providence Hospital’s Business Office, echoed this
sentiment, testifying that Accretive Health “does the same thing we do, they just do it after 60
days.” (Bragg Dep., at 33.) As she put it, “they’re doing the same thing, we’re both doing the
same thing.” (Id. at 39-40.) Later in her deposition, Bragg reiterated that Accretive Health
“works with us as an extended business office. … They do the same thing we do, it’s just they
start working it and we’re back on our other accounts.” (Id. at 107-08.)
Aff., ¶ 7; Bragg Dep., at 56.)10 If Providence accepts that recommendation, then the unpaid
account is reclassified as “bad debt” on the hospital’s financial records and is considered in
default. (Bragg Aff., ¶ 7.)11 As a matter of Providence written policy, an account becomes bad
debt when the hospital or Accretive Health “has exhausted all possible collection efforts and
determined that the account is uncollectible or that the account should be referred to a
commercial collection agency.” (Doc. 94, Exh. P.)12 At that point, Accretive Health’s
involvement comes to an end, and Providence refers the “bad debt” account to a third-party
primary collection agency, either AMCOL or ACSI. (Bragg Aff., ¶ 8; Bragg Dep., at 38-39.)
Providence does not consider an account to be “bad debt” until it is actually placed with a
collection agency, after Accretive Health’s work is concluded. (Bragg Dep., at 97.) As of
January 2014, Accretive Health did not collect any Providence accounts that had been classified
by the hospital as “bad debt” or in default. (Graves Dep., at 53-54.) And Providence’s policy
has “always” been that “we don’t consider an account in default until we determine it’s
uncollectible,” which coincides with the point at which it is reclassified as bad debt. (Bragg
Dep., at 101-02.)
Applying these procedures to Church, defendant’s evidence is that her account was not in
default when Accretive Health mailed the January 17 letter to her. (Bragg Dep., at 97-98.)
According to defendant’s evidence, that account had only been reactivated for seven days at the
time the letter was sent; moreover, Church had not previously been billed for those amounts
There is no hard-and-fast rule dictating when Accretive Health and Providence
decide that an account is to be reclassified as bad debt. Ordinarily, Accretive Health will keep
the account for a minimum of 90 days. (Graves Dep., at 57.) Once Accretive Health and
Providence “feel like we have taken every attempt to collect it,” then the account may be placed
into bad debt and referred to one of Providence’s external collection agencies. (Id.)
Accretive Health likewise “define[s] the point of default to be once the account
has entered – has become a bad debt in the hospital’s accounting system, yes.” (Graves Dep., at
86.) Defendant’s Rule 30(b)(6) witness testified that “[b]ad debt means the same as default to
Accretive Health.” (Id. at 112.)
The phrase “all possible collection efforts,” read in context, would not encompass
judicial or garnishment proceedings. Indeed, the same written policy specifies that “[a]ny file
placed with a collection agency or collection attorney will require additional approval for
garnishment or suit request. … The suit request must be signed by Executive Hospital
Management or their designee.” (Doc. 94, Exh. P, at 3.)
because everyone expected that her two forms of insurance (Medicare and BlueCross/
BlueShield) would cover the entire balance. (Id. at 98.) Church’s account moved into Accretive
Health’s work flow on January 12, 2014 because (i) it had been reactivated when Providence
consolidated the pre-op account (which still showed a balance pending insurance) with the zerobalance surgery account on January 10, 2014; (ii) the balance had been outstanding for more than
60 days (in that the medical services in question had been rendered in November 2012); and (iii)
the account moved from Class A to Class I. The referral to Accretive Health’s work flow was
automated, and resulted in the letter being generated five days later. (Graves Dep., at 104.)
Church’s account remained active and accessible on Providence’s books even after being
assigned to Accretive Health. (Bragg Dep., at 34.) And Providence Hospital never considered
Church’s account to be in default or to be “bad debt.” (Bragg Aff., ¶ 11.)
Summary Judgment Standard.
Summary judgment should be granted only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Rule
56(a), Fed.R.Civ.P. The party seeking summary judgment bears “the initial burden to show the
district court, by reference to materials on file, that there are no genuine issues of material fact
that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).
Once the moving party has satisfied its responsibility, the burden shifts to the non-movant to
show the existence of a genuine issue of material fact. Id. “If the nonmoving party fails to make
'a sufficient showing on an essential element of her case with respect to which she has the burden
of proof,' the moving party is entitled to summary judgment.” Id. (quoting Celotex Corp. v.
Catrett, 477 U.S. 317 (1986)) (footnote omitted). “In reviewing whether the nonmoving party
has met its burden, the court must stop short of weighing the evidence and making credibility
determinations of the truth of the matter. Instead, the evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his favor.” Tipton v. Bergrohr GMBHSiegen, 965 F.2d 994, 999 (11th Cir. 1992) (internal citations and quotations omitted).
“Summary judgment is justified only for those cases devoid of any need for factual
determinations.” Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir. 1987)
The FDCPA Statutory Scheme: Necessity of Default.
Notwithstanding the extensive briefing and hundreds of pages of exhibits submitted on
summary judgment, the parties’ dispute boils down to a discrete, singular question, namely,
whether Church’s account with Providence Hospital was in default upon assignment to Accretive
Health. Here is why: As noted, Church’s only claim is that Accretive Health violated the
FDCPA by omitting from the January 17 letter certain disclosures required by 15 U.S.C. §§
1692e and 1692g. It is not – and cannot reasonably be – contested that the January 17 letter, in
fact, lacked those FDCPA disclosures. Accretive Health’s position, however, is that it had no
FDCPA disclosure obligations in the January 17 letter because the statute does not apply.
On their face, both § 1692e and § 1692g regulate only the conduct of “debt collectors.”
See 15 U.S.C. § 1692e (providing that “[a] debt collector may not use any false, deceptive, or
misleading representation or means in connection with the collection of any debt,” and reciting
the failure to make mini Miranda disclosures in initial communication as a violation); 15 U.S.C.
§ 1692g (mandating that, within five days after initial communication, “a debt collector shall …
send the consumer a written notice” containing certain information). The point is simple: If
Accretive is not a “debt collector,” then its failure to include statutory disclosures in the January
17 letter to Church did not violate the FDCPA and Church’s claims must be dismissed. See, e.g.,
Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1313 (11th Cir. 2015) (“There is no
dispute that § 1692e applies only to debt collectors.”).13
Unsurprisingly, “[a] ‘debt collector’ is a term of art in the FDCPA.” Ausar-El ex rel.
Small, Jr. v. BAC (Bank of America) Home Loans Servicing LP, 448 Fed.Appx. 1, 2 (11th Cir.
Sept. 21, 2011). The statutory definition of “debt collector” sets forth more than a half dozen
exclusions, only one of which is invoked by defendant here. The relevant exclusion states that
the term “debt collector,” as used in the FDCPA, does not include “any person collecting or
See also Milijkovic v. Shafritz and Dinkin, P.A., 791 F.3d 1291, 1297 (11th Cir.
2015) (“The FDCPA regulates what debt collectors can do in collecting debts.”); Harris v.
Liberty Community Management, Inc., 702 F.3d 1298, 1302 (11th Cir. 2012) (observing that
“[t]he Act’s restrictions apply only to ‘debt collectors,” as defined in the statute); White v. Bank
of America Bank, NA, 597 Fed.Appx. 1015, 1020 (11th Cir. Dec. 29, 2014) (“The FDCPA
imposes civil liability on ‘debt collectors’ for certain prohibited debt-collection practices.”).
attempting to collect any debt owed or due or asserted to be owed or due another to the extent
such activity … concerns a debt which was not in default at the time was obtained by such
person.” 15 U.S.C. § 1692a(6)(F)(iii) (emphasis added). Thus, a defendant is not a debt
collector for FDCPA purposes – and is not obliged to make FDCPA disclosures to a consumer –
if the debt being collected was not in default at the time the defendant obtained it. See Davidson,
797 F.3d at 1314 (“Subsection (F)(iii) excludes any person who is collecting or attempting to
collect on any debt owed or due another from the term ‘debt collector’ if the debt was not in
default at the time it was acquired.”); Fenello v. Bank of America, NA, 577 Fed.Appx. 899, 902
(11th Cir. Aug. 12, 2014) (“the district court correctly concluded that Bank of America was not a
‘debt collector’ for purposes of § 1692g(b) because its debt collection activities involved a debt
that was not in default at the time Bank of America became the servicer”).
The critical, dispositive question in this case, then, is whether Church’s debt to
Providence Hospital was “in default” when it was assigned to Accretive Health. See Ruth v.
Triumph Partnerships, 577 F.3d 790, 796 (7th Cir. 2009) (“Where, as here, the party seeking to
collect a debt did not originate it but instead acquired it from another party, we have held that the
party’s status under the FDCPA turns on whether the debt was in default at the time it was
acquired.”). The trick lies in the determination of whether a particular debt was in default.
Regrettably, the term “default” is not defined in the FDCPA, leaving courts to apply the statute
without congressional guidance as to the meaning of this pivotal term. In practice, where a
contract between the originating creditor and the consumer delineates when the account will be
deemed defaulted, or where some other applicable statute or regulation fixes the precise moment
of default, courts have generally held that such agreements or legal provisions dictate when an
account is “in default” for FDCPA purposes. However, where (as here) no such agreement or
governing regulation exists or has been identified by the parties, the analysis becomes more
complicated. See, e.g., Simmons v. Med-I-Claims, 2007 WL 486879, *7 (C.D. Ill. Feb. 9, 2007)
(“[W]here there is no relevant contractual provision … nor any governing regulation, courts have
struggled to establish when a debt is in default for purposes of … determining whether a party is
a debt collector under the FDCPA.”).
That said, a helpful body of precedent developing useful principles for the FDCPA
“default” analysis has emerged, and the Court finds such authorities instructive here. For
example, “[i]n applying the FDCPA, courts have repeatedly distinguished between a debt that is
in default and a debt that is merely outstanding, emphasizing that only after some period of time
does an outstanding debt go into default.” Alibrandi v. Financial Outsourcing Services, Inc., 333
F.3d 82, 87 (2nd Cir. 2003) (citation and footnote omitted). Thus, case law rejects the proposition
“that default occurs immediately after a debt becomes due.” Id.; see also Hamilton v. Avectus
Health Care Solutions, LLC, 2015 WL 5693610, *8 (N.D. Ala. Sept. 29, 2015) (rejecting notion
that “outstanding” and “in default” are synonymous under the FDCPA). Indeed, “[t]he Act’s
legislative history is consistent with construing ‘in default’ to mean a debt that is at least
delinquent, and sometimes more than overdue.” De Dios v. International Realty & Investments,
641 F.3d 1071, 1075 n.3 (9th Cir. 2011). Additionally, courts (and the parties in this case) have
recognized that “in the absence of a contractual definition or conclusive state or federal law, a
creditor’s reasonable, written guidelines may be used to determine when an account is ‘in
default,’” including such factors as “whether the guidelines are applied consistently and whether
they are designed for administering accounts, rather than for circumventing the FDCPA.” Prince
v. NCO Financial Services, Inc., 346 F. Supp.2d 744, 747 (E.D. Penn. 2004) (citation omitted);
see also Bohringer v. Bayview Loan Servicing, LLC, --- F. Supp.3d ----, 2015 WL 6561419, *6
(S.D. Fla. Sept. 10, 2015) (creditor’s written guidelines may be considered in determining
whether debt is “in default” for FDCPA purposes).14 Ultimately, “the determination of whether a
debt is in default [for purposes of the FDCPA] is to be made by a court on a case-by-case basis.”
Hamilton, 2015 WL 5693610, at *8 (citations omitted).15
The Court also bears in mind that the reasoning underlying the “not in default” exception
to FDCPA coverage is as follows: “If the loan is current when it is acquired, the relationship
between the assignee and the debtor is, for purposes of regulating communications and
collections practices, effectively the same as that between originator and the debtor. If the loan
To illustrate the “circumvention” factor, an originating creditor’s policies that
allow the creditor to transfer the loan to a third party for servicing one day, then declare it to be
in default the next day in order to avoid FDCPA regulation, would not be entitled to any weight.
See generally Magee v. AllianceOne, Ltd., 487 F. Supp.2d 1024, 1027-28 (S.D. Ind. 2007);
Church v. Accretive Health, Inc., 2014 WL 7184340, *6 (S.D. Ala. Dec. 16, 2014) (“the law is
clear that a third-party agency like Accretive has no power unilaterally to recharacterize a debt’s
status into something it is not in order to remove it from the ambit of the FDCPA”).
See also Bohringer, 2015 WL 6561419, at *6; Church, 2014 WL 7184340, at *3.
is in default, no ongoing relationship is likely and the only activity will be collection.” F.T.C. v.
Check Investors, Inc., 502 F.3d 159, 174 (3rd Cir. 2007) (quoting Schlosser v. Fairbanks Capital
Corp., 323 F.3d 534, 538 (7th Cir. 2003)); see also Ruth, 577 F.3d at 797 (“The purchaser of an
already-defaulted debt – like the debt collector, and unlike the originator and servicer of a nondefaulted debt – has no ongoing relationship with the debtor and, therefore, no incentive to
engender good will by treating the debtor with honesty and respect.”).
Whether Defendant was a “Debt Collector” for FDCPA Purposes.
Record Evidence Establishes that Plaintiff’s Account was not in Default.
There is no dispute that Accretive Health “obtained” Church’s debt with Providence
Hospital on or about January 12, 2014, when her account first moved into Accretive Health’s
work flow. See, e.g., Carter v. AMC, LLC, 645 F.3d 840, 844 (7th Cir. 2011) (“A servicing agent
‘obtains’ a debt in the sense that it acquires the authority to collect the money on behalf of
another.”). As such, the only question presented on summary judgment is whether Church’s
account was in default at that time.
Examining all record facts and circumstances, the Court finds that Accretive Health has
made a compelling showing that Church’s debt to Providence was not in default as of January
12, 2014. At that time, neither Providence nor anyone else had ever sent Church a bill or
otherwise contacted her to request or demand that she pay that debt. No one at Providence had
ever told Church either (i) that she owed anything for the November 2012 preoperative medical
care, or (ii) what the amount outstanding was. It would defy logic, reason, and common sense
for a consumer account to be classified as “in default’ when the creditor had never previously
sent a bill or otherwise contacted the consumer about the debt, and the consumer had no inkling
of the amount, or even the existence of, the debt. Furthermore, uncontroverted record evidence
establishes that Providence had reactivated Church’s account on January 10, 2014, just two days
before Accretive Health obtained the debt. It would be counterintuitive to the extreme for an
account that had been active for only two days to be labeled “in default” for FDCPA purposes
under any reasonable meaning of the term.
These common-sense observations are galvanized by consideration of record evidence
concerning Providence Hospital’s policies. Defendant’s unchallenged evidence reveals that
Providence has a three-step process for collecting debt from patients or guarantors after
insurance has paid its portion. First, Providence attempts to collect the debt directly by sending
two monthly statements to the patient. Second, if those billing statements are unsuccessful, then
Providence reclassifies the account’s financial class status from A to I, and assigns it to
Accretive Health for “early-out” or pre-collection services, typically for a minimum of 90 days.
During that period, Accretive Health performs the same activities that Providence does, and the
account remains classified as an active account receivable on Providence’s financial ledger.
Third, if Accretive Health’s pre-collection activities fail, if all possible collection efforts have
been exhausted, and if Providence determines that the account is uncollectible, then the hospital
reclassifies the account as bad debt and refers it to an outside commercial collection agency (not
Accretive Health) with no further involvement from Accretive Health. The longstanding policy
and practice of Providence is that an account is not deemed “in default” until it is determined to
be uncollectible and is classified as “bad debt” in the hospital’s accounting system. Record facts
establish that Church’s account had just barely reached the second stage of this three-step
process (after skipping the first one); therefore, as a matter of Providence policy and procedure,
that account could not have been “in default” when it was first assigned to Accretive Health. All
collection efforts had not been exhausted at that time; to the contrary, no collection efforts had
even been initiated. The January 17 letter marked the first collection effort directed at Church by
anyone at any time vis a vis the subject account. As of January 12, hospital business office
representatives had not reviewed Church’s account, deemed it uncollectible, or taken any steps to
refer it to a collection agency. That account still was listed as an active AR account on
Providence’s financial books. All of these facts and circumstances are flatly inconsistent with
the notion that Church’s account was “in default” as of January 12, 2014, when it was first
assigned to Accretive Health.
Further reinforcement of this conclusion may be found by reviewing Accretive Health’s
role in Providence’s debt collection process, juxtaposed against the purposes animating the
FDCPA statutory scheme. Recall that the “not in default” exemption is rooted in the distinction
between originators of debt (who are likely to have an ongoing relationship with the consumer
with a concomitant incentive to engender good will) and debt collectors (who have no such
ongoing relationship with the consumer and no accompanying incentive – absent regulation – to
treat the consumer with dignity and respect). All record facts before the Court establish that
Accretive Health was closely aligned with Providence in performing pre-collection activities.
The two entities worked from a shared system, with the account remaining at all times physically
housed at Providence on Providence’s books as an active, open account. The hospital’s business
office director described Accretive Health as acting as Providence’s “extended business office,”
with consultation between them as to when pre-collection activities should stop and the account
should be moved to bad debt. The January 17 letter itself explained that Accretive Health
“works directly with Providence Hospital,” and reassured Church that “[t]he hospital values you
as a patient and would like to help you resolve this unpaid balance.” Thus, Accretive Health was
directly trading in the goodwill of Providence Hospital, portraying itself as an insider to the
Providence – Church relationship, and holding itself out to Church as an extension of the
hospital. Looking at the purposes of the “in default” requirement for FDCPA disclosures, the
undersigned is of the opinion that they would not be advanced by deeming Accretive Health to
be subject to the FDCPA’s restrictions here. Operating as an “extended business office” for
Providence Hospital, and holding itself out as an extension of the hospital itself, Accretive
Health already had every incentive to treat consumers with dignity and respect so as to preserve
and foster those consumers’ ongoing relationships with Providence. There was no need for
statutory compulsion to force Accretive Health to treat Church respectfully and fairly. Under the
circumstances, Accretive Health was much more closely aligned with the status of a debt
originator than that of a debt collector; therefore, the FDCPA’s statutory purposes would not be
promoted by regulating Accretive Health’s conduct in the January 17 letter.
In the aggregate, then, the summary judgment record weaves a highly persuasive
narrative that Accretive Health is not a debt collector for FDCPA purposes because the
challenged collection activity (i.e., sending a single letter to Church on January 17, 2014) in this
case concerns a debt that was not in default when Accretive Health obtained it. As of that time,
Church had never been billed for the debt, Providence had made no attempt to collect it, and the
account had been active for just two days. Although the debt was outstanding, it cannot
reasonably be viewed on these facts to have been in default. Additionally, Providence’s policies
and procedures would not and did not classify Church’s account as being in default at the time of
the January 12 assignment to Accretive’s workflow queue. And Accretive’s hand-in-hand
relationship with Providence Hospital renders it much more akin to an originator (as to whom
FDCPA restrictions do not apply) than a debt collector (as to whom they do).
Plaintiff’s Counterarguments are Unavailing.
Faced with this formidable collection of record facts favoring summary judgment for
defendant, Church has the daunting task of identifying genuine issues of material fact as to
whether her account was “in default,” such that denial of Accretive Health’s Rule 56 Motion
might be warranted. She advances three categories of arguments in an effort to do so.
First, Church posits that Accretive Health’s evidence equating “bad debt” to “in default”
at Providence Hospital is nowhere reflected in the hospital’s written policies, and that the
testimony of Providence’s Business Office Director, Donna Bragg, to that effect should be
discounted because she merely “parroted Accretive’s legal position.” (Doc. 102, at 14.)16
Plaintiff is correct that Providence’s written policies are couched in the language of “bad debt,”
without delineating a precise moment in time at which an account becomes “in default.”
However, that omission is inconsequential for the summary judgment analysis. Despite
extensive discovery and exhaustive production and review of Providence’s written policies and
procedures, plaintiff has identified not a shred of evidence that is inconsistent with, or that tends
to rebut or cast doubt on, Bragg’s testimony that the hospital has always equated “bad debt” with
“in default,” and has never deemed a patient account to be in default until designating it “bad
debt.” Insofar as plaintiff urges the Court categorically to reject Bragg’s testimony concerning
hospital practices and policies because such testimony is not entirely duplicative of (and captured
within) the four corners of Providence’s written policy manuals, this argument also fails. Courts
in FDCPA cases have considered testimony – not just written policies – by a debt originator in
evaluating whether a specific debt was in default at the time it was obtained by the defendant.
The Court is aware of no persuasive reason favoring categorical rejection of witness testimony
concerning unwritten policies or practices of a debt originator.17
Of course, summary judgment is not the appropriate time to weigh a witness’s
credibility. See, e.g., Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir. 1996) (“It is
not the court’s role to weigh conflicting evidence or to make credibility determinations; the nonmovant’s evidence is to be accepted for purposes of summary judgment.”). Therefore, the Court
declines any invitation to do so with respect to witness Bragg’s testimony.
In this section of her brief, Church suggests that Accretive Health’s inclusion of
FDCPA disclosures in pre-collection letters transmitted to other consumers is somehow
probative of its status as a debt collector covered by the FDCPA here. (Doc. 92, at 15.) Case
law is clear, however, that a servicer not otherwise within the ambit of the statutory definition of
Second, Church asserts that even if defendant’s evidence that Providence equated
“default” with “bad debt” is accepted, such a formulation is unreasonable (because it conflates a
legal term with an accounting term), makes no sense (because it implies that an account is not in
default until “all possible collection efforts are exhausted”), and conflicts with the FDCPA.
(Doc. 102, at 15-17.) None of these contentions are persuasive.18
As to reasonableness, it is up to Providence Hospital (as originator of the debt) to
promulgate policies establishing when an outstanding patient account is deemed “in default.”
Whether plaintiff, this Court or anyone else agrees with those policies – or would have adopted
different policies if standing in Providence’s shoes – is of no moment. We are not here to sit in
“debt collector” does not thereby become a debt collector simply by calling itself one or abiding
by statutory requirements applicable to debt collectors. See, e.g., Saint Vil v. Perimeter Mortg.
Funding Corp., --- Fed.Appx. ----, 2015 WL 6575814, *2 (11th Cir. Oct. 30, 2015) (“The
question in deciding whether a law firm acted as a debt collector is not simply what the firm
called itself but rather whether the firm acted as a debt collector as that term is defined by the
statute.”) (emphasis added); Fenello, 577 Fed.Appx. at 902 (“An entity cannot transform itself
into a ‘debt collector’ within the meaning of the FDCPA simply by noting in a letter that it may
be considered one under the Act.”); Moore v. PNC Mortgage, N.A., 2015 WL 402264, *2 (S.D.
Ga. Jan. 28, 2015) (“even if the servicer calls itself a collector, FDCPA plaintiffs must still plead
that the debt was in default when the servicer began to service it”). To the extent, then, that
plaintiff would derive a genuine issue of material fact from Accretive Health’s voluntary
compliance with FDCPA disclosure requirements in other pre-collection letters sent to other
consumers, such an argument fails as a matter of law.
Fundamentally, these arguments (as well as Church’s point that the hospital’s
written policies do not expressly equate default with bad debt) cannot carry the day because, in
some sense, they address the wrong question. The crucial issue in this case is not whether, in the
abstract, a patient account at Providence Hospital should be declared “in default” at the moment
the account is written off as “bad debt.” Rather, the singular issue on which defendant’s Motion
for Summary Judgment turns is whether Church’s account was in default on January 12, 2014,
when it entered Accretive Health’s work queue through the shared system. As already stated
supra, no genuine issue of material fact exists on this point because undisputed record facts
establish that Providence had never billed Church for any amount on that account, the account
had been activated only two days earlier, the account was still listed as an active AR account on
Providence’s accounts receivable ledger, and Accretive Health was acting as an extended
business office of, and working directly with, Providence to service Church’s account. Given
these facts, even if plaintiff’s critiques of Providence’s policy treating an account as “in default”
only when it was shifted to “bad debt” were meritorious, such a victory would be pyrrhic
because plaintiff still has not identified any genuine issues of material fact as to whether
Church’s account was “in default” on January 12, 2014. It was not.
judgment of Providence’s accounting practices or policies, or to ponder how a prudent or
enlightened hospital might have structured those practices or policies differently. At any rate,
the undersigned perceives nothing unreasonable about an organizational practice of considering
an account to be in default at the time such account is taken off the active accounts receivable
ledger, reclassified as “bad debt,” and referred to an outside collection agency. Certainly,
nothing about that policy appears designed to circumvent or thwart the FDCPA.
As to whether equating “default” and “bad debt” makes sense, Church argues that it does
not because Providence’s written policies provide that an account becomes “bad debt” only after
the hospital or Accretive “has exhausted all possible collection efforts and determined that the
account is uncollectible or that the account should be referred to a commercial collection
agency.” (Doc. 94, Exh. P.) Plaintiff reasons that it cannot be true that an account is not “in
default” until after the servicer had “exhausted all possible collection efforts,” inasmuch as “all
possible collection efforts” would necessarily include litigation, which could not happen unless
the debt were already in default. (Doc. 102, at 15.) This argument misses the mark because it
distorts the phrase “all possible collection efforts” by excising it from the context of the written
policy in which it is found. Reading that policy as a whole reveals that “all possible collection
efforts” expressly do not include litigation which, the policy specifies, occurs only after referral
to a third-party collection agency (i.e., after the debt has attained “bad debt” status) and after
approval from Executive Hospital Management. (Doc. 94, Exh. P.) Thus, plaintiff’s argument
that it makes no sense to equate “in default” with “bad debt” rests on an unreasonably literal
reading of four words of a Providence written policy, divorced from the very context that defeats
plaintiff’s proposed construction.
As for plaintiff’s contention that equating “in default” with “bad debt” conflicts with the
FDCPA, the undersigned cannot agree. The discussion in Section IV.B.1., supra, demonstrates
why it would be fully consistent with the purposes of the FDCPA to rule as a matter of law that
Church’s debt was not in default when Accretive Health obtained it. Nothing in Church’s
argument effectively rebuts that reasoning. To the contrary, plaintiff’s suggestion that
Providence’s policy would allow “a collector or its client to wait until the end of the collections
process to declare a debt in default” (doc. 102, at 16) misstates the facts. Church’s account was
not at “the end of the collections process.” It was at the beginning, or even earlier. At the time
that her account was assigned to Accretive Health’s work queue, Church had not been billed
even one time, by anyone, for the subject account. Even in a hypothetical “typical” case at
Providence, an enormous amount of collection work remains to be done after the account is
written off as “bad debt.” Moreover, plaintiff’s cries of “manipulation” are misguided. There is
nothing manipulative about a policy distinguishing account servicing work done by a vendor that
acts as an extension of the hospital’s business office (which, again, is not the sort of activity that
the FDCPA was designed to regulate) from collection work done by a third-party commercial
collection agency after the hospital has written off the account as bad debt (which is exactly the
sort of activity that the FDCPA was designed to regulate).
Third, plaintiff maintains that summary judgment is inappropriate because the point of
“default” actually occurs “at or prior to the change of status to ‘I’ and referral to” Accretive
Health. (Doc. 92, at 17.) Plaintiff reasons that altering the financial classification of an account
from “A” to “I” and placing it in Accretive Health’s work flow “coincides with a fundamental
change in the status of the account,” meaning that it must be in default. (Id.) Plaintiff cites no
evidence for this proposition, and the facts before the Court belie her contention. The summary
judgment record unequivocally shows that modifying an account’s status to “I” means only that
Accretive Health will perform exactly the same debt-service work on the account that
Providence Hospital had been performing previously, using a shared system. These facts
contradict plaintiff’s characterization of the “I” reclassification as a “fundamental change.” Her
argument seems to be that shifting account responsibilities from the originating creditor to a
servicer must necessarily constitute a “fundamental change” meaning that a default has occurred;
however, neither record facts nor the statutory framework itself supports such a construction.
Indeed, the FDCPA exemption at the heart of this lawsuit shows that Congress did not intend
every transfer of an account from originator to servicer – evincing a “change in approach” by the
originator – to be a FDCPA-triggering event. Rather, as the statutory language makes clear,
transfer of a non-defaulted debt to a servicer does not give rise to FDCPA coverage, even though
it may well be symptomatic of a “change in approach” by the original creditor. Plaintiff’s
argument would effectively write the exception out of the statute.
Besides, plaintiff’s supporting rhetoric that “[b]y demanding payment and sending the
account to a third party agency for collections, Providence certainly treated the debt as in
default” and that the debt was “seriously past due after multiple demands for payment” (doc. 92,
at 18-19) is counterfactual. Once again, Providence never demanded payment from Church
before Accretive Health obtained the account. Accretive Health is not a “third party agency for
collections,” but works directly with Providence as an extension of its business office, doing the
same things Providence had been doing. Even if the Court were to embrace plaintiff’s premise
that default “certainly occurs once the creditor demands a past-due amount and the debtor fails to
timely pay” (id. at 18), summary judgment would remain appropriate here. The record evidence
is that the creditor did not demand a past-due amount from Church prior to the moment when
Accretive Health obtained the account for FDCPA purposes.
For all of these reasons, the Court determines that plaintiff has failed to show any genuine
issue of material fact on the question of whether her account was “in default” as of January 12,
2014. On this record, no reasonable finder of fact could conclude that such a default existed.
Because Church’s account was not in default at the time Accretive Health obtained it, defendant
is not a debt collector for FDCPA purposes pursuant to the “not in default” exemption found at
15 U.S.C. § 1692a(6)(F)(iii). Because Accretive Health was not a “debt collector” in relation to
Church’s debt, defendant was under no obligation to comply with FDCPA disclosures in its
correspondence to Church dated January 17, 2014. Because Accretive Health was not obligated
to include such disclosures, its failure to do so cannot give rise to viable FDCPA claims
predicated on failure to make those disclosures. Accordingly, summary judgment is properly
granted for Accretive Health as to all claims presented in the Second Amended Complaint.19
In so concluding, the Court does not endorse Accretive Health’s argument,
apparently presented for the first time in its reply brief, that it is immune from FDCPA liability
because Church did not actually owe a balance to Providence Hospital. (Doc. 106, at 11, 13-15.)
In other words, defendant relies on facts showing that Church’s account was reactivated by
mistake, that she did not actually owe money to Providence, and that the January 17 letter
stemmed from an erroneous understanding that a balance remained outstanding on the account.
Plaintiff has the better argument on this point. Multiple courts, including binding Circuit
authority, have opined that a debt is in default under FDCPA if the servicer treats it as such,
regardless of whether any debt was validly owed or not. It is the servicer’s treatment of the debt,
rather than the debt’s actual status, that matters. See, e.g., Davidson, 797 F.3d at 1312 n.2
(opining that it is of no consequence whether debt was actually in default, and that where
defendant “has treated [plaintiff’s] debt as a debt that was in default at the time it was acquired
… we will do the same”); Bohringer, 2015 WL 6561419, at *6 (“Even if a debt is not actually in
default at the time its servicing rights are transferred to a loan servicer, the debt is nevertheless
‘in default’ under the FDCPA if the servicer treats the debt as in default at the time of transfer.”)
(citations omitted); Salvato v. Ocwen Loan Servicing, LLC, 2012 WL 3018051, *5 (S.D. Cal.
July 24, 2012) (“It follows from the statutory scheme as a whole that such inquiry into whether
For all of the foregoing reasons, Defendant’s Motion for Summary Judgment (doc. 91) is
granted. There being no genuine issues of material fact as to any claim or cause of action
asserted herein, this action is dismissed with prejudice. A separate judgment will enter.
Defendant is ordered to file a supplemental memorandum in support of the pending Motions to
Seal (docs. 93, 102, 105 and 109) on or before December 8, 2015.20
DONE and ORDERED this 24th day of November, 2015.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
the debt is ‘in default’ at the time of assignment should not depend on whether the Court
ultimately finds the underlying debt to be valid or invalid.”). Thus, the fact that Providence and
Accretive Health recognized some time after January 17 that Church owed nothing on the
account is not relevant to the summary judgment analysis.
Plaintiff’s Motion to Exclude New Evidence Filed with Reply Brief (doc. 108) is
denied. The challenged exhibits were properly submitted as rebuttal evidence in defendant’s
reply. See, e.g., Hammons v. Computer Programs and Systems, Inc. (CPSI), 2006 WL 3627117,
*14 (S.D. Ala. Dec. 12, 2006) (“But nothing in the extant authorities, or in the Federal Rules of
Civil Procedure, forbids a movant from making supplemental record submissions in a reply brief
to rebut specific arguments raised by the non-movant’s opposition brief.”) (collecting cases); see
generally Sideridraulic System SpA v. Briese Schiffahrts GmbH & Co. KG, 2011 WL 3204521,
*2 n.4 (S.D. Ala. July 26, 2011) (observing that “a party properly submits supplemental exhibits
with a reply brief to rebut arguments made in the nonmovant’s response”). At any rate,
Plaintiff’s Motion to Exclude is much ado about nothing. Simply put, the new exhibits do not
materially affect the summary judgment analysis herein. The Court’s reasoning and conclusions
on summary judgment would remain unchanged even if Exhibits JJ, KK, LL and MM were not
part of the record.
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