Indiana Consumer Lawyer Blog

Center Township. Decatur Township. Franklin Township. Lawrence Township. Perry Township. Pike Township. Warren Township. Washington Township. Wayne Township. These are the small claims courts that together comprise the Marion County Small Claims Court. For years, anyone who had any dealings with these courts knew what was going on: creditors and debt collectors would file all of their debt collection cases in a single township, regardless of where the consumer who was being sued lived. Court rules permit this “forum shopping.” There were many reasons for it, but the reasons all had to do with providing an advantage to the debt collector plaintiffs and a disadvantage to the consumer defendants. Some of the reasons are detailed in a July 18, 2011 article in the Wall Street Journal titled “In Debt Collecting, Location Matters.” The article can be found here: http://online.wsj.com/news/articles/SB10001424052702303365804576433763597389214. Despite some “reforms” occasioned by the Wall Street Journal article, Indiana law still permits this forum shopping to the detriment of Indiana consumers.

Federal law – namely, the Fair Debt Collection Practices Act, or “FDCPA,” now, however, has put significant restrictions on the ability of debt collectors (unfortunately, the FDCPA does not apply to most original creditors) to file in whatever township small claims court they choose.

Let me explain. The FDCPA has, for a long time, said that it is an unfair collection practice for a debt collector to sue a consumer in any “judicial district” other than where the contract was signed or the consumer lives. In Indiana, “judicial district” is typically a county. So, the FDCPA prohibits a debt collector from suing a consumer in any county other than were the consumer lives or the contract creating the debt was entered into. Using this provision, Indiana consumer Mark Suesz sued debt collector Med-1 Solutions and contended that in Marion County Small Claims Court, “judicial district” meant township small claim court. If this were true, argued Suesz, suing in any township small claims court other than where the consumer lived or entered into the contract would violate the FDCPA. The district court disagreed. The district court thought “judicial district” meant county and therefore a debt collector could pick any small claims court in Marion County and it would not be unfair. Mr. Suesz appealed to the Seventh Circuit Court of Appeals. Initially, a three judge panel of the Seventh Circuit agreed with the district court. Undaunted, Mr. Suesz asked for a rehearing en banc (before all the judges of the Seventh Circuit) and it was granted. On rehearing, the Seventh Circuit ruled on July 2, 2014 that the term “judicial district” under the FDCPA means the “the smallest geographic area that is relevant for determining venue in the court system in which the case is filed.” What that means in practical terms is that, because the small claims court in Marion County is broken down into various townships (unlike all other small claims courts in Indiana), “judicial district” in Marion County Small Claims Court means the township. The citation to this case is Suesz v. Med-1 Solutions, LLC, 2014 WL 2964771 (7th Cir. July 2, 2014).

Medical debt collection in Indiana is a unique kind of debt collection in several ways. One of the things I see in medical debt collection that I don’t see in other types of collection cases is a hospital or surgery center collecting debts not only for itself but also for other service providers like facility-based physicians.

To illustrate, say Ms. Consumer has outpatient surgery at the Acme Surgery Center (“ASC”). Prior to the surgery, ASC has Ms. Consumer sign an agreement to be responsible for medical charges that are not covered by insurance. After the surgery, ASC bills Ms. Consumer’s insurance for all the care provided, including that by ASC itself for the facilities, drugs and nursing care, but also for the doctor performing the surgery (who is with the Hip and Knee Medical Group) and the anesthesiologist (Dr. Jane Doe). Insurance of course does not pay all of the charges and then ASC sends Ms. Consumer a bill – in this case for a deductible amount owed to Dr. Doe. Ms. Consumer begins making payments but apparently not fast enough so ASC refers the account to Collection Attorney. Collection Attorney files a lawsuit on behalf of ASC or Dr. Doe against Ms. Consumer for not only the unpaid medical bills but also attorney fees.

Collection Attorney may have violated the Fair Debt Collection Practices Act (“FDCPA”). Actually, there may be several different violations but the one I want to focus on here has to do with the request for attorney fees. Attorney fees in this situation are generally only available if the agreement between the parties provides for them. Here, the agreement Ms. Consumer signed was with ASC. The agreement provides for the potential recovery of attorney fees, but there is no agreement between Ms. Consumer and Dr. Doe so attorney fees are not recoverable for the collection of a debt owed to Dr. Doe.

PRESS RELEASE

Indiana Consumer Law Group/The Law Office of Robert E. Duff announces the filing of a lawsuit against Indiana attorney W. Christian Meyer. The lawsuit, which has been filed in the United States District Court for the Norther District of Indiana, alleges that Attorney Meyer filed a debt collection lawsuit on behalf of his client, Unity Surgical Center, LLC, against the wife of man who received medical treatment at the Unity Surgical Center. The Complaint alleges that this was a violation of the Fair Debt Collection Practices Act (“FDCPA”) because the wife was not liable for her husband’s debt. The debt collection lawsuit remains pending at this time. The consumer/plaintiff in the FDCPA lawsuit is seeking an award of actual damages, statutory damages, costs and attorney fees.

The consumer’s lawsuit highlights two issues worth noting here. First, attorneys, if they do sufficient debt collection work, are covered by the FDCPA. If they sue the wrong person, as is alleged here, the attorney can be held liable under the FDCPA. Second, a husband or wife is generally NOT liable for the debts of their spouse. There is an ancient doctrine that is an exception to this called the Doctrine of Necessaries. The doctrine is a holdover from the time when women were unable to legally enter into a contract. The doctrine arose to allow women to obtain the necessities of life on their husband’s credit, making the husband liable. Last year, the Indiana Court of Appeals noted, in the case of Hickory Creek at Connersville v. Estate of Combs, 992 N.E.2d 209 (Ind. Ct. App. 2013) that the doctrine continues to survive, albeit now in a gender neutral form. However, the Court of Appeals clarified that a creditor must first obtain a judgment against the contractually-liable spouse and unsuccessfully attempt to collect on that judgment BEFORE making a claim (in other words suing, or otherwise attempting to collect) against the non-contractually-liable spouse.

PRESS RELEASE

Indiana Consumer Law Group/The Law Office of Robert E. Duff announces the filing of a lawsuit against debt collector American Financial Credit Services, Inc. and the law firm of Bleecker, Brodey & Andrews. The lawsuit, which has been filed in the United States District Court for the Southern District of Indiana, alleges that American Financial Credit Services, Inc. attempted to collect a debt without providing validation of the debt as required by the Fair Debt Collection Practices Act (“FDCPA”). The lawsuit also alleges that Bleecker, Brodey & Andrews made material misrepresentations in a state court debt collection lawsuit against the consumer. The debt collection lawsuit remains pending at this time. The consumer/plaintiff in the FDCPA lawsuit is seeking an award of actual damages, statutory damages, costs and attorney fees.

PRESS RELEASE

Indiana Consumer Law Group/The Law Office of Robert E. Duff announces the filing of a lawsuit against debt collector Portfolio Recovery Associates, LLC and the law firm of Morgan & Pottinger, P.S.C. The lawsuit, which has been filed in the United States District Court for the Southern District of Indiana, alleges that the defendants misrepresented the origin of the debt they were attempting to collect and thereby violated the Fair Debt Collection Practices Act (FDCPA). The FDCPA lawsuit arises out of another lawsuit where Portfolio Recovery Associates and Morgan & Pottinger filed suit against the consumer plaintiff in Indiana state court alleging that she owed a credit card debt. That lawsuit remains pending at this time. The plaintiff in the FDCPA lawsuit is seeking an award of actual damages, statutory damages, costs and attorney fees.

The United States Court of Appeals for the Seventh Circuit recently affirmed the dismissal of a pro se plaintiff’s complaint in the case of Todd v. Collecto, Inc., 2013 WL 5452071. Michael Todd alleged that Collecto had violated the FDCPA by calling him and discussing his mother’s debt with him. Specifically, Mr. Todd first alleged that this violated Section 1692b of the FDCPA. Section 1692b generally prohibits a debt collector from communicating with anyone but the debtor about a debt, except to obtain contact information. (Note: This means a debt collector cannot legally call friends, relatives or co-workers and discuss the debt, and cannot call them at all if the debt collector knows how to contact the debtor.). The Court found that Mr. Todd’s complaint did not state a claim under this section because, under the terms of the section, only the debtor (his mother) could sue to enforce it.

Mr. Todd also alleged that Collecto’s conduct was unfair and unconscionable under Section 1692f. This section generally prohibits a debt collector from engaging in unfair and unconscionable conduct in the course of collecting a debt. The Court ruled that the allegations of the complaint did not state a claim under this section. Important to the Court’s ruling was that there was only one conversation, there was no request for payment and no express or implied threat of repercussions for Mr. Todd or his mother.

The takeaway from this case is that drafting the complaint is very important in an FDCPA lawsuit, just as it is in any case. Reading between the lines, it appears to me that, while no explicit request for payment was made, one of the reasons the Collecto representative engaged in this conversation with Mr. Todd was to get him to pay the debt on his mother’s behalf. An explicit request for payment need not be made for the call to be an attempt to collect a debt. Had Mr. Todd alleged that the phone call to him was an attempt to collect a debt from him, that would make him an alleged debtor under the FDCPA and would provide him with considerably more protections under the Act. If Mr. Todd could have truthfully make this allegation, I believe his claim would have survived the defendant’s motion to dismiss.

PRESS RELEASE

Indiana Consumer Law Group/The Law Office of Robert E. Duff announces the filing of a lawsuit against Deca Financial Services, LLC, a debt collector based in Fishers, Indiana. The lawsuit, which has been filed in the United States District Court in the Southern District of Indiana, alleges that Deca Financial lied about when and whether a lawsuit had been filed, sued the wrong person, misrepresented the amount of the debt that was owed, attempted to collect certain amounts that were not owed and filed and maintained a lawsuit despite knowing that the debt had been paid, all in violation of the Fair Debt Collection Practices Act. The lawsuit seeks an award of actual damages, statutory damages, costs and attorney fees.

DSG Services Group Inc. is a debt collector operating out of Chicago, Illinois. The Indiana Consumer Law Group/The Law Office of Robert E. Duff is preparing to file a Fair Debt Collection Practices Act (FDCPA) lawsuit against DSG Services Group Inc. for sending our client a letter which we believe violates the FDCPA. The FDCPA requires that, within five days of a debt collector’s initial communication with a consumer in connection with the collection of a debt, the debt collector send the consumer a written notice containing certain information, including the amount of the debt and the name of the creditor to whom the debt is owed. The letter from DSG Services Group Inc. does not state the name of the creditor to whom the debt is owed. Click here to view a redacted copy of the letter sent to our client.

If you have received a letter from DSG Services Group Inc. like this one, or a similar one from DSG Services Group Inc. that does not reveal the name of the creditor to whom the debt is owed, please consider contacting us. We may be able to help you, regardless of where you live in the United States. Please note that only the initial written communication from DSG Services Group, Inc. need contain the name of the creditor to whom the debt is owed. There is no requirement under the FDCPA that every follow-up letter from DSG Services Group Inc. attempting to collect a debt contain this information.

Feel free to call our office at 800-817-0461 or complete this short form if you believe we might be of service to you.

Indiana Consumer Law Group/The Law Office of Robert E. Duff occasionally is contacted by a consumer who has just found a debt collection account on their credit report that is not theirs. We can help.

There are many ways these situations can be handled, but in my experience the best way to handle them, as long as you are sure the debt is not yours, is to file an FDCPA lawsuit against the debt collector. It is a violation of the FDCPA for a debt collector to attempt to collect a debt that is not owed. Putting a collection account on your credit report is collection activity, i.e., an attempt to collect a debt, and if the debt is not owed the debt collector has violated the FDCPA.

We represent the consumer in filing an FDCPA lawsuit against the collection agency. Typically (of course we cannot guarantee a particular result in any particular case, all cases are different), these cases are settled within a month or two when the collection agency agrees to delete the collection account, pay our client $1,000 statutory damages, refund our client’s $350 filing fee and pay our client’s attorney fees. In exchange, typically, the collection agency requires our client to sign a settlement agreement/release and dismiss the FDCPA lawsuit with prejudice (permanently). Because our client’s objective was just to get this erroneous account off their credit report, the client is pleased with the result.

The biggest debt collector in the U.S., measured by income, is NCO Financial Systems, Inc. In 2010, their parent company, NCO Group, Inc., reported total revenues of $1.6 billion. They don’t have a very good reputation either, having been ranked as one of America’s Worst Collection Agencies by budhibbs.com. Personally, I have not found them to be one of the worst I have seen, but the Indiana Consumer Law Group/The Law Office of Robert E. Duff has sued them multiple times for FDCPA violations. I took a look at the electronic docket for the United States District Court for the Southern District of Indiana and found that they have been sued several times a year over the last ten years.

If you have been contacted by NCO Financial Systems, Inc. and believe that they have violated the Fair Debt Collection Practices Act (read about the most common violations here), you can contact our office by submitting this form.