Archives for March 2018

BIRMINGHAM, Ala. — AmSher is pleased to announce their newly appointed Chief Operating Officer, Marc Lanni. Marc brings nearly 25 years of experience in the ARM industry, with multifaceted leadership expertise in the first and third party collection of medical, telecommunications, student loan and financial services industries. Marc began his career with 14 years at Nationwide Credit, Inc. and most recently served for many years as the Vice President of Operations for FMA Alliance, LTD. 

As the Chief Operating Officer, Marc will provide the hands-on leadership, management and strategy necessary to ensure that AmSher has the proper operational controls, administrative and reporting procedures, and people systems in place to effectively grow the organization and to ensure financial strength and operating efficiency.

“When my old colleague and long-time friend, Seth Deforest, contacted me about the opportunity to work with him and the AmSher team, there was no doubt in my mind we’d join forces in short order. I’m very excited and am looking forward to working with this team for many years to come,” said Marc Lanni. 

AmSher President, Seth Deforest, said “We are thrilled about Marc’s decision to join the AmSher team. Not only does he bring 24 years of operational expertise to AmSher, his vast experience with quantitative analysis, portfolio management, and employee development will help AmSher deliver performance that further exceeds our clients’ expectations. Marc is energetic, highly collaborative, and has a strong reputation for driving performance in an efficient and compliant manner, making him an excellent addition to AmSher’s culture.”

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About AmSher 

For more than thirty years, AmSher has been providing exceptional accounts receivable solutions within the telecom, cable, medical and financial services industries. Headquartered in Birmingham, Alabama, they’ve built a solid reputation for providing compassionate service to consumers, while delivering consistent and competitive results for their business partners.  

For more information, visit www.amsher.com. Marc can be reached at MLanni@AmSher.com.

Debt collectors must navigate the murky waters of complying with many letter disclosure requirements. In a jurisdiction like New York, where the court dockets are chock full of FDCPA claims and the Department of Financial Services (NYDFS) established a set of debt collection rules, a collision of requirements is inevitable. In a recent decision, the Eastern District of New York was faced with this issue. 

In Polak v. Kirschenbaum & Phillips, P.C., 2018 WL 1189337 (E.D.N.Y. Feb. 16, 2018), the court denied a motion to dismiss a claim that a letter violates the FDCPA because it includes a disclosure that interest may accrue (as allegedly required by Avila) while also stating that zero interest accrued since charge off (as required by NYDFS).  

By denying the motion to dismiss, the court found that the allegations are sufficient to state a claim that including such a combination of disclosures makes the letter misleading.  Interestingly enough, the letter in question is exactly what consumer attorneys argued for in the Taylor v. Financial Recovery Services 2nd Circuit appeal. 

Read the decision here. 

Factual and Procedural Background 

Plaintiff incurred and defaulted on a credit card debt from Barclays Bank. After default, Barclays referred the account to defendant Kirschenbaum & Phillips, P.C. to collect the debt.  

Defendant sent a collection letter to plaintiff stating that “[t]he amount may vary from day to day, due to interest or other charges added to your account after the date of this letter.  Hence if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection.” The letter also included the NYDFS-required account itemization, stating that zero interest has accrued since charge off.

Plaintiff, represented by RC Law Group, brought this lawsuit alleging that the letter was false, deceptive, and misleading because it contained an interest disclosure and then also stated that zero interest has accrued since charge off. 

Defendant filed a motion to dismiss the claim. Sometime during the advocacy of this motion, likely to support the inclusion of the interest disclosure, defendant stated that statutory and contractual interest continued to accrue but that the creditor elected not to collect said interest.  

The court referred the motion to the magistrate, who issued the underlying opinion on February 16, 2018. The magistrate’s decision was adopted by the judge on March 6, 2018. 

Decision 

The court found that a combination of an Avila interest disclosure and a NYDFS itemization that states zero interest accrued since charge off is deceptive and misleading to consumers because the letter as a whole implies two opposing stances on whether or not interest is accruing. 

The court first declined to accept defendant’s argument that it should not be liable because it included the Avila safe harbor language in its letter. The court, just like the 7th Circuit in the recent Boucher v. Financial System of Green Bay, Inc. decision, found that simply including an interest disclosure does not protect the debt collector from liability if the circumstances do not warrant it. 

The court took issue with the defendants’ statements, both in the letter and while arguing the motion to dismiss, that interest was still accruing but the creditor was not collecting it.  The court found that by stating this, it is then misleading to state that $0.00 interest accrued since charge off since interest, according to defendant, was accruing. Due to this discrepancy, the court denied the motion to dismiss. 

Analysis

If your agency or firm is currently fighting the reverse Avila claims on accounts where interest is not accruing, take a good look at this case. The admission by defendant that interest continued to accrue but was not being collected by the creditor is interesting as many in the industry, including creditors and debt collectors alike, do not think this is an accurate representation of what actually occurs. However, since this admission matches the argument presented by appellant’s counsel in the Taylor appeal, this case provides excellent foresight to the Second Circuit of what could come from such a finding. 

In essence, the court here stated that if the required NYDFS itemization of interest accrued since charge off is zero, then the least sophisticated consumer assumes that interest is not accruing. Otherwise, the statement that interest is accruing would not be misleading to the consumer. Many times, since creditors do not charge interest on charged off accounts, the NYDFS itemization will include “zero.” Including an interest disclosure such as that pondered during the Taylor oral arguments would cause the exact issue seen here. 

Debt collectors are no strangers to the “damned if you do, damned if you don’t” position.  The Avila progeny of cases are a perfect example of a situation where well-intentioned debt collectors are penalized for genuinely trying to comply with mismatched requirements while plaintiffs’ counsel take advantage of the situation due to the unilateral attorneys’ fees provision in the FDCPA. With the Taylor appeal, the Second Circuit has the opportunity to stop the bleeding on the Avila issue and allow compliant debt collectors, who play a vital role in the financial ecosystem, to not drown in the legal costs associated with defending themselves against such claims.

The state of Maryland is one of the states that has transitioned many of their bonds to NMLS. They are strongly encouraging current licensees to adopt the electronic bond format and requiring that all new applications be electronic. Look at the checklist below to make sure you are compliant and can avoid time-consuming and costly deficiencies.

1. Does your agency hold any of the following licenses? If so, there are separate bonding requirements for each of them:

✓ Collection Agency License

✓ Consumer Loan License

✓ Credit Services Business License

✓ Debt Management License

✓ Installment Loan License

✓ Money Transmitter License

✓ Mortgage Lender License

2. Does your agency hold branch licenses in Maryland? If so, separate branch bonds are no longer accepted in the NMLS ESB format. Your main location bond must now be incrementally increased to accommodate all branches. 

3. Did you upload your paper bond via the Document Uploads section? If so, please note that this will not satisfy the bonding requirement in Maryland. 

4. Did you obtain a Consumer Loan bond for an Installment Loan license, or vice-versa? If so, please note that though these were once the same bond type, they are now distinct bond types in NMLS.

Earlier this month I shared the culmination of what I’ve been hearing from the industry, and what I see as core challenges to be solved. I described these in my first-ever video on Linkedin. In short, and for those who prefer to read:

1. Scammers have really ruined things. Their billions and billions of calls mean that consumers don’t trust anyone who is contacting them.
2. Collectors are legally required to confirm they are talking to the right consumer — but the consumer doesn’t trust them enough to share any information that confirms their identity.
3. Because of privacy concerns, collectors and consumers who want to jointly resolve debts are left in the 20th century, forced to communicate by postal mail and landline. This is not what anyone wants, and it forces consumers into awkward and uncomfortable phone conversations.

My overall conclusion – there has got to be a #BetterWay!

In this second video, I offer several ideas about how to address the first issue – scammers – with some practical ways to insert trust back into the system. One of these ideas is for creditors to insert a “goodbye” communication before sending an account to collections. I’m not talking about the sale of debt here — I’m talking about traditional, third party contingency collections (though yes, it should happen with debt sales, too). This communication (which may be by letter, email, private message — or whatever is the consumer’s preferred method of communication) would tell the consumer who will be getting in touch about their unresolved account. Now, when the collector makes contact, at least there is one closed loop, and something the consumer can trust.

Yes, I know there is a cost. But consider the lift in recoveries due to more effective communication.

Also, if we can improve a consumer’s experience in collections, isn’t it much more likely that there will be a “hello” conversation when they are ready to be a customer again?

insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion.

The centerpiece of the page is a chart of significant FDCPA cases. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Where insideARM has published a story on the case, a link is provided.

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Here’s a rundown of just a few of the FDCPA cases in the spotlight as 2018 got underway.

Hsu v. Enhanced Recovery Company, LLC

The issue: Was the abbreviation of the collection agency’s name an FDCPA violation?

The gist: Collection letters for the plaintiff’s T-Mobile account included the name of the original creditor, an account number, and a balance due. However, instead of identifying itself as “Enhanced Recovery Company, LLC,” ERC instead identified itself only as “ERC.”  Plaintiff’s position is that ERC’s use of “ERC” to identify itself in its letters violates the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. ERC’s letters to Plaintiff each provide a Florida P.O. box as the company’s address, and ERC had registered its initials as a fictitious name with the Florida Secretary of State at the time it sent its letters to Plaintiff. The Court found that ERC’s initials constituted a “true name” for the purposes of Section 1692e(14), and granted it  summary judgment on Hsu’s FDCPA claim.

Pfountz v. Navient Solutions, LLC

The issue: Was the collection agency a collection agency when it first began a relationship with the consumer?

The gist: A consumer claimed that Navient failed to advise it was a debt collector in its voice mails. Navient says its role in Pfountz’ account was not that of a debt collector because it began servicing the debt prior to the loan default. The court found that although the plaintiff’s complaint had competing inferences as to when Navient was assigned the debt to collect, Pfountz has alleged a plausible claim under the FDCPA. Navient’s motion to dismiss is denied.

Panico v. Portfolio Recovery

The issue: Questions around statute of limitations — specifically Delaware’s tolling statute.

The gist: A New Jersey consumer owed MBNA a substantial sum for credit card charges, and the bank assigned the rights to the debt to PRA, a debt collector. PRA was unable to recover the money, and more than three but fewer than six years after the debt went to collections, PRA sued. While NJ bars litigation on debts older than six years, Delaware’s statute, under which the MBNA credit agreement was governed, bars suits to collect these debts after three years. PRA agreed to a stipulated dismissal. In 2015, Panico filed suit alleging that PRA had violated the FDCPA in seeking to collect on a time-barred debt. The district court granted PRA summary judgment, finding that a Delaware tolling statute prevented the Delaware statute of limitations from running out on a party living outside that state during the credit relationship and ensuing litigation. The Third Circuit reversed the district court’s decision.

McKay v. Scott & Associates, P. C.

The issue: Collection agency filed suit in the right county, but in the wrong precinct.

The gist: McKay filed suit alleging defendants violated the FDCPA by filing a debt collection lawsuit in the wrong precinct of the justice court. The was filed in the correct county but in a precinct where consumer did not live. Judge found that for venue purposes, “judicial district” in this case applies to precincts and that the law firm did not file in the correct precinct.

Ceban v. Capital Management Services, L.P.

The issue: Collection agency correctly communicated tax implications of settlement offer.

The gist: Plaintiff claims that the statement, “[t]his settlement may have tax consequences” in the debt collection letter that he received was deceptive and misleading and constituted an unfair debt collection practice. Defendant  moved to dismiss plaintiff’s complaint for lack of standing and failure to state a claim upon which relief can be granted, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The Eastern District of New York agreed with the defendant.

For additional insight, read this article on insideARM.com

Clark v. Cavalry Portfolio Services

The issue: Vicarious liability when a debt buyer’s law firm files suit in the wrong venue.

The gist: Plaintiff alleged defendants violated the FDCPA by 1) bringing state court action in a judicial district where plaintiff did not reside, 2) falsely stating that plaintiff owed interest on the underlying debt and seeking such interest in the state court action 3) attempting to collect a debt they did not have a legal right to collect or standing to pursue, 4) threatening to take action they could not legally take, and 5) that it all amounted to a deceptive act and practice. The judge granted the defendant’s motion to dismiss on items 2, 3, and 4. Items 1 and 5 will proceed to trial.

Benjamin Fish v. Stone, Higgs & Drexler, P.C

The issue: Garnishment isn’t a legal action against a consumer.

The gist: To establish a violation of the FDCPA, a plaintiff must prove three elements. First, plaintiff must be a “consumer.” 15 U.S.C. § 1692a(3). Second, plaintiff must show that the money being collected is a “debt.” 15 U.S.C. § 1692a(5). Third, Plaintiff must show that defendant is a “debt collector.” 15 U.S.C. § 1692a(6). Section 1692i applies to “[a]ny debt collector who brings any legal action on a debt against any consumer.” Fish argued that Stone violated the venue provision in Section 1692i by filing a domestication action, and a garnishment action against him in Tennessee to collect on a personal loan. Stone requested summary judgment because “a garnishment proceeding is against the garnishee, not the judgment debtor, and therefore does not qualify as a `legal action on a debt against any consumer'” under § 1692i(a).  The Court agreed with Stone, finding that a garnishment proceeding is not a legal action “against a consumer.”

Watkins v. Investment Retrievers

The issue: Collection agency gets the facts wrong in its letter to a consumer.

The gist: Debt collector sent consumer a letter stating they held the title to his vehicle, and that Watkins still had it in his possession. In fact, Watkins did not have possession of the vehicle. He filed suit alleging the letter contained a false statement that violated 15 U.S.C. § 1692 of the FDCPA. The debt collector claims the consumer’s suit is immaterial and consumer suffered no harm, but the court disagreed. The court’s interpretation is that although letter would not lead the “least sophisticated consumer” to believe he now possessed a car he knew he no longer possessed, it might confuse the least sophisticated consumer—and any consumer—about whether his creditor believes he is in possession of the debt collateral. Further, the false statement could disadvantage plaintiff “in charting a course of action in response to the collection effort” by, for example, leading him to contact the debt collector to correct the mistake when plaintiff otherwise would refuse such contact or not take the time to initiate contact. The defendant’s motion to dismiss this portion of the suit was denied and the case will proceed to trial.

Ben-Davies v. Blibaum & Associates, P.A.

The issue: Law firm was correct in how it charged post-judgment interest.

The gist: Tenants brought FDCPA action in Maryland Federal court for improperly charging post-judgment interest. The case was remanded to state court on the sole issue of whether post-judgment interest rate of 6% applies to judgments that comprise unpaid rent and other expenses that are due under residential leases. The Appeals court held that it does.

Skinner v. LVNV Funding, LLC

The issue: Debt buyer was able to prove that its primary business was not debt collection.

The gist: A debt buyer was found not to be a debt collector, because consumer failed to establish that primary purpose of debt buyer’s business was debt collection. Evidence of collection lawsuits filed and a collection license was not enough to demonstrate the percentage of the debt buyer’s operations are involved debt collection as compared to their operations as a whole.

For additional insight, read this article on insideARM.com.

PHOENIX, Ariz. — Teffia Inc., a Woman Owned Small Business (WOSB), is excited to announce that we are officially certified by the U.S. Small Business Administration as a Woman-Owned Small Business (WOSB) and HUBZone-qualified company. 

“While we have been proud to be a woman-owned organization for some time now, I am extremely proud to announce our new designation as a Woman-Owned Small Business and HUBZone certified company. This certification emphasizes our strong commitment to providing economic growth and employment opportunities in a Historically Underutilized Business Zone.  As one of only a few qualified Call Center and Business Process Outsourcing (BPO) companies in the US, we are anticipating significant growth this year through our HUBZone certification, we can offer the opportunity for organizations from federal government and the private sector to meet their diverse spending goals by providing our clients access to highly skilled resources at extremely competitive rates,” said Anna Donnelly, President of Teffia Inc.

Teffia Inc. offers unique advantages to our clients as our selective approach to client relationships, paired with unique mentoring agreements, provides both the focus and responsiveness of a small firm, as well as the capabilities and stability of a large company.

About Teffia Inc. 

Teffia Inc., is a Woman-Owned Small Business and HUBZone certified company providing clients with Call Center, Business Process Outsourcing (BPO) and Receivable Management services.  Teffia’s principal owner, Anna Donnelly holds 15+ years’ industry experience and is committed to providing enhanced customer experience solutions.  Teffia has the technology and capacity to handle any project size and is conveniently located in the heart of Phoenix at:  455 N. 3rd Street, Suite 261, Phoenix, AZ 85004. 

Contact Us 

For additional information, we encourage you to visit the website at: www.teffia.com  to learn more about how we can help you enhance your operations through our full suite of services. 

Anna Donnelly – President
anna.donnelly@teffia.com
(866) 241-4988 or Cell: (480) 239-6151 

John Stock – Vice President of Sales

john.stock@teffia.com
(866) 241-4988 or Cell: (251) 751-5130

TAMPA, Fla. —  While collections agencies are not generally cast in the best of light by the general public, a local Tampa collections agency is a reminder that they not only recover money for hospitals, physicians, and  other healthcare and government entities but they also give back to the community as well. Several employees and family members of Preferred Collection and Management Services participated in what has become a Tampa tradition in the 41^st Running of the Publix Gasparilla Distant Classic 15K and 5K held in Tampa along beautiful Bayshore Drive.

Through efforts from the Gasparilla Distance Classic Association, volunteers, participants, Publix and many others associated with the event, more than $5.1M has been raised to support Tampa Bay Area youth charitable organizations.

[Pictured Left to right: Jacob Kiefer, Jenny Vargas, Matt Kiefer, Catherine Kiefer, Lisa Guthrie, John Guthrie, Cole Costello, Erin Swartz, Eric Swartz, David Kelley. Not Pictured : Charity Crenshaw, Jennifer Pierce, Caydence Pierce]

The bulk of what is raised goes to the Association’s Heritage Charities, including the Boys & Girls Clubs of Tampa Bay, Big Brothers & Big Sisters of Tampa Bay and the Friends of Tampa Recreation. Money is also shared with South Tampa Neighborhood Associations, the Cigna Kids Running Program, Publix’s Too Good For Drugs Jr. Gasparilla Classic, the University of Tampa’s Cross-Country & Track Programs and several nonprofits providing volunteers for the event. There are more than 32,000 runners and walkers from all walks of life, representing all 50 states and 10 countries.

Learn more about Preferred Group of Tampa here.

Today the Consumer Financial Protection Bureau issued a Request for Information (RFI) regarding its rulemaking processes.

Download the complete RFI here. The 90-day comment period is expected to close approximately June 9, 2018.

Debt collection stakeholders have been engaged in the CFPB’s rulemaking process since 2013, when the Bureau first issued its Advance Notice of Proposed Rulemaking.

The Bureau makes it clear that it is not seeking comment on the content of any particular proposed or final rule, but is focused on process. Here is a summary of what they’re looking for:

Initial Outreach and Information Gathering

1. Mechanisms used by the Bureau for gathering information, data, and feedback from stakeholders (i.e., industry, consumer advocates, and others) in advance of the steps outlined.
2. Convening a SBREFA panel, when required, including the outline of the proposal under consideration and the analysis of potential impacts on small entities and regulatory alternatives that are released at the start of the SBREFA panel process; selection of and interaction with small entity representatives during the SBREFA panel process; the SBREFA panel report; and outreach to other stakeholders on the basis of public release of the outline of the proposal under consideration.
3. Consultations with tribal governments in certain circumstances, which pursuant to Bureau policy may occur through meetings, telephone conferences, and other forms of communication and outreach prior to issuing an NPRM, as well as through a formal request for comment from tribal governments and tribal members in an NPRM.

 Notices of Proposed Rulemaking

1. The content of the NPRM itself, including the background section; Section-by-section analysis of the proposed regulatory text and commentary; Impact analyses for the proposed rule, including the qualitative and quantitative analysis therein, and the data on which they rely; The proposed regulatory text and commentary, and, relatedly, the level of detail and the quantity of examples contained in proposed commentary.
2. The Bureau’s issuance of the NPRM, including the Bureau’s general practice of releasing the NPRM on its website in advance of publication in the Federal Register, and supporting materials the Bureau may release simultaneously with an NPRM, such as a press release or blog post.
3. Comment periods for NPRMs, including the length of the comment period and extensions of comment periods in certain circumstances, whether and in what circumstances the Bureau should provide “reply periods” for commenters to review and formally respond to other commenters’ comment letters, and whether and to what extent the Bureau should consider comments received after the close of the comment period.
4. Mechanisms for encouraging additional feedback on all or part of a NPRM.
5. The Bureau’s processing and posting of comments received to its electronic docket on http://www.regulations.gov.
6. Outreach and engagement by the Bureau during and after the comment period, including meetings with stakeholders, and disclosure of such communications under the Bureau’s ex parte policy.
7. Consideration of new data, studies, and reports issued by other agencies or third parties after the NPRM is released.

Final Rules

1. The content of the notice issuing the final rule, including each of the elements listed above in topic 4 (for NPRMs) as well as the Bureau’s explanation of its rationale for the final rule, the discussion in the section-by-section analysis about the final rule’s regulatory text and commentary, the summary of and response to comments received on the NPRM (including those specifically regarding the impact analyses), and the explanation of changes from the NPRM.
2. The Bureau’s release of the final rule on its website in advance of publication in the Federal Register and supporting materials the Bureau may release simultaneously with a final rule, which may include a press release, consumer-facing blog post, remarks by the Bureau’s Director presented at a public event or press call, other high-level or summary material regarding the content of the final rule, and select regulatory implementation materials.

On January 17, 2018 CFPB Acting Director Mick Mulvaney announced that he was issuing a “call for evidence” to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers. Since then a series of requests has been released about activities including:

• Civil Investigative Demands (comment period closes March 27)
• Administrative Adjudication (comment period closes April 6)
• Enforcement (comment period closes April 13)
• Supervision (comment period closes May 21)
• External Engagements (comment period closes May 29)
• Consumer Complaint Portal (comment period closes June 4)

Also expected soon are calls for evidence on these topics:

• Bureau Rules Not Under §1022(d) Assessment
• Inherited Rules
• Guidance and Implementation Support
• Consumer Education
• Consumer Inquiries

insideARM Perspective

While this latest request for evidence isn’t meant to cover specific industry issues, it’s worth mentioning that last week the Consumer Lending Subcommittee of the CFPB’s Consumer Advisory Board met to discuss debt collection. Committee member input was predictable, but clearly identified the latest arguments.

As I mentioned in a recent perspective, this is a critical time for the ARM industry, from creditors to collection agencies, debt buyers, attorneys and service/technology providers. There has probably not been such an opportunity in decades for your voice to be heard and to make an impact. insideARM suggests one thing overall — get involved.

Yesterday Judge Thomas C. Wheeler issued a preliminary injunction in favor of the plaintiffs in the case of FMS v. USA (Department of Education, or ED). ED is now enjoined from recalling borrower accounts that are being serviced as part of the 2015 Award Term Extensions (ATEs) granted to FMS Investment Corp. (FMS), Account Control Technology, Inc. (ACT), GC Services Limited Partnership (GC Services), and Continental Service Group, Inc. (ConServe).

Judge Wheeler came down squarely on the side of the collection agencies, and said he was “convinced that Plaintiffs are likely to succeed on the merits of their bid protests.”

You can download the Order here.

Background

As insideARM reported on February 21, 2018, seventeen law suits have so far been filed in the Court of Federal Claims in the second round of the matter of the Department of Education (ED) Private Collection Agency (PCA) contract. This is the newest chapter in a story that began in 2014. Our February 13 story provides a more comprehensive summary, but briefly:

There were seventeen collection agencies on the 2009 five-year unrestricted (large company) federal student loan contract (there were five firms on the small business contract). In 2014, eleven firms won new small business contract awards. The unrestricted awards were delayed until December 2016, when seven firms received contracts. During that delay, five firms received Award Term Extensions (ATEs) in order to continue to service accounts in repayment (meaning the borrower is actively making payments and has not re-defaulted). Those ATEs expire in April 2019.  

The awards were protested and lawsuits were filed. In May 2017 ED promised a do-over, or “corrective action.” Bidders re-submitted offers and everything was re-evaluated.

On January 11, 2018 ED completed the corrective action and awarded contracts to just two companies, Performant Recovery, Inc. (Performant) and Windham Professionals, Inc. (Windham). They also issued a notice of recall for those in repayment accounts from four of the five companies (the 5^th is Windham, which did not have its accounts recalled). This ended the prior round of litigation, but opened the door for a new one… which just about brings us to today.

While this case proceeds, FMS, ACT, GC and ConServe requested a preliminary injunction to prevent ED from recalling those in repayment accounts.

Yesterday’s Decision

The facts in this case have been sealed under protection, so this is the first look we are getting at what Judge Wheeler has reviewed. His comments in the Order are telling:

While a full administrative record has not yet been filed in this case, the Court has before it a set of core documents from ED that include, among other things, ED’s Past Performance, Technical Evaluation, and Small Business Evaluation Committees’ Consensus Reports, the Source Selection Decision Memorandum, and the Contracting Officer’s Responsibility Determination. After reviewing this documentation and considering Plaintiffs’ arguments both in their motions and in open court, the Court has serious questions over ED’s evaluation of proposals in this procurement. The evidence currently before the Court points to inconsistencies, omissions, unequal treatment of offerors, and cherry-picked data that the Court finds to be rather problematic. Based on these initial observations, the Court finds that Plaintiffs have demonstrated a likelihood of success on the merits in their bid protests.

For this and other reasons, he granted the request to prevent ED from recalling the accounts being worked under the 2015 ATEs until the current bid protest can be fully resolved.

insideARM Perspective

Meanwhile, ED has represented to the Court that it has agreed to voluntarily stay its contract awards to Performant and Windham. This means that all debt collection servicing is currently being done by the small business contractors, with some outsourcing excess volume to larger contractors who had previously done this work. This is irony. And, it also puts relatively smaller businesses in the position of supervising larger businesses, which would be more likely to have the infrastructure required for vendor oversight.

If you need a good bedtime read and want a complete history of this matter, you can see all of our coverage here.

There has been a lot of news lately about RIP Medical Debt, and momentum it has gained in the effort to buy and forgive … yes … medical debt for struggling consumers. This latest activity involves NBC4, the local broadcaster in the Washington, DC market, which is reportedly making a $15,000 donation to RIP, which will forgive $1.5 million in debt. NBC7 in San Diego made a similar announcement. Both stations are part of the parent, NBC and Telemundo Owned Television Stations Group, which today announced a  donation of $150,000.

As reported by NBC4, the individuals whose debt is forgiven is randomly determined based on eligibility criteria. They say there is no mechanism to apply to have their debt forgiven.

So for now, it’s a little like the folks who mysteriously give $100 bills to strangers on the street or in stores at the holiday times. It seems to always be totally unexpected, but extremely appreciated.

A new element associated with this current campaign is that the group is suggesting a way for those who have benefitted to pay it forward and help others; make a donation themselves to RIP.

You can learn more about RIP Medical debt here.

insideARM Perspective

insideARM has written about RIP on several occasions, following their progress since they came onto the scene in 2016. The partnership with NBC is significant in that it’s the first really scalable effort they’ve undertaken.

Most recently we published this story about a group of Michigan nurses who raised $10,000 to buy and forgive the debts of 500 patients.

In June 2017 we wrote about a team of researchers that convened in New York City to study the impact of medical debt forgiveness.

In December 2016 we published a Q&A addressing questions about the non-profit, how it works, where the money comes from, how it addresses HIPAA requirements, and more.

RIP Medical Debt gained attention in June 2016 when it became linked to an episode of “Last Week Tonight with John Oliver,” when Oliver dedicated the show to the debt-buying industry, and claimed to give away $15 million. He accomplished this by purchasing a medical debt portfolio for $60,000 and then had RIP manage the debt forgiveness so that it could be done without tax consequences to the patients.

Some of the articles about RIP explain that medical debts can be sold for pennies on the dollar, and then collectors attempt to collect the full amount. While this is technically true, what is also true is that the lion’s share of medical debt is not sold. Instead, healthcare providers either attempt to collect it themselves, or engage professional debt collection firms that specialize in working with patients to 1) assist in sorting through the bills they have, 2) identify possible sources of payment (including insurance, or application for charity care), 3) establishing settlements and/or payment arrangements in accordance with their client’s policy (the client may be a hospital, a physician, dentist, home health agency, skilled nursing facility, etc.); and 4) identify patients who may meet a healthcare provider’s standards for financial aid and work with those patients in applying to any applicable financial assistance programs the caregiver may sponsor. 

Legitimate collectors will tell you that they would applaud this effort. As a strategy, especially when working on behalf of non-profit hospital clients, it is important for collectors to help identify patients who do not have the ability to pay outstanding medical bills.  Collectors who are able to communicate with patients and/or their responsible parties prefer to focus their efforts on situations where there appears to be an ability to afford to pay. If there is an organization with an ability to resolve “unpayable” medical bills it would seem to be — all the better for everyone involved – the patients, the healthcare providers, and the collectors.