While the debt collection industry spent 2022 focused on Regulation F and the Hunstein cases, consumer attorneys remained diligent in filing a record number of other FDCPA lawsuits against debt collectors again in 2022.  Further, the most effective strategies for defeating these FDCPA cases shifted recently, with motions to dismiss again being considered “the first arrow from the quiver” used by debt collectors to prevail in some of these matters.  

In the latest episode of the Debt Collection Drill video series, Moss & Barnett attorneys Aylix Jensen and Mike Poncin discuss specific techniques and strategies that debt collectors are using to defeat recent FDCPA cases, including the use of motions to dismiss and arbitration clauses.

BLOOMINGTON, Minn. – Absolute Resolutions Corp. (“ARC”), headquartered in Bloomington, MN, announced today that Dennis Guetterman has joined the company as Sr. Vice President of Acquisitions.   

“As a well-known industry veteran with an outstanding reputation in business development and relationship management, we are thrilled to welcome Dennis to the ARC team.” said Laura Jensen, ARC’s Chief Marketing Officer. 

Dennis comes to ARC with over 20 years of experience in the Financial Services Industry having held previous positions at Provana, First Data, Array Services, RNN Group, Inc., and Experian. In his time in the industry, he has held leadership positions in many areas of business operations such as sales, business development, and marketing.  

“ARC is a great company with an amazing team,” said Guetterman, “I couldn’t be more excited for this new chapter in my career.”

In his new role with ARC, Dennis will be working on the acquisitions team to expand ARC’s network with financial services clients in diverse market segments. He will be primarily focused on new relationship development and will be traveling and representing ARC at trade shows and industry events throughout the year.

About Absolute Resolutions Corp.

Absolute Resolutions Corp. is a certified professional receivables company with offices in Bloomington, MN and San Diego, CA. www.absoluteresolutions.com

LOS ANGELES, Calif — Creditors Adjustment Bureau (CAB) recently prevailed in a landmark California appellate court decision. The ruling in Creditors Adjustment Bureau, Inc. v. Ray Imani, 2022 Cal. App. LEXIS 689, establishes case law that provides specific guidelines and assurances for purposes of structuring settlement agreements. The decision stands up against the 2008 California appellate decision in Greentree Financial Group Inc. v. Execute Sports, Inc., (2008) 163 Cal.App.4th 495.

“This published decision is definitive and will provide clarity and relief to creditors entering into these sorts of settlement agreements”, says CAB chief counsel Kenneth J. Freed, Esq.

The debtor, Ray Imani owed $251,200.13 after defaulting on a lease. Under a settlement agreement reached through Creditors Adjustment Bureau, Imani agreed to pay a much lesser sum in 24 monthly installments. If he defaulted, however, he would owe the full amount sought in the complaint including fees, interest, and costs. Imani immediately defaulted on the settlement agreement and judgment was accordingly entered. He sought to set aside the judgment arguing that it constituted a penalty and was void under Greentree and its progeny. In it’s August 9th, 2022, ruling, the Court of Appeals rejected this argument and was persuaded by CAB’s position that the specific language used in its settlement documentation made it distinguishable from Greentree and that court’s finding of an unenforceable penalty.

“It’s all about the way we framed our stipulations for entry of judgment after that terrible Greentree decision,” says Freed.

Justice Kenneth Yegan began his ruling by saying: “Over twenty-five years ago, we stated the unremarkable: ‘The purpose of the law of contracts is to protect the reasonable expectations of the parties…. There is…a price to be paid for breach of contract.” That quote was from his Nov. 20, 1995, opinion in Ben-Zvi v. Edmar Co., (1995) 40 Cal.App.4th 468, 475. He continued, “here, we protect the reasonable expectations of the parties. And there is still a price to be paid for breach of contract.”

Creditors and their counsel can now breathe a lot easier knowing that a properly drafted settlement agreement will be deemed valid and enforceable even if it has a substantial “kicker” in the event of a default.

The CAB v. Imani Order can be found here. 

Contact:

Creditors Adjustment Bureau 4340 Fulton Ave.,

Third Floor Sherman Oaks, CA 91423 

Toll Free: 800-800-4523

Telephone: 818-990-4800

A recent federal district court opinion highlights the potential pitfalls associated with renewals of unsatisfied default judgments. The case, Sarah Pitera v. Asset Recovery Group Inc., No. 2:22-cv-00255-TL (W.D. Wash.), serves as a reminder that judgment creditors must still tread carefully when seeking to collect on, or revive, judgments from yesteryear. Read on for more analysis.

In January 2012, Asset Recovery Group, Inc. (ARG) filed an action in Washington state court to collect on a medical debt owed by Sarah Pitera. After she was served the complaint, Pitera sent two letters to ARG’s collections counsel. The first — sent in January 2012 — disputed the debt, demanded validation, and requested documentation substantiating the debt. Unsatisfied with ARG’s response, Pitera sent a second dispute letter in February 2012, seeking the same documentation. ARG’s collections counsel responded on February 27, 2012, providing the original creditor’s name and address only and inviting Pitera to contact counsel by March 12 if she wanted to resolve the debt. “Otherwise,” the letter stated, ARG would “proceed as provided by the law.” That same day, and unbeknownst to Pitera, ARG collections counsel moved for a default judgment, which the court granted on March 5 — seven days before the deadline set forth in the February 27 letter. After contacting the original creditor, Pitera believed the debt was no longer owing. Confident that ARG could not collect on a debt that she had paid, Pitera had no further communication with ARG until February 7, 2022, when she received notice that ARG had renewed the unsatisfied 2012 default judgment.

Pitera filed suit, claiming violations of the Fair Debt Collection Practices Act (FDCPA) and the Washington Consumer Protection Act. Specifically, Pitera alleged that ARG, through counsel, failed to provide her five days’ notice of the hearing on its motion for default, despite her “appearance” in the case, which violated Washington State Superior Court Rule 55(a)(3). Pitera also alleged that the February 27 letter was deceptive because it presented an opportunity for resolution of the debt on the sameday ARG moved for default. According to Pitera, ARG collection counsel’s assertion that ARG would “proceed as provided by law” was manifestly untrue given its failure to provide notice mandated by Rule 55(a)(3).

Following removal to federal court, ARG moved to dismiss Pitera’s complaint on grounds that the action was time-barred, with no equitable tolling affording relief from the FDCPA’s one-year limitations period.

Not so fast according to Judge Tana Lin of U.S. District Court for the Western District of Washington. In a 10-page opinion issued on August 26, 2022, the court held ARG was estopped from asserting a statute of limitations defense and denied the motion to dismiss. Accepting the complaint’s allegations as true, the court found that ARG’s correspondence with Pitera occurred whilst simultaneously averring to the state court that Pitera had made no appearance demonstrated ARG’s duplicity. The court reasoned that while Pitera had not entered a formal appearance in the state action, she nonetheless “appeared” by virtue of her post-litigation dispute correspondence and, therefore, was entitled to a notice of hearing on the default motion that ARG (admittedly) failed to provide. The court also “completely reject[ed]” ARG’s argument that Pitera’s reliance on ARG’s statement that it would “proceed as provided by law” was unreasonable; “Plaintiff’s reliance on Defendant proceeding as provided by law was reasonable because Defendant’s counsel — who drafted the February 27 letter — had a legal obligation and an ethical duty of candor separate and distinct from the protections provided under the FDCPA.” That ARG obtained the judgment in 2012 but took no action for 10 years also militated in favor of finding that Pitera remained ignorant of the outstanding judgment against her.

While Pitera will eventually need to prove her allegations at trial, the district court’s decision demonstrates the importance of ensuring streamlined processes to avoid unfortunate timing hiccups that can result in an asset becoming a potential liability.

Read the Order denying the motion to dismiss here. 

TAMPA, Fla. – Sept. 26, 2022 – ProVest, an industry leader in serving legal process, announced a new compliance solution for its clients.

Clients can now follow each audit step taken on every job in the ProVest QA PDF document. Files can be exported and stored on the client’s system for easy retrieval and used as evidence to defend against any future challenge to service.

ProVest’s QA PDF service is offered free to clients. It fortifies the company’s best-in-class compliance by including time-date stamped photos, GPS coordinates, and other important compliance data for each file. This quality assurance benefit guarantees that firms can view their files and each verification document whenever necessary without relying on a vendor to search for or send the file. There is transparency at every step of the process.

“Our clients have multiple compliance obligations and regulatory requirements at federal and state levels. We are pleased to offer a complete compliance solution,” said ProVest Sr. Vice President Neil Heath. “Investment in compliance is an investment in the success of our clients. For more than 30 years, ProVest has worked to be at the leading edge of innovation in all aspects of our business,” Heath added. 

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If you’re collecting debt for nursing home care, you might want to double check who is responsible for payment.  Last week, in conjunction with a field hearing, the CFPB issued a new Consumer Financial Protection Circular and an Issue Spotlight on Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA) violations in connection with nursing home debt.  The CFPB also released a letter sent jointly with the Centers for Medicare & Medicaid Services (CMS) on third-party guarantees of nursing home debt.

Issue Spotlight

Motivated by concern about the increasing cost of nursing home care and the financial challenges faced by consumers in paying for such care, the report discusses efforts by nursing facilities to obtain payment from non-residents.  The Nursing Home Reform Act (NHRA) prohibits a nursing facility that participates in Medicaid or Medicare from requesting or requiring a third-party guarantee of payment as a condition of admission, expedited admission, or continued stay in the facility.  Provided a resident’s representative does not incur personal liability, the NHRA does permit a nursing facility to require a representative with legal access to a resident’s available income or resources to sign a contract to provide payment to the facility from the resident’s income or resources.  

The report finds that some nursing facilities include terms in their admission contracts that try to hold a third party financially liable for the resident’s nursing home costs and discusses different forms that such terms may take.  The report states that many third parties are unaware that there are legal restrictions on nursing home admission contracts and may also lack the resources to properly respond to a lawsuit seeking to collect a resident’s costs based on such contract terms.  As a result, courts may enter default judgments, thereby enabling debt collection firms to use wage garnishment or foreclosure to collect residents’ costs from third parties.  The report also states that nursing homes and debt collectors may also report a resident’s debts to credit reporting companies as a third party’s personal debt as a way of creating pressure on the third party to pay such debts.

The report also discusses claims made in debt collection lawsuits that a third party engaged in financial wrongdoing, such having intentionally misused, hidden, or stolen the resident’s funds.  As an example, the report references boilerplate language used in many New York lawsuits alleging that a third party had engaged in fraudulent conveyances.

Circular

The circular discusses the risk of FDCPA and FCRA violations based on debt collection and consumer reporting practices relating to debts that are invalid under the NHRA or state law analogues to the NHRA that contain similar prohibitions.  

The CFPB acknowledges that it does not enforce compliance with the NHRA and is generally not responsible for overseeing the activities of nursing facilities.  However, it warns that a debt collector, including a law firm in litigation, that represents that a third party must personally pay a nursing facility resident’s debt may violate the FDCPA prohibition on misrepresentations where the debt is based on a contract provision that is unenforceable under the NHRA or a state law analogue.  The CFPB also warns that a debt collector can violate the FDCPA prohibition on misrepresentations by making baseless allegations in a lawsuit that a third party engaged in financial wrongdoing.

With regard to FCRA liability, the CFPB warns that because it is inaccurate to report that a consumer owes a debt that is based on an illegal contract provision, a debt collector who furnishes information about nursing home debts or a consumer reporting agency (CRA) that includes such information in a consumer report can violate FCRA accuracy requirements if the debts are invalid under the NHRA or a state law analogue.  (The question of whether a CRA can be held liable for violating the FCRA’s accuracy requirements when the accuracy of a debt reported by the CRA requires a legal determination as to the debt’s validity is raised in a case currently pending before the Second Circuit.)  A furnisher or consumer reporting agency can also violate the FCRA by failing to meet its dispute obligations with respect to information related to nursing home debts. 

Joint Letter  

CMS, together with the Department of Health and Human Services, has issued rules implementing the NHRA and, along with DHHS, is responsible for enforcement of the NHRA.  Their joint letter discusses the potential  FDCPA and FCRA violations described in the Circular and sets forth the expectations of the CFPB and CMS for nursing facilities and their debt collectors to comply with the NHRA, FDCPA and FCRA.

None of the three new items on nursing home debt collection mention the Affordable Care Act (ACA), which the CFPB discussed in a blog post about the connection between eligibility for financial assistance under policies mandated by the ACA and medical collections.  The ACA requires nonprofit hospitals to establish financial assistance policies for consumers who are unable to pay for their medical expenses.  It also prohibits nonprofit hospitals from reporting medical debts as collections to credit reporting companies, or from selling the debt to another party, without first trying to determine whether the patient would be eligible for their financial assistance policies.  In the blog post, the CFPB suggested that nonprofit hospitals may not be providing low income consumers with the financial assistance for which they are eligible and may be reporting medical debts in violation of the ACA.  (Based on the CFPB’s position with regard to the NAHA, it seems likely that the CFPB would similarly assert that attempts to collect medical debts incurred due to hospital’s failure to provide financial assistance required by the ACA can violate the FDCPA and that the reporting of medical debts where prohibited by the ACA can violate the FCRA.)

ROCHESTER, N.Y. — Continental Service Group, Inc., dba ConServe, is a devoted community partner and helps to make the world a better place.  Through the organization’s ongoing philanthropy program, ConServe Cares, the ConServe team supports and funds the efforts of numerous agencies that strive to make a difference.  As a result of the employees’ compassion and generosity; countless lives have been touched and enriched.

In the month of August, the ConServe team along with their organization’s corporate “Matching Gift Program”, donated to Goodwill of the Finger Lakes.  “Our team of caring and committed employees takes great pride in supporting a diverse group of local and national agencies that help to make life a little easier for many people who are struggling with health and social challenges,” said George Huyler, Vice President of Human Resources at ConServe.

Goodwill of the Finger Lakes was delighted to be chosen as the August recipient of the ConServe Cares program, said Jennifer L. Boutte, Vice President of Community Engagement. “We are grateful for your continuous generosity and support in helping us advance our mission of ‘Elevating people, community, and planet for a good today and a better tomorrow.’” 

About ConServe

ConServe is a top-performing accounts receivable management service provider specializing in customized recovery solutions for their Clients. Anchored in ethics and compliance, and steadfast in their pursuit of excellence, they are a consumer-centric organization that operates as an extension of their Clients’ valued brands.  For over 37 years, they have partnered with their Clients to provide unmatched customer service while simultaneously helping them achieve their accounts receivable management goals.  Visit us online at: www.conserve-arm.com 

About Goodwill of the Finger Lakes  

Goodwill of the Finger Lakes is a local, caring, person-centered nonprofit organization who does a lot of good across the Greater Rochester community and Finger Lakes Region.  Our unique social enterprise is comprised of over 700 individuals who use their passion and expertise to find innovative solutions to address the countless barriers and social challenges that impact the lives of more than 387,000 people whom we are proud to serve annually. As you often hear us say, “We are more than a store!”  Each time you donate and/or purchase at one of our retail stores, revenue generated is reinvested in our community programs and services.  Through programs such as Goodwill Vision Enterprises (formally known as ABVI), 211/LIFE LINE, Workforce Development, and our Good Neighbor Program; we collaborate with community to maximize vision wellness, create quality employment opportunities, eliminate barriers to independence and connect people to resources they need.  Visit them online at:  https://www.goodwillfingerlakes.org/

One of the most important pieces of evidence in any case for a TCPA defendant is evidence of their policies and procedures.

Such evidence is particularly important in defeating certification–if a Plaintiff seeks to certify a class of “exceptions” to the policy there are almost certainly individualizied issues at stake–but it can also find pay dirt at the summary judgment phase.

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In Abboud v. Agentra,  2022 WL 4099740 (N.D. Tex. Sept. 7, 2022) for instance the Plaintiff sued Agentra arguing she had not consented to receive text messages.

Agentra brought summary judgment arguing that it had a routine practice of popping a screen to its agents to remind them to inform callers that they would receive transactional text messages as part of a sign up flow. In response, the Plaintiff argued that the Court could not accept that evidence but the Court disagreed:

Abboud provides no caselaw supporting her argument that Agentra can’t win summary judgment based on the type of evidence it provided. Actually, the caselaw teaches the opposite. Like other kinds of competent summary-judgment evidence, “routine practice evidence” can achieve summary judgment when the other party fails to rebut it with counter-evidence.

That’s a good reminder for all the TCPA defendants out there–always consider leading with your policies. If the Plaintiff fails to introduce evidence that the policy was not followed then you win outright. Even if the Plaintiff introduces such evidence, it generally only highlights an individual issue thwarting certification.

Read the Order on Summary Judgment here. 

TREVOSE, Pa.– NCB Management Services, Inc., recently announced the hiring of Stephanie Schenking as VP of Portfolio Acquisitions.  Stephanie joins NCB with more than twenty years’ experience working in the financial services industry. She has a proven track record building strategic partnership, enhancing the customers’ experience and driving superior results. Most recently, Stephanie served as Agency Relationship Manager at Crown Asset Management, where she created excitement with transparency among agencies that led their drive to compete.  As a result of Stephanie’s ability to lead and motivate, overall Agency engagement and performance improved during her tenure.  Stephanie has previously worked for Unifund and Fidelity Investments in a variety of leadership roles including Sales, Service, and Compliance.  She currently holds her CCCO with ACA International and her CRCP with RMAI. Stephanie earned her BS in Finance from the University of Dayton and is a regular attendee at industry conferences and educational events.  

“I am excited that Stephanie is joining our team”, stated Charlie Bonner, Chief Acquisitions Officer. “Stephanie is an industry leader who will play an integral part in NCB’s growth in the Account Receivables Market”

Schenking stated, “It’s an exciting time for growth and innovation in the rapidly changing environment of Receivables Management.  I look forward to the opportunities both professionally and personally at NCB, a company that has established itself as a leader in the industry”

About NCB Management Services

NCB Management Services, Inc. was established in 1994 and is headquartered in Trevose, PA with satellite offices in Jacksonville, FL, Sioux Falls, SD, and Lincoln, NE. NCB is a well-respected Debt Buyer of Unsecured Consumer Credit Products and an admired, well-recognized Accounts Receivable Management (ARM) industry leader. NCB is a customer-centric, regulatory compliant organization with a robust infrastructure, who has blended many years of ARM experience with the latest in new information systems and communication technology. NCB has developed a reputation as consistently being a valued business partner and performer in a wide variety of applications. Providing superior customer interaction and achieving maximum results, while protecting our client’s valued reputation, are among our highest priorities.