Kelley v. Med-1 Solutions, LLC, 952 N.E.2d 817

Med-1 Solutions, LLC is an Indiana-licensed collection agency that works for hospitals to collect delinquent medical debts; it also files collection actions in its clients’ names and as a letter vendor.
The hospitals involved include St. Vincent Carmel Hospital and Rush Memorial Hospital, with contracts authorizing Med-1 to use legal means to collect and to pay/recover attorney fees from the debtor accounts.
Debtors Kennedy, Housley, Emous, Kelley, and Boyd were pursued in small-claims actions by Med-1 for delinquent hospital bills and related attorney fees, resulting in default judgments against them.
A federal FDCPA action Beeson v. Med-1 was filed and resolved against Beeson, with Beeson appealing Beeson’s theory about Med-1’s conduct; Beeson’s outcome influenced later state actions.
The Debtors filed a state-court action (Marion County) asserting FDCPA violations, constructive fraud, and related claims; Med-1 moved for summary judgment, which the trial court granted, and the trial court’s order was appealed.
The Indiana Court of Appeals affirmed the grant of summary judgment, holding no FDCPA violation, no fraud on the court, and denied appellate attorney-fee relief to Med-1.

Issue	Plaintiff's Argument	Defendant's Argument	Held
FDCPA violation by Med-1’s small-claims filings	Debtors: Med-1 sued in its own name for debts it did not own, misrepresenting status	Med-1: filings clearly identified collection for hospitals; no misleading status	No FDCPA violation; status disclosed and unsophisticated-debtor standard applied
Res judicata/collateral estoppel as bar to FDCPA claims	Debtors: claims barred by prior judgments	Med-1: FDCPA claims independent of underlying judgments; could be pursued separately	FDCPA claims not barred; independent action permissible; yet summary judgment still upheld on merits
Fraud on the court	Debtors: Med-1’s alleged non-disclosures constituted fraud on the court	Med-1 did not engage in conduct amounting to fraud on the court	No proof of fraud on the court; independent-action relief denied on merits
Appellate attorney fees	Debtors: appellate fees warranted due to frivolous appeal	Med-1: appeals meritless, frivolous; fee-shifting	Appellate fees denied; sanction not warranted

Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057 (7th Cir. 2000) (unsophisticated-debtor standard for FDCPA notices; not misled)
Beeson v. Med-1 Solutions, LLC, No official reporter citation provided in opinion (S.D. Ind. 2008) (Beeson holding on FDCPA interpretation used to support ruling; not published in reporter)
Watson v. Auto Advisors, Inc., 822 N.E.2d 1017 (Ind. Ct. App. 2005) (FDCPA claims not barred when brought as independent action; not intruding on small-claims judgment)
Spears v. Brennan, 745 N.E.2d 862 (Ind. Ct. App. 2001) (FDCPA claims may be separate from underlying debt validity)
Mut. Hosp. Serv., Inc. v. Burton, 695 N.E.2d 641 (Ind. Ct. App. 1998) (agency may collect attorney fees if contract authorizes it)
Eichenberger v. Eichenberger, 743 N.E.2d 370 (Ind. Ct. App. 2001) (res judicata: default judgment is on the merits for preclusion purposes)
TacCo Falcon Point, Inc. v. Atl. Ltd. P'ship XII, 937 N.E.2d 1212 (Ind. Ct. App. 2010) (outlines claim vs. issue preclusion analysis in res judicata)
Scott v. Bodor, Inc., 571 N.E.2d 313 (Ind. Ct. App. 1991) (standard for genuine issues of material fact in summary judgment)
Landmark Health Care Assocs., L.P. v. Bradbury, 671 N.E.2d 113 (Ind. 1996) (standard for granting summary judgment)