456 F.Supp.3d 1030
N.D. Ind.2020Background
- Katie Wagoner received four medical services at Saint Joseph Regional Medical Center (SJRMC); after insurance adjustments she owed small balances ($5.80–$536.28).
- SJRMC sent the accounts to NPAS, Inc., an "early-out" vendor that bills and services non-default healthcare accounts, within 30–64 days after service.
- NPAS sent two statements per account describing itself as "managing your account for the healthcare provider," noting insurance had been billed, and warning that unpaid balances "may be referred to a debt collector."
- The Master Service Agreement (MSA) between NPAS and SJRMC framed NPAS as an extension of the hospital business office and contemplated servicing only accounts not "in default;" payments were made to SJRMC and no interest or fees were charged before NPAS placement.
- Wagoner sued NPAS under the Fair Debt Collection Practices Act (FDCPA) and Indiana Deceptive Consumer Sales Act (IDCSA), arguing NPAS was a "debt collector" that failed to make required disclosures; the sole disputed legal issue at summary judgment was whether the accounts were in default when NPAS obtained them.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NPAS was a "debt collector" under the FDCPA when it obtained Wagoner's accounts | Wagoner argued the accounts were in default when NPAS obtained them, so NPAS qualifies as a debt collector and must comply with FDCPA disclosure requirements | NPAS contended it obtained and serviced accounts that were not in default (an "early-out" servicer), so it is exempt from the FDCPA definition of "debt collector" (15 U.S.C. § 1692a(6)(F)(iii)) | Court held the accounts were not in default when NPAS obtained them; NPAS was not a debt collector under the FDCPA and summary judgment was granted for NPAS |
| Whether a debt is "in default" should be judged by a debtor-centric reasonableness test | Wagoner urged a debtor-perspective test (what a reasonable debtor would believe) to determine whether the creditor viewed the debt as in default | NPAS and the court argued the statutory text focuses on the status of the debt when obtained and that contracts/statutes governing the obligation inform whether it was in default | Court rejected a debtor-centric standard for this circuit, applied the plain meaning of "default" guided by contract and statute, and found no default here |
| Whether NPAS's communications treated the accounts as in default (asserted default) | Wagoner argued NPAS's statements functioned as collection and could show an asserted/default status | NPAS pointed to statements describing it as managing accounts for the provider, noting insurance billing and prospective due dates, not demands for defaulted debts | Court found NPAS's communications consistent with servicing current accounts, not asserting default; no asserted default existed |
| Whether Wagoner's state-law IDCSA claim survives if FDCPA claim fails | Wagoner maintained state claim independent of federal claim | NPAS argued IDCSA "debt collector" term is coterminous with FDCPA and fails if FDCPA claim fails | Court retained supplemental jurisdiction and, because the statutes define "debt collector" coterminously, entered summary judgment for NPAS on the IDCSA claim as well |
Key Cases Cited
- Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017) (interpreting who counts as a debt collector under the FDCPA)
- Schlosser v. Fairbanks Capital Corp., 323 F.3d 534 (7th Cir. 2003) (distinguishing servicers of current accounts from assignees of defaulted debts)
- Bailey v. Security Nat'l Servicing Corp., 154 F.3d 384 (7th Cir. 1998) (examining account status under superseding payment arrangements)
- Alibrandi v. Financial Outsourcing Services, 333 F.3d 82 (2d Cir. 2003) (discussing difference between delinquency and default for FDCPA coverage)
- Magee v. AllianceOne, Ltd., 487 F. Supp. 2d 1024 (S.D. Ind. 2007) (considering plain dictionary meaning of default where contract lacks definition)
- Fausz v. NPAS, Inc., 237 F. Supp. 3d 559 (W.D. Ky. 2017) (finding NPAS a debt collector where prior referral to a collection agency showed the account had been treated as in default)