Sixth Circuit Affirms Summary Judgment Finding Defendant Not a “Debt Collector” Under the FDCPA Where Account Was Not in Default When Transferred

As discussed here, in August 2020, a district court for the Middle District of Tennessee held that a medical provider’s third-party billing servicer did not qualify as a debt collector under the Fair Debt Collections Practices Act (FDCPA) because the debt was not in default when it was placed with the extended billing office (EBO). On March 24, 2023, the Sixth Circuit affirmed that decision.

The complaint arose out of two visits the plaintiff made to a medical center. On each visit prior to receiving treatment, the plaintiff signed an agreement acknowledging that the medical center may use a third party as an EBO for account and billing services, and that the account would not be considered past-due or in default while placed with the EBO. The defendant EBO then sent two statements to the plaintiff, including a payment due date and a payment request, and left two voicemails. 

The plaintiff subsequently filed suit, alleging that the EBO violated 15 U.S.C. § 1692(d) and (e) of the FDCPA by failing to disclose its identity when contacting the plaintiff, failing to notify the plaintiff that it was attempting to collect a debt, and by failing to use its full “true name” in its voicemail messages. The EBO subsequently moved for summary judgment arguing that it is not a “debt collector” subject to the FDCPA. The court agreed, holding that the EBO did not fit the FDCPA’s definition of a “debt collector” as the plaintiff’s debt was not in default when the account was placed with it.

As the Sixth Circuit noted, “liability under the FDCPA attaches only to a ‘debt collector.'” In order for the EBO to be considered a debt collector under the statute, the plaintiff’s account had to be in default when it was transferred to it. Upon review of the record, the court found nothing to indicate the plaintiff’s account was being treated as in default. 

While the plaintiff had failed to pay the bill marked “due on receipt” weeks before the account was placed with the EBO, the court found there was nothing in the record to suggest that the failure to pay was being treated as a breach. “Indeed, for eighty days on the first account and sixty days on the second, [the medical center] just waited for [the plaintiff] to pay. Then it sent the debt to [the EBO] who sent [the plaintiff] statements with due dates that were ten to fifteen days out, with no interest charged. And while [the EBO] had the debt, [the medical center] agreed that it would not consider [the plaintiff’s] account to be ‘delinquent, past due or in default.'” Since neither the medical center nor the EBO treated the debt as if it were in default, the court of appeals agreed with the district court that the EBO was not a debt collector under the FDCPA.