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Garner v. Claimassist, LLC

United States District Court, D. Maryland

August 9, 2018

JESSICA GARNER, Individually and on behalf of all others similarly situated, Plaintiff,
CLAIMASSIST, LLC, et al. Defendants.



         Plaintiff Jessica Garner, individually and on behalf of all others similarly situated, initiated suit against defendants ClaimAssist, LLC (“ClaimAssist”); Credit Control Services, Inc. (“CCS”); and CCS Financial Services, Inc. (“CCS Financial”), alleging violations of the Fair Debt Collection Practices Act (“FDCPA” or the “Act”), codified, as amended, at 15 U.S.C. §§ 1692 et seq. ECF 1 (“Complaint”). Garner alleges that ClaimAssist is a debt collector that violated the FDCPA by making false representations and using deceptive or misleading means in an attempt to collect a debt from plaintiff. Id. According to plaintiff, ClaimAssist, CCS, and CCS Financial operate, in effect, as a single entity. See id.

         Defendants have moved for summary judgment (ECF 57), supported by a memorandum of law (ECF 57-1) (collectively, the “Summary Judgment Motion”) and exhibits (see ECF 57-2 through ECF 57-10). The Summary Judgment Motion also seeks “sanctions”, in the form of costs and attorneys' fees, under 15 U.S.C. § 1692k(a)(3) and 28 U.S.C. § 1927. See ECF 57-1 at 5. Plaintiff opposes the Summary Judgment Motion (ECF 65), supported by a memorandum of law (ECF 65-1) and exhibits. See ECF 65-2 through ECF 65-18. Defendants have replied. See ECF 66.[1]

         Additionally, plaintiff has filed a “Motion To Certify A Class, Appoint Named Plaintiff As Class Representative, And Appoint Class Counsel” (ECF 62), supported by a memorandum of law (ECF 62-1) (collectively, the “Motion to Certify”) and exhibits. See ECF 62-2 and ECF 62-3. Defendants oppose the Motion to Certify as to CCS and CCS Financial, but not as to ClaimAssist. See ECF 64. Plaintiff has replied (ECF 67) and provided additional exhibits. See ECF 67-1 through ECF 67-6.

         Further, defendants have filed a “Motion for Rule 11 Sanctions” (ECF 63), supported by a memorandum of law (ECF 63-1) (collectively, the “Motion for Sanctions”) and exhibits. See ECF 63-3 through ECF 63-12. The Court did not request a response (see Local Rule 105.8(b)), and plaintiff has not filed one.[2] For the purpose of judicial economy, I shall consider the sanctions requested in the Summary Judgment Motion (ECF 57) together with the Motion for Sanctions (ECF 63).

         The motions are fully briefed, and no hearing is necessary to resolve them. See Local Rule 105.6. For the reasons that follow, I shall grant defendants' Summary Judgment Motion as to the FDCPA claims, but deny the request for sanctions. Because I shall grant the Summary Judgment Motion as to the FDCPA claims, plaintiff's Motion to Certify shall be denied, as moot. Further, I shall deny defendants' Motion for Sanctions.

         I. Factual Background[3]

         On May 16, 2014, Garner was injured during a motor vehicle accident in Baltimore (the “Accident”). See ECF 57-2 (the Complaint), ¶ 9. On that day, she received medical treatment at Northwest Hospital (“NWH” or the “Hospital”) for injuries arising from the Accident. ECF 57-3 (Deposition of William Rew, Director of Patient Financial Services for LifeBridge Health, Inc.) at 30. As a result, Garner incurred a bill from the Hospital. ECF 57-2 at 23-24.

         In connection with the Accident, Garner retained a lawyer, Michael Greene, to represent her in a tort case. Greene now represents Garner in this FDCPA action.

         ClaimAssist is a limited liability company, formed under the laws of Delaware, with its principal office in Newton, Massachusetts. ECF 1, ¶ 5; see also ECF 57-2, ¶ 5. CCS and CSS Financial are also Delaware corporations that maintain their principal offices in Newton, Massachusetts. ECF 1, ¶¶ 6-7. According to plaintiff, defendants “improperly disregard corporate formalities” and, in effect, operate as a single entity. Id.; see also ECF 65-1 at 13.

         According to the Affidavit of William Rew (ECF 57-4), the Director of Patient Financial Services for LifeBridge Health, Inc. (“LifeBridge”), LifeBridge is the “sole member (the corporate ‘parent') of Northwest Hospital Center, Inc.” Id. ¶ 2. Rew avers that, as the Director of Patient Financial Services for LifeBridge, he is both “familiar with Northwest Hospital's billing procedures” (id.) and “responsible for them.” ECF 57-3 at 30.

         In January 2010, LifeBridge hired ClaimAssist “to assist in the collection of auto liability accounts.” ECF 57-3 at 23-24; see also ECF 65-2 (“Claim Processing Service Agreement”, dated January 1, 2010) (hereinafter, the “ClaimAssist Agreement”). Notably, ClaimAssist was hired “exclusively . . . to collect recovery from third-party sources[.]” ECF 57-3 at 46.

         Rew explained that an auto liability account at the Hospital is typically paid by a third-party, such as an insurer or a tort litigant. ECF 57-3 at 24. Pursuant to the ClaimAssist Agreement, the Hospital transferred auto liability accounts to ClaimAssist, allowing ClaimAssist to “identify the payer responsible and to pursue recovery from that [third-party] payer.” Id. at 24. Upon transfer of an account, ClaimAssist would “contact[] the patient on the hospital's behalf to gather the information to seek reimbursement” from the proper third-party payer. ECF 57-3 at 25.

         The transfer of accounts to ClaimAssist occurred once per week. Id. at 36. Notably, when auto liability accounts were transferred to ClaimAssist, they were “pre-collection”, meaning they were not yet in default. Id. at 68-69.

         On May 24, 2014, eight days after Garner received medical treatment at the Hospital, her account was transferred to ClaimAssist, pursuant to the ClaimAssist Agreement, because Garner's medical treatment related to an automobile accident. ECF 57-3 at 23-24, 31-32, 35; see also ECF 65-2; ECF 57-3 at 36-37. Of import here, when Garner's account was transferred to ClaimAssist, it was not in default. ECF 57-4, ¶ 3; ECF 57-3 at 66-68.

         According to Rew, ClaimAssist was not hired to collect any debt directly from Garner. ECF 57-3 at 38; see also ECF 57-4, ¶ 4. Rather, ClaimAssist was hired to identify the proper third-party payer in regard to Garner's account. ECF 57-3 at 46.

         On April 28, 2015, ClaimAssist sent a letter to Greene, Garner's tort lawyer. ECF 57-2 at 23-34 (the “Letter”). The Letter stated that a lien had been lodged against plaintiff on behalf of Northwest Hospital. Id; see ECF 1, ¶¶ 11, 12, 27, 28. Page one of the Letter provided, id. at 23:

Dear MR GREEN [sic],
The attached is a copy of the lien in which [sic] NORTHWEST HOSPITAL has filed with BALTIMORE CITY CIRCUIT COURT.
This is to inform you that we statutorily attach a hospital lien to any funds that an injured patient may receive as reimbursement as a result of an accident or injury.
Title 16 S16-601 is the Maryland Statute providing the legal means of insuring payment of the injured person's hospital bill. The lien is filed when the possibility exists that other persons, firms or corporations may be liable for damages caused to the patient.
An example would be if a person was injured in an automobile accident and an insurance company was expected to cover the related hospital expenses, the hospital would file a lien to insure that they would be paid out of any recovered funds.
The patient and/or person or company who appear on the lien is provided a copy of said lien by certified mail.
Please let me know if you have any questions about this procedure.

         Page two of the Letter is titled “NOTICE AND CLAIM OF HOSPITAL LIEN.” ECF 57-2 at 24. A facsimile of page two of the Letter appears below. However, I have deleted the references to plaintiff's address.

         (Image Omitted)

         Page two of the Letter reflects, inter alia, Garner's name and address; provides that Garner was admitted to the Hospital on May 16, 2014; and indicates that she was discharged from the Hospital on the same date. ECF 57-2 at 24. Further, the Letter indicates: “Amount due [to NWH] for care of $801.16.” Id.

         The Letter identified NWH as the “Claimant Hospital” and Raja Khoury, who signed page one of the Letter on behalf of ClaimAssist, as the “Executive Officer or Agent of Hospital.” Id. at 23-24. The Letter also included the following statement, id. at 24:

The above named hospital pursuant to laws of the State of Maryland in such cases made and provided, does hereby claim a lien upon any and all causes of action, suits, claims, counter-claims, or demands for damages accruing to the patient named herein, or to the legal representative of such patient, on account of injuries giving rise to such causes of action and which necessitated his or her hospitalization, for its customary charges for hospital care and treatment of the above named injured patient in the sum hereinabove claimed to be due.
In addition, the Letter provided, id.: “No other responsible parties identified at this time.”

         According to the Complaint, the Letter inaccurately stated that plaintiff owed $801.16 to NWH. See ECF 1, ¶ 12. Garner does not dispute that a debt was owed to the Hospital. See ECF 65. But, she claims that she had “health insurance (and/or other contractual / legal relationship) with Aetna insurance . . . and U.S. Medicare . . .” and the Hospital and ClaimAssist were legally required to process the bill for Hospital services consistent with NWH's agreements with Aetna and Medicare. ECF 1, ¶ 12. According to Garner, the bill had not been processed as of April 28, 2015. Id. Therefore, “the alleged debt amount of $801.16 was plainly false, inaccurate, deceptive, and/or misleading (including by being not certain, and known to be so).” Id.

         On May 31, 2011, LifeBridge formed a separate agreement with CCS (the “CCS Agreement”). See ECF 57-3 at 23; see also ECF 65-6 (“CCS Collection Agreement”, dated May 31, 2011). Pursuant to the CCS Agreement, CCS provided debt collection services as to accounts that were initially transferred from LifeBridge to ClaimAssist but later fell into default. See ECF 57-3 at 41; ECF 57-3 at 55-56. Rew averred that ClaimAssist attempted to exhaust “insurance opportunities” to satisfy a medical bill before transferring an account to CCS. ECF 57-3 at 55. If ClaimAssist was unable to recover funds from a third-party, “at some point ClaimAssist transfer[ed] that account or refer[ed] that account to CCS . . . [f]or collection.” Id. at 55-56. According to Rew, an account was only transferred from ClaimAssist to CCS if the account was “in default or in collections.” Id. at 56-57.

         Rew stated at his deposition that “[a]t some point” during an unspecified month or year, ClaimAssist transferred Garner's account to CCS. ECF 57-3 at 41-42. Counsel for plaintiff did not inquire further as to the transfer of the ...

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