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Edwards v. BC Services, Inc.

United States District Court, D. Colorado

December 10, 2019

BC SERVICES, INC., Defendant.



         This matter comes before the Court on Defendant's Motion and Memorandum Brief for Summary Judgment [#16] (the “Motion”). The parties have consented to proceed before the undersigned United States Magistrate Judge for all proceedings, including entry of a final judgment. [#9, 12] The Court has carefully considered the Motion and related briefing, the entire case file, and the applicable case law, and has determined that oral argument would not materially assist in the disposition of the instant Motion. For the following reasons, Defendant's Motion is GRANTED IN PART and DENIED IN PART.


         This action arises out of Defendant BC Services, Inc.'s attempts to collect a debt from Plaintiff Clifford Edwards related to purportedly past due payments for medical services Plaintiff received from Colorado Imaging Associates (“CIA”), which is referred to herein as the “Subject Debt.” [#1 at ¶¶ 9-12] Except where expressly noted, the relevant facts are undisputed.[1]

         In or around the summer of 2018, Plaintiff went to the hospital for injuries sustained in an accident. [#1, ¶ 9; #22, SOF1] Plaintiff told the hospital that the injury happened at work but provided the hospital with insurance information for his private insurance carrier. [#22, SOF2, SOF25] CIA was one of the healthcare providers who provided treatment to Plaintiff for his injuries. [Id. at SOF3] Following treatment, Plaintiff's private insurance carrier paid a portion of CIA's bill to CIA. [Id. at SOF5; see also #17-1 at 18, ¶ 5] After payments and adjustments from the insurance carrier were provided, there was a remaining balance due to CIA in the amount of $7.20. [#17-1 at 18, ¶ 5; #22, SOF8] On December 10, 2018, CIA referred the Subject Debt in the amount of $7.20 to Defendant. [#17-1 at 18, ¶ 6] CIA sent Defendant information concerning the Subject Debt indicating that Plaintiff had private health insurance. [#22, SOF4] It is undisputed that CIA had provided accurate information on other accounts to Defendant in the past and that Defendant relies on the information provided to it by CIA. [Id. at SOF23, SOF24]

         On December 11, 2018, Defendant sent a collection letter (the “Collection Letter”) to Plaintiff relating to the Subject Debt, notifying Plaintiff that “Your creditor, listed above, has placed your account for collection.” [Id. at SOF6; see also #17-1 at 16] With regard to the amount due on the Subject Debt, the Collection Letter stated:

Date: December 11, 2018 L35552-#101
Account #: 16106121
Principal: $7.20 Interest: $0.00 Balance: $7.20

[#17-1 at 16] The Collection Letter thus reflected principal in the amount of $7.20, interest in the amount of $0.00, and a balance due in the amount of $7.20. [Id.] It is undisputed that the Subject Debt totaled $7.20 at the time the Collection Letter was sent.[2] [#22, SOF8] The Collection Letter was the only communication sent by Defendant to Plaintiff. [Id. at SOF18]

         On December 18, 2018, Plaintiff called Defendant and stated that he did not owe the Subject Debt, because it was covered by workers' compensation, and stated that he was going to sue Defendant's “client” (the “December 18 Call”). [Id. at SOF9] It is undisputed that Defendant did not become aware that the Subject Debt may be covered by workers' compensation insurance until the December 18 Call. [Id. at SOF10] On December 19, 2018, Plaintiff retained an attorney, who instructed Plaintiff to call Defendant again. [Id. at SOF11, SOF12] As instructed by his attorney, Plaintiff called Defendant on December 19, 2018 and asked Defendant what its intentions were regarding the Subject Debt (the “December 19 Call”). [Id. at SOF13, SOF14] In response, Defendant stated on the December 19 Call that its intent was to collect the Subject Debt. [Id. at SOF15] Defendant did not request payment of the Subject Debt from Plaintiff during the December 19 Call. [Id. at SOF16] Although it is undisputed that Defendant did not expressly state during the December 19 Call that it would continue to seek to collect the Subject Debt from Plaintiff, the parties dispute whether that was Defendant's intent and the implication of Defendant stating that it intended to collect the Subject Debt. [Id. at SOF17] Defendant did not tell Plaintiff in either the December 18 Call or the December 19 Call that the amount of the Subject Debt may change. [Id. at SOF19]

         After the December 19 Call, Pinnacol Assurance (“Pinnacol”), the workers' compensation carrier, contacted Defendant and stated that it would pay the Subject Debt. [Id. at SOF20] Pinnacol subsequently paid the Subject Debt in the full amount of $7.20. [Id. at SOF21] Upon receipt of the payment from Pinnacol, Defendant considered the debt paid in full. [Id. at SOF22]

         On December 26, 2018, Plaintiff filed the instant lawsuit alleging that Defendant violated two provisions of the Fair Debt Collection Practices Act (“FDCPA”). [#1] Plaintiff first contends that Defendant violated 15 U.S.C § 1692e, which prohibits debt collectors from “us[ing] any false, deceptive, or misleading representation or means in connection with the collection of any debt, ” by seeking to collect on a debt that Plaintiff did not owe, even after Plaintiff informed Defendant that the Subject Debt was covered by workers' compensation, and by including an interest line item in the Collection Letter. [Id. at ¶¶ 29-32] According to the Complaint, the inclusion of a reference to interest “misleadingly suggests to consumers the false possibility that Defendant could tack on additional amounts on debts that are not owed” and because Plaintiff did not owe the subject debt, “interest could not be lawfully added and/or collected from Plaintiff.” [Id. at ¶ 32] Plaintiff also contends that Defendant's inclusion of the interest line item and attempts to collect a debt that Plaintiff did not owe violated 15 U.S.C § 1692f, which prohibits debt collectors from “us[ing] unfair or unconscionable means to collect or attempt to collect any debt.” [Id. at ¶¶ 33-36]

         On September 24, 2019, Defendant filed the instant motion. [#16] Plaintiff filed his response to the Motion on October 15, 2019. [#19] On October 29, 2019, Defendant filed its reply in support of the Motion. [#21]


         Summary judgment is appropriate only if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 569 (10th Cir. 1994). The movant bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact, which the movant may do “simply by pointing out to the court a lack of evidence . . . on an essential element of the nonmovant's claim” when the movant does not bear the burden of persuasion at trial. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998). If the moving party bears the burden of proof at trial, “the moving party must establish, as a matter of law, all essential elements of the [claim or affirmative defense on which summary judgment is sought] before the nonmoving party can be obligated to bring forward any specific facts alleged to rebut the movant's case.” Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008). In other words, the moving party “must support its motion with credible evidence showing that, if uncontroverted, the moving party would be entitled to a directed verdict.” Rodell v. Objective Interface Sys., Inc., No. 14-CV-01667-MSK-MJW, 2015 WL 5728770, at *3 (D. Colo. Sept. 30, 2015) (citing Celotex Corp., 477 U.S. at 331). If the movant carries its initial burden, the burden then shifts to the nonmovant “to go beyond the pleadings and set forth specific facts that would be admissible in evidence in the event of trial.” Adler, 144 F.3d at 671 (quotation omitted).

         “[A] ‘judge's function' at summary judgment is not ‘to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'” Tolan v. Cotton, 572 U.S. 650, 656 (2014) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury. See Anderson, 477 U.S. at 248-49; Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000); Carey v. U.S. Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987). Evidence, including testimony, offered in support of or in opposition to a motion for summary judgment must be based on more than mere speculation, conjecture, or surmise. Bones v. Honeywell Int'l Inc., 366 F.3d 869, 875 (10th Cir. 2004). A fact is “material” if it pertains to an element of a claim or defense; a factual dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a reasonable jury could return a verdict for either party. Anderson, 477 U.S. at 248. “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)). In reviewing a motion for summary judgment, the Court “view[s] the evidence and draw[s] reasonable inferences therefrom in the light most favorable to the non-moving party.” See Garrett v. Hewlett-Packard Co., 305 F.3d 1210, 1213 (10th Cir. 2002).

         III. ANALYSIS

         The purpose of the FDCPA is “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). To succeed on a claim under the FDCPA, a plaintiff must establish the following four elements: (1) the plaintiff is a natural person who is a “consumer” under 15 U.S.C. § 1692a(3); (2) the “debt” arises out of a transaction entered primarily for personal, family, or household purposes under 15 U.S.C. § 1692a(5); (3) the defendant is a “debt collector” within the meaning of 15 U.S.C. § 1692a(6); and (4) the defendant violated, by act or omission, a provision of the FDCPA. Rhodes v. Olson Assocs., P.C., 83 F.Supp.3d 1096, 1103 (D. Colo. 2015). Here, Defendant challenges only the fourth element-i.e., whether any of Defendant's actions or omissions constitute a violation of any provision of the FDCPA.

         Plaintiff alleges that Defendant violated Section 1692e and Section 1692f. [#1] Section 1692e prohibits a debt collector from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt” and includes a non-exhaustive list of 16 specifically prohibited practices that violate the general prohibition against false, deceptive, or misleading representation or means. 15 U.S.C. § 1692e. Of relevance to the instant Motion, Plaintiff argues that Defendant's conduct, in addition to violating the general prohibition, violated subsection 2(a), which prohibits the false representation of the character, amount, or legal status of any debt, subsection 5, which forbids the threat to take any action that cannot legally be taken or that is not intended to be taken, and subsection 10, which prohibits the use of any false representation or deceptive means to collect or attempt to collect any debt.[3] [#1 at ¶¶ 30-32] Section 1692f proscribes a debt collector from using “unfair or unconscionable means to collect or attempt to collect any debt, ” and includes a non-exhaustive list of eight specifically prohibited practices that violate the general prohibition against unfair or unconscionable means. 15 U.S.C. § 1692f. Of relevance here, Plaintiff contends that Defendant's conduct, in addition to violating the general prohibition, violated subsection 1, which prohibits “[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” [#1 at ¶¶ 34-35]

         The federal circuits are split with regard to the appropriate standard that should be applied in evaluating whether a debt collector's representations are false, deceptive, misleading, unfair, or unconscionable. The majority of Circuits-including the Second, Third, Sixth, Ninth, and Eleventh Circuits-have adopted a “least sophisticated consumer” standard, whereas a minority of Circuits-including the First, Seventh, and Eighth Circuits-have adopted an “unsophisticated consumer” standard.[4] See, e.g., Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d 98, 103 n.4 (1st Cir. 2014) (noting Circuit split and adopting the “hypothetical unsophisticated consumer” standard); Hatuey v. IC Sys., Inc., No. 1:16-CV-12542-DPW, 2018 WL 5982020, at *3 n.3 (D. Mass. Nov. 14, 2018) (identifying Circuit Split). Although the Tenth Circuit has not expressly addressed the appropriate standard in a published opinion, it has applied the least sophisticated consumer standard in two unpublished decisions. See Fouts v. Express Recovery Servs., Inc., 602 Fed.Appx. 417, 421 (10th Cir. 2015); Ferree v. Marianos, 129 F.3d 130, 1997 WL 687693, at *1 (10th Cir. 1997) (unpublished table decision). Here, both parties agree that the Court should apply the least sophisticated consumer standard. [#16 at 4-5; #19 at 4-5] Consistent with the parties' approach, for purposes of the current Motion, the Court thus will apply the least sophisticated consumer standard to Plaintiff's claims.

         The least sophisticated consumer standard is an objective standard that considers “how the least sophisticated consumer-one not having the astuteness of a ‘Philadelphia lawyer' or even the sophistication of the average, everyday, common consumer- understands the [communication] he or she receives” from the debt collector. Russell v. Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996). The least sophisticated consumer, however, “can be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care.” Ferree, 1997 WL 687693, at *1 (quoting Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993)). The least sophisticated consumer standard serves the dual purpose of “(1) ensur[ing] the protection of all consumers, even the naive and the trusting, against deceptive debt collection practices, and (2) protect[ing] debt collectors against liability for bizarre or idiosyncratic interpretations of collection notices.” Clomon, 988 F.2d at 1320.

         Here, Plaintiff's Section 1692e and Section 1692f claims “stem from two instances of Defendant's conduct: (1) Defendant's attempts to collect a debt from Plaintiff which was covered by worker's compensation and which Plaintiff did not owe; and (2) Defendant's decision to send Plaintiff a collection letter which itemized the interest due on the subject debt as ‘$0.00.'” [#19 at 1] The Court addresses each in turn.

         A. Defendant's Attempt to Collect a Debt ...

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