Michelle Echlin, on behalf of herself and all others similarly situated, Plaintiff-Appellant,
PeaceHealth, DBA PeaceHealth Southwest Medical Center; Computer Credit, Inc., Defendants-Appellees.
and Submitted December 5, 2017 Seattle, Washington
from the United States District Court for the Western
District of Washington Barbara Jacobs Rothstein, Senior
District Judge, Presiding D.C. No. 3:14-cv-05211-BJR
Brendan W. Donckers (argued) and Daniel F. Johnson, Breskin
Johnson & Townsend PLLC, Seattle, Washington; Thomas J.
Lyons Jr., Consumer Justice Center PA, Vadnais Heights,
Minnesota; for Plaintiff-Appellant.
Bradley L. Fisher (argued), Davis Wright Tremaine LLP,
Seattle, Washington, for Defendant-Appellee PeaceHealth.
Cassandra L. Crawford (argued) and Mark A. Stafford, Nelson
Mullins Riley & Scarborough LLP, Winston-Salem, North
Carolina; Jeffrey I. Hasson, Davenport & Hasson LLP,
Portland, Oregon; for Defendant-Appellee Computer Credit,
Before: Diarmuid F. O'Scannlain, Richard C. Tallman, and
Paul J. Watford, Circuit Judges.
Debt Collection Practices Act
panel affirmed the district court's grant of summary
judgment in favor of the defendants in an action under the
Fair Debt Collection Practices Act.
panel held that the plaintiff did not establish flat-rating,
a practice in which a third party sends a delinquency letter
to a debtor, portraying itself as a debt collector, when in
fact it has no real involvement in the creditor's debt
collection effort, in violation of 15 U.S.C. § 1682j.
The panel concluded that the record supported the district
court's finding that defendant Computer Credit, Inc.,
meaningfully participated in defendant PeaceHealth's
debt-collection efforts, and thus did not engage in
flat-rating, when its services included screening referred
debtors for barriers to collection, independently composing
and mailing collection letters, inviting and responding to
customer questions on a variety of details about the
collection process, and maintaining a website that allowed
customers to access individualized information about their
debts and to submit electronic files to the company.
panel held that the district court properly struck a claim of
threatening action that cannot legally be taken or that is
not intended to be taken under § 1692e(5) because the
complaint did not allege such a claim, and any amendment to
add the claim would be time-barred. The panel concluded that
any claim under § 1692e(10) was waived.
SCANNLAIN, CIRCUIT JUDGE:
decide whether, under the Fair Debt Collection Practices Act,
a company that sent letters demanding that hospital patients
pay their overdue medical bills meaningfully participated in
the hospital's efforts to collect debts.
Echlin is a former patient of PeaceHealth Southwest Medical
Center (PeaceHealth) in Vancouver, Washington. Echlin
received treatment at PeaceHealth on two different occasions
but never paid the nearly $1, 000 in medical bills she
incurred as a result. After Echlin ignored multiple requests
for payment, PeaceHealth referred her delinquent accounts to
Computer Credit, Inc. (CCI), a purported collection agency,
for further action.
number of years, CCI and PeaceHealth operated together under
a "Subscriber Agreement" signed in 2004. Under the
agreement, PeaceHealth would refer delinquent patient
accounts to CCI and, for a fixed fee, CCI would perform
various services related to the debt-collection
process-primarily mailing letters demanding that the patients
pay their bills. During the time that an account had been
referred to CCI, PeaceHealth would suspend its in-house
referred an account to CCI, PeaceHealth would give CCI the
debtor's name and address, the name of any guarantor, the
date of the service in question, and the amount owed on the
account. CCI would then independently screen each account for
potential collection problems (such as staleness of the
claim). CCI's screening process was mostly automated,
though a CCI employee would personally review at least some
of the accounts for red flags. If an account passed CCI's
screening process, CCI would then send the debtor a letter
advising her that the account had been assigned to CCI for
collection purposes and demanding payment.
controlled the largely formulaic letter-mailing process.
Although PeaceHealth was generally aware of the standard
format of CCI's letters, CCI alone controlled the content
of the letters it actually sent, and CCI did not seek
PeaceHealth's approval prior to mailing. The letters were
written on CCI letterhead, they were mailed from CCI's
in-house mailing center, and they listed CCI's address
and phone number (along with PeaceHealth's contact
information under a section labeled "Creditor
Detail"). The letters also directed debtors to visit a
website maintained by CCI, where one could see more details
about his or her debt, find information about how to repay or
to dispute the debt, and submit electronic documents to CCI.
Like the letters, the website encouraged debtors to contact
CCI by phone, fax, or mail with questions.
would mail up to two collection letters for each PeaceHealth
account. The first letter informed the debtor that her
account had been referred to CCI, "a debt collector,
" for collection and requested payment either by check,
by a credit card form included in the letter, or online at
PeaceHealth's website. CCI itself had no ability to
process or to negotiate payments for PeaceHealth, but it
would forward to PeaceHealth any payments it received,
including endorsing checks made out to CCI, as necessary. CCI
typically allowed the debtor two weeks to respond to its
first letter. If a debtor made full repayment, CCI stopped
all collection activity. But if the debtor failed to pay or
to respond within two weeks, CCI would send a second letter,
renewing its request that the debtor settle the account. If,
after another two to three weeks, the debtor still had not
paid her debt, CCI would refer the debt back to PeaceHealth
and CCI's activity on the account would end.
sent back to PeaceHealth would often then be referred to
another company for additional action. As PeaceHealth
describes it, CCI's activities were the first step in a
series of collections processes "up to and including the
point of an additional agency obtaining and executing on a
court judgment." CCI did not participate in any of the
later collection steps.
also handled correspondence-both in writing and over the
phone-from PeaceHealth debtors. In 2013, for instance, CCI
received 440 pieces of mail from PeaceHealth debtors. When it
received such mail, CCI would "review, act on it, copy
it, " and then forward it to PeaceHealth, though CCI
would not necessarily respond directly to the debtor herself.
For example, when it received written requests for debt
verification, CCI would contact PeaceHealth to verify the
validity of the debt and then either PeaceHealth or CCI would
send a letter responding to the debtor. CCI also trained its
staff personally to handle phone inquiries from debtors, and
CCI's Collections Manager estimated that CCI handled
approximately 500 calls a week from debtors for all of its
clients combined. CCI personnel gave a variety of
information to callers, including clarifying basic details
about their debts, assisting in understanding their insurance
benefits, advising them to look into charity programs for
assistance in paying, and explaining the distinction between
a payment plan and a partial payment. CCI did not generally
reach out to debtors beyond the two letters, but CCI
personnel would return calls to debtors if requested, and CCI
sent debtors various administrative notices, such as payment
or account-closure confirmations.
early April 2013, PeaceHealth sent Echlin's information
to CCI for assistance in collecting the debt from her first
treatment at PeaceHealth. On April 4, CCI assigned
Echlin's debt a CCI account number and screened it for
barriers to collection. The next day, CCI sent an initial
collection letter to Echlin demanding payment. The letter was
written in the form described above and stated:
Your overdue balance with PeaceHealth . . . has been referred
to [CCI] for collection. . . . This letter will serve to
inform you that your account remains unpaid and we expect
resolution of your obligation to [PeaceHealth].
letter directed Echlin to remit payment in order to
"prevent further collection activity by" CCI. It
also instructed her to notify CCI within 30 days if she
disputed the validity of the debt.
received no response, CCI sent a second letter to Echlin
exactly two weeks later. The second letter was substantially
the same as the first but included the additional notice:
This is our FINAL NOTICE and you must take action to resolve
this overdue account. Pay the amount due to discharge your
debt owed to [PeaceHealth]. . . . [T]his is our LAST ...