Collector - July/Aug 2021 - 15

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IAF
Case in 8th Circuit Clarifies Debt Collectors' Role in
Providing 501(r) Financial Assistance Policies
ACA International supported the defendants through the Industry Advancement Fund.
According to a ruling by the U.S.
Court of Appeals for the 8th Circuit in
Klein v. The Affiliated Group Inc., debt
collectors are not required to provide
financial assistance policies in collection
letters under the Internal Revenue Service's
501(r) rules for nonprofit hospitals;
rather, the responsibility lies on
the hospital.
ACA International supported the defendants
in the case, The Affiliated Group
and Credit Management LP, through the
Industry Advancement Fund.
This case addresses two separate issues:
1. The debt collector's role to inform
consumers of financial assistance policies
under 501(r) if they are working
on behalf of a health care provider
client, and
2. Allegations that the debt collection
agency violated the Fair Debt Collection
Practices Act by attempting
to collect on a debt that was barred
by law.
The plaintiff, Dina Klein, owed money
on a medical bill and applied for financial
assistance through her health care provider.
The application was denied, and her bill
went to collections.
In November 2017, North Memorial (the
health care provider) hired The Affiliated
Group (TAG) to collect the debt. TAG sent
Klein a letter that month informing her that
" the below listed account(s) has been turned
over to us by our client, who has given you
an opportunity to satisfy this obligation. "
TAG's letter did not mention anything
about North Memorial's financial assistance
policy, according to the court.
At the time, TAG and Credit Management
LP (CMLP) were wholly owned but
separate subsidiaries of The CMI Group.
At some point, TAG either merged or
transferred the debt to CMLP, both of
which were owned by The CMI Group.
After the two companies consolidated
accounts under the CMLP label, that
agency sent a substantially similar collection
letter to Klein in its own name in
March 2018.
FINANCIAL ASSISTANCE
POLICY AGREEMENT
After receiving the second collection
letter, the consumer sued TAG and
CMLP arguing, among other things,
that the debt collectors violated Sections
1692e(5) and 1692f(1) of the FDCPA
by failing to include information about
the hospital's financial assistance policy
in the two letters.
The district court entered summary judgment
in favor of the debt collectors, and the
consumer appealed to the 8th Circuit.
The plaintiff argued that TAG and
CMLP needed to provide a financial
assistance policy to the consumer since their
client was a nonprofit health care provider
and, as such, was subject to 501(r). They
argued that TAG and CMLP were acting
as an extension of the health care provider
and, by failing to provide a required notice,
were in violation of the FDCPA.
Regarding the consumer's claim that the
debt collectors violated the FDCPA by failing
to notify her of the hospital's financial
Continued on Page 16
JULY/AUGUST 2021
15

Collector - July/Aug 2021

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