District Court: Request for Insurance Information Does Not Overshadow Required Notices

A district court in New Jersey recently dismissed a consumer’s complaint where the medical collection letter acknowledged the possibility of insurance coverage. In Cruz v. Financial Recoveries, the collection letter included the following provisions:

University Hospital has listed your past due account with this office for collection. To avoid further contact from this office regarding your past due account, return the top portion of this notice with your payment in full. Payments should be made payable to University Hospital and sent to the following address.

University Hospital
P.O. Box 3009
Newark, NJ 07103-0009…

If you have insurance that may pay all or a portion of this debt, that information can be submitted by calling 1-800-220-0260 or by completing the information on the reverse side of this letter and returning the entire letter to this office at Financial Recoveries, PO Box 1388, Mt. Laurel, NJ 08054.

 IMPORTANT CONSUMER NOTICEUnless, within 30 days after receipt of this notice, you dispute the validity of the debt or any portion thereof, we will assume the debt to be valid. If, within 30 days after your receipt of this notice, you notify us in writing that the debt or any portion thereof is disputed, we will obtain a verification of the debt, or if the debt is founded upon a judgment, a copy of any such judgment, and we will mail to you a copy of such verification or judgment. If the original creditor is different from the creditor named above, then upon your written request within 30 days after the receipt of this notice we will provide you with the name and address of the original creditor.

This Company is a debt collector. We are attempting to collect a debt and any information obtained will be used for that purpose.

Cruz v. Fin. Recoveries, 2016 U.S. Dist. LEXIS 83576, *2-3 (D.N.J. June 28, 2016).

The consumer alleged two claims under the FDCPA. First, the plaintiff contended that the letter violated 15 U.S.C. 1692g because the provision as to insurance contradicted or overshadowed the Section 1692g notice requirements. Similarly, because the letter did not comply with section 1692g, the consumer alleged the letter was “false, deceptive and misleading” and violated section 1692e.  

The district court noted at the outset that whether or not the communication overshadows the Section 1692g notice must be evaluated from the perspective of the least sophisticated consumer. The court went on to hold, that “while the standard protects naïve consumers, it also prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and presuming a basic level of understanding and willingness to read with care. Even the least sophisticated debtor is bound to read collection notices in their entirety." Cruz at *6, quoting Campuzano-Burgos v. Midland Credit Mgmt., Inc., 550 F.3d 294, 299 (3d Cir. 2008) (internal citations omitted). In determining whether the request for insurance information overshadowed the section 1692g debt validation requirements, the court noted that courts have generally upheld requests for information even if the information is somewhat related to the notion of disputing a debt. 

In reviewing the specific language used by the collection agency in this particular letter, the court held that it was simply a request for information. “[T]he language Defendant's letter uses makes no reference to disputing the debt, only the provision of insurance information related to the debt. The Court finds this to be a meaningful distinction”. Id. at *10. The court further held that because the plaintiff could not prevail on her section 1692g claim, she likewise could not proceed forward under 15 U.S.C. 1692e(10) as the analysis of section 1692g language is generally dispositive of section 1692e claims. The court therefore granted the collection agency’s motion for judgment on the pleadings and dismissed the action.