Klein v. Affiliated Group, Inc., The

Background

Dina Klein incurred two debts to North Memorial Health Care and applied unsuccessfully for financial assistance. In November 2017, North Memorial placed the debts with The Affiliated Group, Inc. (TAG), which sent Klein a collection letter. The letter stated that the accounts had been placed for collection and that payment in full was due, but it did not mention North Memorial’s financial-assistance program.

TAG and Credit Management, LP (CMLP) merged on January 1, 2018. The court stated that TAG’s accounts, contract rights, and obligations were transferred to CMLP, and that CMLP later restarted the validation period for the debts. The parties also amended the written collection agreement with North Memorial to substitute CMLP for TAG. In March 2018, CMLP sent Klein another collection letter concerning the same debts. That letter likewise did not mention the financial-assistance program.

Klein alleged that the defendants violated the Fair Debt Collection Practices Act (FDCPA) by: (1) collecting without a written contract as allegedly required by an agreement between North Memorial and the Minnesota Attorney General; (2) making false statements in CMLP’s March 2018 letter; and (3) failing to include information about North Memorial’s financial-assistance program in the collection letters.

Summary-judgment standard

The court explained that summary judgment is proper when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. The court viewed the evidence and reasonable inferences in the light most favorable to the party opposing each motion.

Written contract and authority to collect

The FDCPA prohibits collecting an amount unless the amount is authorized by the agreement creating the debt or permitted by law. Klein argued that CMLP was not authorized to collect because it did not have a written contract with North Memorial and because the TAG/North Memorial agreement did not specifically mention assignments.

The court rejected that argument. It explained that contract rights generally may be assigned unless an assignment is barred by statute or contract, or the contract involves personal trust or confidence. None of those exceptions applied. The evidence showed that TAG and CMLP intended to transfer TAG’s rights and obligations under the agreement to CMLP. The companies operated as though the transfer had occurred, amended the agreement to substitute CMLP for TAG, and North Memorial continued placing accounts with CMLP under the agreement. Because the original agreement was written and its rights were transferred to CMLP, the court concluded that a valid and enforceable written contract existed between CMLP and North Memorial. Klein’s FDCPA claim based on the alleged lack of a written contract therefore failed.

Statements in the March 2018 letter

Klein argued that CMLP’s statement that the accounts had been “turned over to us by our client” was false. She also argued that the defendants threatened action they could not legally take and that TAG attempted to collect under a false name.

The court concluded that CMLP had stepped into TAG’s position under the assigned agreement. It therefore had authority to collect under its own name, did not threaten action it could not legally take, and did not make a false statement in the March 2018 letter. The court granted summary judgment to the defendants on these claims.

Financial-assistance-program notices

Klein argued that federal regulations required the defendants to include information about North Memorial’s financial-assistance program in their collection letters. The court ruled that the cited regulations require hospital facilities and hospital organizations to publicize such programs; they do not impose the same requirement on these collection companies. The court also found that the evidence showed North Memorial’s internal policy applied to bills sent by North Memorial on its own letterhead. Even assuming the policy applied to the defendants’ letters, the court stated that Klein had not identified authority making a violation of an internal policy an FDCPA violation. The court therefore concluded that no reasonable jury could find an FDCPA violation based on the missing financial-assistance-program notice. Because the claim failed on the merits, the court did not decide the defendants’ separate argument that Klein lacked standing because she could not show harm.

Disposition

Judge Frank denied Klein’s Motion for Partial Summary Judgment, granted the defendants’ Motion for Summary Judgment, ruled that the defendants were entitled to summary judgment on Klein’s claims, and dismissed Klein’s Second Amended Complaint. The order did not state that the dismissal was with or without prejudice.