United States District Court, W.D. Kentucky, Louisville
ELLA J. FAUSZ, individually, and on behalf of a class of similarly situated persons PLAINTIFFS
NPAS, Inc. DEFENDANT
Charles R. Simpson III, Senior Judge United States District
matter is before the Court on the motion of Defendant NPAS,
Inc. (“NPAS”) for summary judgment under Federal
Rule of Civil Procedure 56(a), ECF No. 53. Plaintiff Ella
Fausz, individually and behalf of a putative class of
similarly situated persons, responded, ECF No. 56. NPAS
replied, ECF No. 58.
also moved for a hearing and oral argument on the issues that
are raised in its motion for summary judgment, ECF No. 55.
Fausz did not object, ECF No. 57. As NPAS's motions
concern the same facts and issues, the Court will address
them in a single memorandum opinion and order. For the
reasons explained below, the Court will grant in part and
deny in part NPAS's motion for summary judgment. The
Court will also deny NPAS's motion for a hearing and oral
argument on the issues discussed in the motion for summary
Springfield Regional Medical Center's Process of
Regional Medical Center (“the hospital”) is part
of Community Mercy Health Partners, a regional healthcare
system. Ex. B, ECF No. 53-4. When the hospital attempts to
obtain payment on overdue patient accounts, it does not use
the term “default, ” regardless of how many days
the payment is overdue. Napier Dep. 3, ECF No. 53-6. Nor does
the hospital use the term “delinquent” or
“past due.” Id. Instead, the hospital
describes the patient accounts as “aging.”
Id.; see also Crum Aff. ¶ 7, ECF No.
56-6. The patient accounts are assigned an aging category in
30-day increments based on the date of discharge. Crum Aff.
¶ 7, ECF No. 56-6. After the patient accounts age for
360 days, the hospital assumes that no additional payment
will be received for such accounts. Id. ¶¶
hospital engages in several steps to collect balances on
patient accounts. When patients are admitted to the
hospital's emergency room and are unable to provide their
insurance information, the hospital later sends them
statements for payment of the medical services that they
received. Napier Dep. 3, ECF No. 56-5. The hospital initially
seeks to be reimbursed for its services from third-party
payors, including insurance companies. Id. If
third-party payors do not reimburse the hospital or if a
balance on the account remains after the third-party payor
provides partial reimbursement, it sends the patient an
account statement. Id. If the patient does not pay
the balance on the account, the hospital sends a second
statement. Gaffey Dep. 2, ECF No. 53-7. The hospital also
sends the patient a financial aid application. Id.
patient still does not pay the balance, the hospital sends
the patient account to an early-out vendor. Id. at
2, 5; Napier Dep. 3, ECF No. 56-5. The hospital considers the
early-out vendors an extension of its business office. Gaffey
Dep. 4, ECF No. 53-7. The early-out vendor provides the
patient with additional information about the account
balance. Id. at 2. The early-out vendor makes
“proactive communication[s]” regarding the
patient's “open balances” and
“options” for paying them. Id.
the hospital sends the account to a collection agency. Napier
Dep. 7, ECF No. 53-6. Accounts that the hospital sends to a
collection agency have generally aged more than six months.
Id. at 6. But if a patient had been making some
payments, the accounts could age for longer before being sent
to a collection agency. Id. at 7.
an early-out vendor that provided business services to the
hospital. Id. at 2. NPAS agreed to “use
commercially reasonably reasonable efforts to collect the
amounts owed [on patient accounts], which may [have]
include[d] phone calls and written communications with
guarantors, and/or third party agencies or payors that may
[have] be[en] responsible for the patient account. These
efforts [were] intended to resolve/liquidate the accounts
within a 90-day time frame.” Service Agreement 1, ECF
operates call centers in Louisville, Kentucky and in Texas.
Summers Dep. 5, ECF No. 56-2. NPAS is a licensed collection
agency in some states. Steadmon Dep. 4, ECF No. 56-1. It
receives a portion of the monies that it recovers for its
services. Summers Dep. 2, ECF No. 56-2; Service Agreement 1,
ECF No. 53-8. NPAS does not engage in credit reporting.
Summers Aff. ¶ 5, ECF No. 53-10.
described in its service agreement with the hospital, NPAS
does not receive any patient accounts that are in default,
patient accounts that are considered in default, or patient
accounts on which it would not have a legal right to collect.
Service Agreement 2, ECF No. 53-8. The service agreement,
however, does not define when patient accounts are in
Fausz's Accident and Collection of her Account
August 2011, Fausz was sitting in the front passenger seat of
a car that was stopped for a red light when “somebody
plowed into the back end” of the vehicle. Fausz Dep. 9,
11, ECF No. 53-3. An ambulance transported her to the
hospital. Id. at 5, 8, 10. There, she was treated
for whiplash and lower back injuries. Id. at 11.
week after Fausz was treated for her injuries, the hospital
sent Fausz's account statement to her insurance carrier,
Cincinnati Insurance Company. Claim, ECF No. 56-3. The
patient account balance totaled $3, 515.50. Id. When
Cincinnati Insurance Company did not pay the account balance,
Medical Reimbursements of America (MRA), a medical
reimbursement company, mailed Fausz's attorney a series
of three letters on behalf of the hospital. Napier Dep. 3,
ECF No. 56-5; MRA Letter 9/1/2011, ECF No. 56-7; MRA Letter
11/15/2011, ECF No. 56-8; MRA Letter 4/12/2012, ECF No. 56-9.
In September 2011, MRA sent its first letter to Fausz's
attorney, which explained that it sought information about
potential payment sources for Fausz's medical debt, such
as sources of insurance. MRA Letter 9/1/2011, ECF No. 56-7.
In November 2011, MRA send a second letter to Fausz's
attorney seeking the same payment information. MRA Letter
11/15/2011, ECF No. 56-8. And in April 2012, MRA sent a third
letter to her attorney, which also sought the same payment
information. MRA Letter 4/12/2012, ECF No. 56-9.
month later, in May 2012, the hospital sent Fausz a statement
explaining that she was personally responsible for paying her
$3, 515.50 patient account balance. May Statement, ECF No.
12. Then in June 2012, the hospital sent her a second
statement that asserted that her patient account was past
due. June Statement, ECF No. 13. During this period of time,
the hospital also apparently called Fausz several times to
discuss payment of her patient account balance. Fausz Dep. 2,
ECF No. 56-10. In July 2012, MedPay Assurance, another
medical reimbursement company, sent a letter to Fausz to
attempt to collect the balance on her patient account. Napier
Dep. 5, ECF No. 53-6; MedPay Letter 7/5/2012, ECF No. 56-14.
following month, NPAS sent Fausz a letter to collect the
unpaid patient account balance. NPAS Letter 8/3/2012, ECF No.
56-15. As Fausz did not pay her medical debt by December
2012, the hospital recorded in its account ledger that it
estimated it would receive $0.00 in revenue on the debt. A/R
Aging Ledger, ECF No. 16.
February 2013, the hospital referred Fausz's account to
United Collections Bureau, Inc., a licensed debt collection
agency. UCB Letter 2/11/2013, ECF No. 17. United Collections
Bureau, Inc. sent Fausz a dunning letter in which it
explained that it was ...