United States District Court, W.D. Virginia, Harrisonburg Division
Michael F. Urbanski Chief United States District Judge
action arises under the Fair Debt Collection Practices Act
("FDCPA"), 15 U.S.C. § 1692 et seq. Plaintiff
William Masters ("Masters") alleges that Defendant
Harrison & Johnston PLC ("H&J") violated
the FDCPA by initiating a time-barred collection action on
behalf of its client, Neurologic Associates PLC
("Neurologic"). H&J does not contest the
violation, but seeks shelter in the bona fide error defense
under 15 U.S.C. § l692k(c). Both parties moved for
summary judgment, ECF Nos. 14 & 16, and have filed
responsive briefs, ECF Nos. 18 & 20-21. The court
dispenses with oral argument because the facts and legal
contentions are adequately presented in the materials before
the court and argument would not aid the decisional process.
For the following reasons, Masters' motion for summary
judgment, ECF No. 14, is DENIED and
H&J's cross-motion for summary judgment, ECF No. 16,
sought medical services from Neurologic in July 2008, for
which Masters signed an agreement promising to pay any
invoices. See Ex. C to PL's Mem. of Law in Supp. of Summ.
J., ECF No. 15-5. No payments were made for the services
after 2008. See PL's Statement of Undisputed Facts, ECF
No. 15-1, at l. In late 2015 or early 2016, Neurologic
sought H&j's assistance in initiating collections
actions for unpaid services. See Def.'s Mem. in Opp'n
to PL's Mot. for Summ. J. and in Supp. of Def.'s
Cross-Mot. for Summ. J., ECF No. 18, at 1 ("Def.'s
Mem."). Stephen L. Pettier, Jr., the managing
member and an attorney at H&J, informed Dr. Mark Landrio,
the manager of Neurologic, that H&J could not collect
accounts that were unpaid for more than five years due to
Virginia's statute of limitations. See
Def.'s Mem., ECF No. 18, at 1-2. Neurologic agreed to
only provide accounts with charges incurred or payments
received within the last five years. See Id. at 2.
Neurologic reviewed its records and the records of its
medical billing company, J.D. Matthews & Associates
("J.D. Matthews") during its compilation of
accounts. See Id. at 2. In July 2016, Neurologic
provided information for 442 accounts, including Masters'
account, to H&J for the purpose of initiating collection
actions. See id.
to initiating litigation, H&J reviewed all of the
accounts for "appropriate documentation and divided [the
accounts] into tranches for drafting of warrants in debt and
filing of the same." See Ex. E to PL's Mem. of Law
in Supp. of Summ. J., ECF No. 15-7, at 3-4. H&J has no
written procedures for its review of accounts received for
collections and potential litigation. See PL's Statement
of Undisputed Facts, ECF No. 15-1, at 2. However,
"[a]ttomeys with H&J review[ed] all claims to
determine that cases filed for those claims are filed within
the applicable statute of limitations." See Ex. G to
PL's Mem. of Law in Supp. of Summ. J., ECF No. 15-9, at
3. Although the attorneys reviewed the documents provided by
Neurologic, "[n]o review of the documents from the
billing company (the exhibits attached with Plaintiffs Motion
for Summary Judgment) would indicate if the debtor had made
payments or otherwise agreed to a payment plan or such other
accommodations with Neurologic Associates, PLC." See
Def.'s Mem., ECF No. 18, at 5. Specific to Masters'
account, H&J reviewed his patient informational sheet,
patient receipt, signed patient promise to pay, and signed
insurance information sheet. See PL's Statement
of Undisputed Facts, ECF No. 15-1, at 1-2. "[I]t was
understood, from the information available to H&J from
Neurologic Associates, PLC, that the Masters' account was
currently active." See Ex. E to PL's Mem. of Law in
Supp. of Summ. J., ECF No. 15-7, at 3-4.
November 8, 2016, H&J filed a lawsuit against Masters in
Winchester General District Court to collect an alleged
outstanding balance of $392.99 owed to Neurologic, plus
interest, costs, and attorney's fees of $500. See
PL's Statement of Undisputed Facts, ECF No. 15-1, at 1.
Masters' counsel then notified H&J that the statute
of limitations had lapsed. Upon learning of the statute of
limitations defense, H&J "subsequently determined,
after consultation with Neurologic Associates, PLC, that the
Masters account was open, but it did not have any activity on
the account within the period of the applicable statute of
limitations. The account was sent to H&J for collection
by mistake." Ex. G to PL's Mem. of Law in Supp. of
Summ. J., ECF No. 15-9, at 2. Prior to Masters responding to
the suit, H&J dismissed the suit with prejudice. See id.
Masters and H&J move for summary judgment, ECF Nos. 14
& 16. In his motion for summary judgment, Masters argues
that H&J's initiation of litigation meets the three
requirements for an FDCPA violation: (1) Masters is a
consumer as defined in § l692a(3) because he is a
natural person allegedly obligated to pay a medical debt; (2)
H&J, as a law firm seeking repayment of a debt on behalf
of a client, is a debt collector under § l692a(6); and
(3) H&J engaged in an act or omission in violation of the
FDCPA by filing a lawsuit to collect a time-barred debt.
Masters contends H&J possessed documents showing that the
statute of limitations passed in 2013, three years prior to
the initiation of the lawsuit.
opposition and in its cross summary judgment motion, H&J
does not contest the FDCPA violation but claims the bona fide
error defense under 15 U.S.C.S. § l692k(c). H&J
argues that filing the time-barred collection action was
unintentional and a bona fide mistake because Neurologic
agreed to only forward active accounts. Further, H&J
contends that its reliance on Neurologic's review of the
records was a procedure reasonably adopted to avoid such an
error. As different billing records were held by both
Neurologic and J.D. Matthews, Neurologic agreed to collect
and review the records to verify that accounts were not
barred by the statute of limitations. H&J states that it
had to rely on Neurologic's review of the records given
the nature of Neurologic's two different account records.
opposed H&J's cross-motion for summary judgment and
replied in support of its own motion, arguing that the bona
fide error defense is inapplicable because H&J did not
commit a bona fide error and did not have procedures
reasonably adapted to avoid the error. Masters does not
challenge H&J's lack of intention for the error.
However, Masters asserts that the error was not bona fide
error because, although a debt collector can rely on its
client for information, there must be a reasonable or
colorable factual basis to believe that the information is
accurate; H&J had no reasonable basis because the
client's provided documentation showed no activity on the
account after 2008. Masters further argues that H&j lacks
written procedures reasonably adapted to avoid time-barred
claims, and that reliance on Neurologic's representations
as the client is insufficient.
to Federal Rule of Civil Procedure 56(a), the court must
"grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett.
477 U.S. 317, 322 (1986); Glynn v. EDO Corp.. 710
F.3d 209, 213 (4th Or. 2013). When making this determination,
the court should consider "the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with . . . [any] affidavits" filed by the parties.
Celotex. 477 U.S. at 322. Whether a fact is material
depends on the relevant substantive law. Anderson v.
Liberty Lobby. Inc., 477 U.S. 242, 248 (1986).
"Only disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude
the entry of summary judgment. Factual disputes that are
irrelevant or unnecessary will not be counted."
Id. (citation omitted). The moving party bears the
initial burden of demonstrating the absence of a genuine
issue of material fact. See Celotex, 477 U.S. at
323. If that burden has been met, the non-moving party must
then come forward and establish the specific material facts
in dispute to survive summary judgment. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp.. 475 U.S. 574, 586-87
determining whether a genuine issue of material fact exists,
the court views the facts and draws all reasonable inferences
in the light most favorable to the non-moving party.
Glynn. 710 F.3d at 213 (citing Bonds v.
Leavitt. 629 F.3d 369, 380 (4th Or. 2011)). Indeed,
"[i]t is an 'axiom that in ruling on a motion for
summary judgment, the evidence of the nonmovant is to be
believed, and all justifiable inferences are to be drawn in
his favor.'" McAirlaids. Inc. v. Kimberly-Clark
Corp.. No. 13-2044, 2014 WL 2871492, at *1 (4th Cir.
June 25, 2014) (internal alteration omitted) (citing
Tolan v. Cotton. 134 S.Ct. 1861, 1863 (2014) (per
curiam)). Moreover, "[credibility determinations, the
weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge . . . ." Anderson. 477 U.S. at 255.
However, the non-moving party "must set forth specific
facts that go beyond the 'mere existence of a scintilla
of evidence.'" Glynn. 710 F.3d at 213
(quoting Anderson. 477 U.S. at 252). Instead, the
non-moving party must show that "there is sufficient
evidence favoring the nonmoving party for a jury to return a
verdict for that party." Res. Bankshares Corp. v.
St. Paul Mercury Ins. Co.. 407 F.3d 631, 635 (4th Cir.
2005) (quoting Anderson. 477 U.S. at ...