United States District Court, W.D. Washington, Tacoma
JOSEPH FANGSRUD VON ESCH, and RENNY FANGSRUD VON ESCH Plaintiffs,
LEGACY SALMON CREEK HOSPITAL, et al., Defendants.
ORDER [DKT. #S 18, 20, 24, 36, AND 37]
B. Leighton United States District Judge.
MATTER is before the Court on the following motions:
Plaintiff Fangsrud von Esch's Motion for Summary Judgment
[Dkt. #18]; Defendant Legacy Salmon Creek Hospital's
Motion for Summary Judgment [Dkt. #20]; Defendant Asset
System's Motion for Summary Judgment [Dkt. #24]; Fangsrud
von Esch's Motion for Leave to File Deposition
Transcripts with Exhibits [Dkt. #36]; and Fangsrud von
Esch's Motion to Amend his complaint to assert an outrage
claim [Dkt. #37].
2013, Renny Fangsrud von Esch had a baby at Legacy. Her
insurer, Kaiser, initially refused to pay some or all of her
$16, 904.46 bill. She appealed this denial. Meanwhile, Legacy
continued to bill her the full amount. In December, Kaiser
relented and agreed to pay the bill, minus a $400 co-pay, or
paid Legacy a large lump sum, or “batch payment”
(some $485, 000), to pay a number of patients' bills. But
the batch payment was $4931.51 less than it should have been,
and, for reasons that remain unclear, the entire shortage
fell on Fangsrud von Esch's account. As a result, while
Kaiser and Fangsrud von Esch agreed she owed only $400,
Legacy's accounting system “thought” she owed
$5, 331.51. Legacy continued to bill Fangsrud von Esch this
amount, plus accruing interest at the Washington statutory
rate, 12%. Each bill invited her to call a toll free number
if she had questions. She did not, and she apparently did not
pay the $400 she agreed she owed. She claims she assumed the
bill would be corrected. Legacy also called to discuss the
outstanding balance but was unable to contact Mrs. (or Mr.)
Fangsrud von Esch.
2014, Legacy assigned the Fangsrud von Esch account Defendant
Asset Systems, a debt collector it has often used. Asset
promptly notified Fangsrud von Esch about the debt. For
reasons that are not explained, however, not much happened
for a long time. Even Fangsrud von Esch's own attorney
references only two letters that Asset sent to Fangsrud von
Esch: one on January 12, 2016, and one on June 9, 2016.
claims that it did not hear from Fangsrud von Esch until
January 2016, when she called Legacy to complain that the
account had been erroneously sent to collections and that
Kaiser was responsible for the payment. Fangsrud von Esch
also called Asset to dispute the bill several times in early
2016. In March, Fangsrud von Esch paid Asset $100. In July,
she sent a letter disputing the amount of the debt that Asset
was seeking to collect, as to both principal and interest.
and Asset concede that the accounting error was not resolved
for some time (partly due to Kaiser's short batch payment
and erroneous “explanation of benefits, ” partly
because of Legacy's accounting error, and partly because
Fangsrud von Esch ignored the erroneous billings until well
after the account was sent to collections).
Kaiser/Legacy/Fangsrud von Esch accounting discrepancy was
resolved in August 2016. Legacy recalled Fangsrud von
Esch's debt from Asset, refunded the $100 to Fangsrud von
Esch, “wrote off” the unpaid $400 co-payment, and
von Esch sued. She asserts claims under the federal Fair Debt
Collection Procedures Act (FDCPA) and Washington'
Consumer Protection (CPA) and related Collection Agency (CAA)
Acts. She seeks actual and consequential damages, emotional
distress damages, treble damages, costs and attorneys'
fees, and a variety of injunctive relief. Fangsrud von Esch
also seeks to amend her complaint to assert a state law
“outrage” tort claim against Legacy.
von Esch seeks partial summary judgment on her FDCPA claim
against Asset, arguing that the FDCPA imposes strict
liability where a debt collector uses “false,
deceptive, or misleading means” to collect a debt. She
claims that because she did not actually owe the money Asset
sought, its efforts to collect that debt by claiming she
did owe it were “false” as a matter of
response, Asset also seeks summary judgment, on the FDCPA claim
and on the CPA and WCC claims. It argues it had a right to
rely on the accuracy of the account that Legacy sent to it,
because Asset and Legacy had a 30 year, thousands of
accounts, working relationship, and Legacy documented its
accounts. It claims its collection efforts were the result of
a bona fide error. Asset also argues that Fangsrud von
Esch's CPA and CAA claims fail because she cannot
establish that she was actually damaged by its actions.
also seeks summary judgment on Fangsrud von
Esch's CPA and CAA claims against it. It argues
that, as a heavily regulated health care provider, it is
exempted from CPA liability, and that Fangsrud von Esch
cannot establish a CPA claim in any event: the billing was a
mistake, not a lie or deception, and Fangsrud von
Esch has not shown she was damaged in any event. It argues
that the CPA was not intended to provide a windfall to every
consumer who suffers the inconvenience of a billing error.
Summary Judgment Standard
judgment is proper “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(c). In determining whether an issue of fact
exists, the Court must view all evidence in the light most
favorable to the nonmoving party and draw all reasonable
inferences in that party's favor. Anderson Liberty
Lobby, Inc., 477 U.S. 242, 248-50 (1986); Bagdadi v.
Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine
issue of material fact exists where there is sufficient
evidence for a reasonable factfinder to find for the
nonmoving party. Anderson, 477 U.S. at 248. The
inquiry is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is
so one-sided that one party must prevail as a matter of
law.” Id. At 251-52. The moving party bears
the initial burden of showing that there is no evidence which
supports an element essential to the nonmovant's claim.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Once the movant has met this burden, the nonmoving party then
must show that there is a genuine issue for trial.
Anderson, 477 U.S. at 250. If the nonmoving party
fails to establish the existence of a genuine issue of
material fact, “the moving party is entitled to
judgment as a matter of law.” Celotex, 477
U.S. at 323-24.
FDCPA prohibits the use of false or deceptive means to
collect even a legitimate debt: “A debt collector may
not use any false, deceptive, or misleading representation or
means in connection with the collection of any debt, ”
such as making a “threat to take any action that cannot
legally be taken or that is not intended to be taken.”
15 U.S.C. § 1692e-(5). The test for determining whether
a debt collector violated the FDCPA is objective, and does
not depend on whether the debt collector intended to deceive
or mislead the consumer. Clark v. Capital Credit &
Collection Servs., Inc., 460 F.3d 1162, 1171 (9th Cir.
2006). Instead, the “least sophisticated” debtor
standard applies, and the liability analysis turns on whether
a debt collector's communication would mislead an
unsophisticated but reasonable consumer. Id. Debt
collectors are strictly liable for violations of the FDCPA.
Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1030
(9th Cir. 2010).
Asset argues that a debt collector is entitled to rely on
information provided by a creditor who has provided accurate
information in the past. It argues that the FDCPA does not
impose on the debt collector any duty to independently
investigate the claims presented to it, and, as a result, it
is entitled to a bona fide error defense: essentially, if the
billing error was an honest mistake, it is not liable.
See Clark, supra, at 1176: “Pursuant to §
1692k(c)'s bona fide error defense, a debt collector is
not liable for its violations the FDCPA if the