UNITED STATES OF AMERICA
November 10, 1992
Michael L. Zager, Esq.
Dear Mr. Zager:
This is in response to your letter dated July 31, 1992, in which you requested an informal staff opinion regarding the effect of the Fair Debt Collection Practices Act ("FDCPA") on a proposed arrangement between your law firm and a hospital. I apologize for the delay in responding to your request.
Based upon your letter and our recent telephone conversation, it appears that the proposed arrangement would be as follows. The hospital would attempt one time to collect the amount allegedly owed from its former patients. The hospital would then send you lists of those patients who fail to pay. You would prepare and mail letters to those patients, outlining the balance due and seeking payment and/or insurance information. You would mail the letters on hospital letterhead and request that patients send payments directly to the hospital. You would, however, give a telephone number at your law firm as the number to call if patients receiving the letters have questions. The telephone line would be devoted solely to the hospital's patients, and employees of your firm who answer the line would respond as if they were located at the hospital. The letters sent from your office would not contain the validation notice required for debt collection letters under Section 809 of the FDCPA. You ask if your firm would be acting as a "debt collector" for purposes of the FDCPA if they drafted and mailed such letters.
Section 803(6) of the FDCPA defines "debt collector" as
Based upon your letter and our conversation, it appears that your firm is acting as a debt collector if it mails the letters described above because (1) the firm is regularly attempting to collect debts from third-party patients;(1) (2) although the money is sent directly to the hospital, the firm will have collected the money indirectly; and (3) the money is owed to another, i.e., the hospital.
Because your firm would be acting as a debt collector in this capacity, the firm would have to comply with all the provisions of the FDCPA. The letters would thus have to include the Section 809 validation notice and the Section 807(11) disclosure that the letter is an attempt to collect a debt and any information obtained would be used for that purpose.
The letters would appear to violate the Section 807(14) prohibition against using "any business, company, or organization name other than the true name of the debt collector's business, company, or organization" since the firm is the debt collector but it would be using the hospital's name.
The views expressed herein represent an informal staff opinion. As such, they are not binding on the Commission. They do, however, reflect the staff's current enforcement position.
Thomas E. Kane
1. Your firm probably would not be a debt collector covered by the Act if it simply mailed letters requesting insurance information because, theoretically, it would not be attempting to collect a debt. If, however, the letters request that patients pay an alleged debt -- as I assume most of the letters will -- your firm would be covered because it clearly would be engaged in a collection activity.