Filed: Jan. 02, 2014
Latest Update: Mar. 02, 2020
Summary: Case: 13-12276 Date Filed: 01/02/2014 Page: 1 of 9 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 13-12276 Non-Argument Calendar _ D.C. Docket No. 5:10-cv-01537-AKK MELVIN BRADLEY, Plaintiff, DIANNE RODEN BRADLEY, as executrix for the Estate of Melvin Bradley, KEVIN A. CALMA, individually and on behalf of all others similarly situated, Plaintiffs - Appellants, versus FRANKLIN COLLECTION SERVICE, INC., Defendant - Appellee. _ Appeal from the United States District
Summary: Case: 13-12276 Date Filed: 01/02/2014 Page: 1 of 9 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 13-12276 Non-Argument Calendar _ D.C. Docket No. 5:10-cv-01537-AKK MELVIN BRADLEY, Plaintiff, DIANNE RODEN BRADLEY, as executrix for the Estate of Melvin Bradley, KEVIN A. CALMA, individually and on behalf of all others similarly situated, Plaintiffs - Appellants, versus FRANKLIN COLLECTION SERVICE, INC., Defendant - Appellee. _ Appeal from the United States District C..
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Case: 13-12276 Date Filed: 01/02/2014 Page: 1 of 9
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-12276
Non-Argument Calendar
________________________
D.C. Docket No. 5:10-cv-01537-AKK
MELVIN BRADLEY,
Plaintiff,
DIANNE RODEN BRADLEY,
as executrix for the Estate of Melvin Bradley,
KEVIN A. CALMA,
individually and on behalf of all others similarly situated,
Plaintiffs - Appellants,
versus
FRANKLIN COLLECTION SERVICE, INC.,
Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(January 2, 2014)
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Before HULL, MARCUS and WILSON, Circuit Judges.
PER CURIAM:
Appellants Melvin Bradley and Kevin Calma (collectively “Appellants”)
incurred medical debts at North Alabama Urology, P.C. (Urology) and University
of Alabama at Birmingham Health System West (UAB West), respectively.
Because Appellants failed to pay their debts, Urology and UAB West referred the
accounts to appellee Franklin Collection Service, Inc. (Franklin). As part of the
referral, Urology and UAB West added to Appellants’ accounts a charge for
collection fees. It is this charge that prompted Appellants to file suit against
Franklin, alleging violations of Alabama state law, the Fair Debt Collection
Practices Act (FDCPA), 15 U.S.C. §1692–1692p, and the Racketeer Influenced
and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–1968. 1 Both parties
moved for summary judgment. The district court denied Appellants’ motion on all
claims except for Calma’s unjust enrichment claim and granted Franklin’s motion.
After the district court’s ruling, Appellants filed a motion to dismiss with prejudice
Calma’s unjust enrichment claim. Their motion was granted, and the case was
dismissed with prejudice. Appellants now appeal the district court’s decision to
1
Based on the district court’s order and the parties’ briefing on appeal, it appears that
only Bradley appeals his claims under the FDCPA and state law.
2
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grant Franklin’s motion for summary judgment. 2 For the reasons that follow, we
reverse the district court’s decision granting summary judgment in favor of
Franklin on Bradley’s claim under 15 U.S.C. § 1692f of the FDCPA. We affirm
the district court’s decision granting Franklin’s motion for summary judgment on
all remaining claims raised in this appeal.3
We review a district court’s summary judgment decision de novo, applying
the same legal standards as those that governed the district court. Capone v. Aetna
Life Ins. Co., 592 F.3d 1189, 1194 (11th Cir. 2010). Summary judgment is
appropriate where “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). We
construe the facts and draw all reasonable inferences in favor of the non-moving
party. Walters v. Am. Coach Lines of Miami, Inc.,
575 F.3d 1221, 1226 (11th Cir.
2009) (per curiam). We therefore state the facts in the light most favorable to the
Appellants, the non-moving party.
2
In a footnote, Franklin notes that Appellants also appeal the district court’s order
denying their motion for class certification. However, class certification is never mentioned in
Appellants’ briefing. Because Appellants did not brief the issue, we consider it waived. See
Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004) (holding that “a legal
claim or argument that has not been briefed before the court is deemed abandoned and its merits
will not be addressed”).
3
Because we find Appellants’ remaining FDCPA claims, RICO claims, and claims under
state law unavailing, we affirm those claims based on the thorough and well-reasoned order of
the district court entered on March 28, 2013.
3
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I. BACKGROUND
A. UAB West
UAB West is a healthcare institution operating under the control of the
University of Alabama at Birmingham Health System (UAB). UAB manages
healthcare delivery and billing for its hospitals, including UAB West. UAB and
UAB West contracted with Franklin to collect unpaid medical bills. UAB West’s
agreement with Franklin involved adding a 30% collection fee to all accounts UAB
West referred for collection. The agreement also gave Franklin the right to pursue
collection lawsuits on UAB’s behalf.
In 2007, Appellant Calma incurred a $735 bill when he took his daughter to
UAB West for treatment. Calma failed to pay his bill. In response, UAB West
sent him three separate statements, warning that, pursuant to their agreement, if
Calma failed to pay, UAB West would send his account to a collection agency.
The agreement Calma signed with UAB West stated, in part, “I agree that if this
account is not paid when due, and the hospital should retain an attorney or
collection agency for collection, I agree to pay all costs of collection including
reasonable interest, reasonable attorney’s fees (even if suit is filed) and reasonable
collection agency fees.” 4 Calma never paid UAB West. According to its debt
4
Unlike Bradley, Calma did not appeal Franklin’s collection fee based on a violation of
15 U.S.C. § 1692f. And, unlike Bradley’s agreement, Calma’s agreement explicitly provided
that Calma agreed to pay “reasonable collection agency fees.”
4
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collection policy, UAB added a 30% collection fee to his account and referred his
account to Franklin for collection. With the 30% added collection fee, Calma
owed UAB West $922.25.
B. Urology
Urology is a healthcare provider that also uses Franklin to collect unpaid
medical bills. The collection contract between Urology and Franklin stated that
Urology would add 33-and-1/3% to a debt prior to transferring the account to
Franklin. The contract also stipulated that Franklin was entitled to 30% of the total
collected from each debt. Critically, Bradley was not a party to this agreement.
In 2009, Appellant Bradley received medical treatment from Urology and
incurred a bill for $861.96. Like Calma, Bradley also signed a patient agreement,
which stated: “In the event of non-payment . . . I agree to pay all costs of
collection, including a reasonable attorney’s fee . . . .” Also like Calma, Bradley
failed to pay his medical bill. As a result, Urology added a $293.06 collection fee
to Bradley’s balance. Urology then sent his account to Franklin for collection.
Bradley’s new balance due to Urology was $1,155.02. To avoid being sued,
Bradley paid the $1,155.02 and reserved his right to recover overcharges.
II. DISCUSSION
In enacting the FDCPA, Congress sought “to eliminate abusive debt
collection practices by debt collectors, to insure that those debt collectors who
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refrain from using abusive debt collection practices are not competitively
disadvantaged, and to promote consistent State action to protect consumers against
debt collection abuses.” 15 U.S.C. § 1692(e). The FDCPA prohibits debt
collectors from using “any false, deceptive, or misleading representation or means
in connection with the collection of any debt” as well as the use of “unfair or
unconscionable” means of collection. 15 U.S.C. §§ 1692e, 1692f. Here, the sole
issue is Bradley’s claim under § 1692f. We affirm the district court on all other
issues raised in this appeal.
Section 1692f prohibits unfair or unconscionable means of collection.
Subsection (1) of this section specifically prohibits “collection of any amount
(including any interest, fee, charge, or expense incidental to the principal
obligation) unless such amount is expressly authorized by the agreement creating
the debt or permitted by law.” 15 U.S.C. § 1692f(1). Bradley argues that the
collection fee he paid violates this section of the FDCPA because the fee was
really liquidated damages rather than the actual cost of collection. We agree.
While the Eleventh Circuit has not previously addressed this issue, we find
the Eighth Circuit’s reasoning in Kojetin v. CU Recovery, Inc., 212 F.3d 1318,
1318 (8th Cir. 2000) (per curiam), to be persuasive. There, the Eighth Circuit held
that the debt collector violated the FDCPA when it charged the debtor a collection
fee based on a percentage of the principal balance of the debt due rather than the
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actual cost of collection. Id. That is what happened here. When Bradley signed
Urology’s patient registration form, he only agreed to pay “all costs of collection.”
That is, Bradley agreed to pay the actual costs of collection; his contractual
agreement with Urology did not require him to pay a collection agency’s
percentage-based fee where that fee did not correlate to the costs of collection.
Before Urology handed over Bradley’s delinquent account to Franklin, it
added a 33-and-1/3% “collection fee.” Franklin failed to direct this Court to any
evidence that the 33-and-1/3% “collection fee”—which was assessed before
Franklin attempted to collect the balance due—bears any correlation to the actual
cost of Franklin’s collection effort. As such, the 33-and-1/3% fee breaches the
agreement between Bradley and Urology, since, contractually, Bradley was only
obligated to pay the “costs of collection.” See id. Urology and Franklin cannot
alter Bradley’s obligations by the terms of their subsequent agreement. Because
there was no express agreement between Urology and Bradley allowing for
collection of the 33-and-1/3% fee, that fee violates the FDCPA. See 15 U.S.C.
§ 1692(e); see also
Kojetin, 212 F.3d at 1318.
This is not to say that Bradley and Urology could not have formed an
agreement allowing for the collection of the percentage-based fee. It is the nature
of the agreement between Bradly and Urology, not simply the amount of the fee
that is important here. For example, Plaintiff Calma agreed to pay, inter alia,
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“reasonable collection agency fees.” And, based on this contractual language,
Calma declined to argue on appeal that the agreement that he had with UAB West
did not cover Franklin’s percentage-based collection fee.
Courts examining other contractual language have also suggested that a
percentage-based fee can be appropriate if the contracting parties agreed to it. For
example, the Seventh Circuit suggested that the following contractual provision
may allow the imposition of a percentage-based collection fee when a delinquent
account was referred to a third-party collection agency: “You agree to reimburse
us the fees of any collection agency, which may be based on a percentage at a
maximum of 33% of the debt, and all costs and expenses, including reasonable
attorneys’ fees, we incur in such collection efforts.” See Seeger v. AFNI, Inc., 548
F.3d 1107, 1110, 1113 (7th Cir. 2008); see also Boatley v. Diem Corp., No. CIV.
03-0762-PHX-SMM,
2004 WL 5315892, *5-6 (D. Ariz. Mar. 24, 2004).
But, Bradley’s contract with Urology was not like Calma’s contract with
UAB West or the contracts from these other cases. Under the contract at issue
here, Bradley agreed to pay the actual costs of collection; he did not agree to pay a
percentage above the amount of his outstanding debt that was unrelated to the
actual costs to collect that debt.
Franklin argues that Kojetin is distinguishable because it holds that a
violation of the FDCPA only occurs where the debt collector charges a percentage-
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based fee not supported by the language of the underlying agreement. But that is
exactly what we have here. As explained above, the agreement creating the debt—
the patient agreement between Urology and Bradley—only allows a charge for
“costs of collection.” See id. Nowhere on the form does Bradley agree to a
collection fee that is not tied to the actual costs of collection, let alone the 33-and-
1/3% “collection fee” he was ultimately assessed.
We therefore hold that Franklin violated the FDCPA when it collected from
Bradley a debt that included a 33-and-1/3% “collection fee” when Bradley only
agreed to pay the actual costs of collection. Accordingly, we reverse the district
court’s decision granting summary judgment in favor of Franklin on Bradley’s
claim under § 1692f of the FDCPA. We affirm the district court’s decision
granting summary judgment on Appellants’ RICO claims, remaining FDCPA
claims, and state law claims.
AFFIRMED IN PART, REVERSED IN PART.
9
