On December 22, the United States District Court for the Eastern District of Pennsylvania entered judgment in favor of the defendant in an action involving a Truth in Lending Act claim, and issued a stern rebuke to the plaintiff and his counsel, instituting Rule 11 proceedings and describing the case as “litigation out of control.”   

The plaintiff, Andrew Wolfington, needed knee surgery and sought treatment at Reconstructive Orthopaedic Associates.  The standard policy of Reconstructive Orthopaedic requires payment of a patient’s deductible under his or her applicable insurance policy before treatment.  Wolfington had insurance but told the medical provider that he was unable to pay his full deductible.  At Wolfington’s request, Reconstructive Orthopaedic allowed Wolfington to make a small down payment on the deductible with a promise to pay the balance after the operation, without interest.  After the surgery, Wolfington never paid any part of the balance due on the deductible.  Instead, he sued Reconstructive Orthopaedic for failing to provide him with information allegedly required under TILA. 

The District Court entered judgment in favor of Reconstructive Orthopaedic, finding that the parties never consummated a transaction for TILA purposes.  The only agreement between Wolfington and Reconstructive Orthopaedic with mention of payment terms was the “Financial Policy,” which required payment of the deductible in full.  Any subsequent discussions of payment terms were merely informal and not subject to TILA disclosures.  Furthermore, the Court found that the medical provider was not a “creditor” under Regulation Z, which implements TILA, because the group neither regularly extended credit nor extended credit to Wolfington via a written agreement.  The Court also suggested that the Federal Reserve, the entity that promulgates Regulation Z, consider revising the regulation to make clear that TILA does not extend to situations like Wolfington’s. 

The remainder of the Court’s opinion reprimanded Wolfington for even initiating the lawsuit.  “Plaintiff came to Defendant for a cure, requested a favor, and received the operation without prepaying his deductible.  Imposing a requirement of financial disclosure under these facts would establish the most unfortunate precedent, imposing TILA disclosure operations on any verbal agreement to delay payment, which probably happens about a million times a day in the United States,” the Court wrote.  The idea that Wolfington asked Reconstructive Orthopaedic to defer payment of his deductible with no intention of paying did not sit well with the Court, which referred to his actions as “common law larceny.”  Finally, the Court noted an email sent by Wolfington’s father to Reconstructive Orthopaedic, in which he offered his financial services to the group, an offer the medical provider declined.  While the email was not pertinent to the analysis, the Court mentioned its potential relevance in the context of Rule 11 proceedings, wherein the Court will inquire whether the email had anything to do with the initiation or prosecution of Wolfington’s suit. 

A copy of the Court’s opinion is available here.