On February 7, the Seventh Circuit Court of Appeals ruled in favor of the accounts receivable management industry, finding that a debt collector did not misrepresent the “character” of debt by reporting unpaid medical bills owed to a single provider separately rather than in the aggregate.
In Rhone v. Medical Business Bureau, LLC, the Seventh Circuit Court of Appeals reversed a decision by the United States District Court for the Northern District of Illinois, which held that defendant Medical Business Bureau, LLC (“MBB”), a debt collector, violated §1692e(2)(A) of the Fair Debt Collection Practices Act by reporting that plaintiff Diane Rhone owed nine debts of $60 each for nine physical therapy sessions rather than one aggregate debt of $540. The Court, resolving an issue of first impression, held that simple arithmetic does not affect the “character” of debt under the FDCPA; instead, the “amount” of the debt governs the debt’s size.
In Rhone, it was undisputed that the plaintiff’s credit report was factually correct. The question in the case was whether accurately representing the “character” of debt requires the debt collector to aggregate multiple transactions between a debtor and a single entity. The Seventh Circuit answered “no,” finding that there is no regulation requiring aggregation and emphasizing that the terms “character” and “amount” are used independently in the statute and, thus, must be given different meanings.
The Court also found that representing the debts on a per transaction basis would allow a debtor to identify exactly which transactions are at issue and which debts may be stale. Accordingly, the Court held that MBB did not misstate the “character” of Rhone’s debt, reversing the District Court’s finding of liability.
In rendering its decision, the Seventh Circuit had the benefit of an amicus brief filed by ACA International, advocating for reversal of the district court’s decision on several grounds that were ultimately adopted by the Court.