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Gorman v. Express Recovery Services, Inc.

United States District Court, D. Utah

October 23, 2018

SANDI GORMAN, Plaintiff,



         This matter is before the court on Plaintiff Sandi Gorman's Motion for Summary Judgment [Docket No. 27], and Defendant Express Recovery Services, Inc.' Motion for Summary Judgment [Docket No. 30]. On October 17, 2018, the court held a hearing on the motions. At the hearing, Plaintiff was represented by Ryan L. McBride and Defendant was represented by Joseph J. Lico. The court took the motions under advisement. The court has carefully considered the materials submitted by the parties and the facts and law relevant to the motions. Now being fully advised, the court issues the following Memorandum Decision and Order.


         This is an action for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”). On September 14, 2015, Plaintiff Sandi Gorman received medical treatment at Tanner Clinic. Gorman had TriCare Medical Insurance and provided her insurance information to Tanner Clinic. Gorman alleges and ERS disputes that Gorman paid her $12.00 copay to Tanner Clinic at the time of service.

         After her visit, Gorman received an explanation of benefits from TriCare stating that TriCare would pay $104.07 for the visit and Gorman was responsible for the $12.00 copay. However, Tanner Clinic sent Gorman repeated bills for payment of $128.07. The bills stated that Gorman owed $116.07 for the September 14, 2015 visit and a $12.00 copay for a July 7, 2015 visit. The invoices were designed in a way to show the amount charged for the services, the amount adjusted based on an insurance agreement, the amount insurance paid, and the amount for which the patient was responsible. The Tanner Clinic invoices sent to Gorman showed that Gorman's insurance had paid its part for Gorman's July 7, 2015 visit, but no copay had been made. The invoices also showed that no payment from Gorman or her insurance had been made with respect to the September 14, 2015 visit. Gorman never responded to Tanner Clinic's billing statements and she alleges that she did not know that Tricare had failed to make its payment to Tanner Clinic for the September 14, 2015 visit.

         On January 29, 2016, Tanner Clinic assigned Gorman's account to ERS, a debt collection agency, for collection on the unpaid account. Prior to the assignment, Tanner Clinic and ERS had entered into a contract for ERS to collect delinquent accounts for Tanner Clinic. On February 2, 2016, ERS sent Gorman a letter indicating that it had been assigned her account from Tanner Clinic and providing a validation notice for the Tanner Clinic account. ERS also called Gorman on February 9, 2016, March 4, 2016, March 16, 2016, and March 22, 2016. On March 22, 2016, ERS sent Gorman another collection letter. Gorman did not respond to any of ERS' letters or telephone calls.

         On April 13, 2016, ERS had the law offices of Edwin Parry send a validation letter to Gorman. The letter stated that the law firm represented ERS in the collection of the unpaid account and it gave Gorman thirty days to dispute the validity of the debt. On April 14, 2016, ERS sought confirmation from Tanner Clinic that the debt was correct, due, and owing. On April 27, 2016, a representative from Tanner Clinic signed the confirmation request verifying that the debt was due and owing. The Tanner Clinic representative included an invoice and financial agreement with debt verification. The invoice showed the $12.00 copay due for services on July 7, 2015, the $116.07 due for services on September 14, 2015, and $32.02 due for collection fees for a total amount due of $160.09.

         Gorman did not respond to the April 13, 2016 letter from the law offices of Edwin Parry. On May 23, 2016, ERS had Gorman served with a copy of the Summons and Complaint in a state lawsuit for payment of the overdue account. On June 1, 2016, ERS filed its complaint for payment of the account in Utah's Second District Court against Gorman and her late husband. Gorman's late husband died approximately five years ago, long before the services at issue in the case. Gorman did not answer or otherwise respond to the complaint. On June 16, 2016, ERS filed a motion for default, seeking $128.07 owed for services at Tanner Clinic, $4.78 for accrued interest, $92.00 for court costs, $32.02 for collection fees, and $250.00 in attorney fees for a total judgment of $506.87.

         On July 13, 2016, the state court granted default judgment against Gorman in the requested amount of $506.87. Although the Default Judgment states that it is “against said defendant(s) jointly and severally, ” the judgment specifically states that it is “against defendant SANDI GORMAN.” There is no indication that the judgment is against her late husband. Despite Gorman's assertions to the contrary, there were no allegations in the state court complaint made specifically against her late husband or additional costs sought against him. He was named because of a Utah statute allowing family expenses to be collected against both spouses.

         On July 7, 2016, a week before the state court entered default judgment against Gorman, Tanner Clinic received payment from TriCare Insurance for $104.00 on Gorman's account. Under the collection agreement between Tanner Clinic and ERS, Tanner Clinic was required to inform ERS of the payment within 72 hours. However, Tanner Clinic did not inform ERS. On July 18, 2016, the law offices of Edwin Parry sent a notice of the state court Default Judgment to Gorman. However, she did not respond.

         Neither Tanner Clinic nor Gorman informed ERS of the July 7, 2016 $104.00 TriCare payment until December 6, 2016, when Gorman made her first contact with ERS. ERS contacted Tanner Clinic for confirmation and learned on December 12, 2016, that Tanner Clinic received payment from TriCare on July 7, 2016. ERS notified the law offices of Edwin Parry of the insurance payment and the law firm made an adjustment to the amount Gorman owed under the Default Judgment.

         On January 19, 2017, Tyler Allred, an employee of the law offices of Edwin Parry, and Gorman appeared in state court for a supplemental hearing on satisfying the Default Judgment against Gorman. Gorman alleges that she was not informed of the outstanding debt at the hearing. However, at the hearing, Gorman agreed to a payment plan for the outstanding Tanner Clinic debt. Gorman never made any payments on the payment plan agreed to during the supplemental hearing.

         On February 22, 2017, Holli Clark, an employee at the law offices of Edwin Parry, received a letter from Plaintiff disputing the debt and asking for a payoff amount. Ms. Clark marked the account as disputed but did not immediately respond to Gorman's request for a payoff amount. The law offices of Edwin Parry assert that they have policies and procedures requiring employees to provide a payoff amount if requested by a consumer. Ms. Clark testified that she received such training and mistakenly failed to respond in this instance. The law offices of Edwin Parry disciplined Ms. Clark for failing to follow proper procedures with Gorman. Approximately six weeks later, on April 10, 2017, the law offices of Edwin Parry sent a letter to Gorman, addressed to Gorman and her late husband, about payment on the judgment because she had not made any payments on the payment plan. The letter reflected the total amount due and notifying her that a lien will be placed on any real property in her name within the county.

         In June 2017, Gorman filed the present lawsuit against ERS in Utah's Second District Court for violation of the FDCPA and the Utah Consumer Sales Practices Act, Utah Code Ann. §§ 13-11-1 et seq. ...

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