Avoiding Penalties Under Florida Consumer Collection Protection Act

Executive Summary

The Florida Consumer Collection Protection Act (FCCPA), which is designed to protect consumers from intentionally unfair collection practices by creditors, has spawned a cottage industry of plaintiff’s law firms seeking out defendant healthcare providers — a group not traditionally thought of as debt collectors. Automated collection calls, standard invoice letters and contracts with collection agencies present these attorneys with an opportunity to file suit against physicians under this law. Healthcare organizations should familiarize themselves with the FCCPA and amend their internal policies to decrease exposure and increase compliance with the act.

Recommended Actions

Ensure that your practice has internal policies in place to identify and immediately record changes to a patient’s collection information from any source, including:

• Revocation of consent to being contacted (being told to stop calling)
• Representation by legal counsel (receiving an email or letter from a law firm)
• Partial payment of an account balance
• Treatment under workers’ compensation
• Changes in insurance coverage
•  Bankruptcy

If any of the above information is identified for a patient, avoid sending the debt to a collection agency. Rather, notate or place an internal hold on the patient’s records, which indicates that collection attempts should not be made for the debt. You may consider writing off the balance. Good employee training is key to not only recognizing, but also escalating sources of potential collection problems. 

If sued and the FCCPA claim has merit, resolve the claim as quickly as possible to avoid mounting attorneys’ fees. Settlement is usually the best option in these cases, so retaining rapport with plaintiff’s counsel can promote a streamlined resolution.

If the violation was not internal and your collection agency is responsible, enforce the indemnity provision of your contract through subrogation. You can review your contract now to determine if it needs to be amended to allocate risk and expense to them in the event of a violation of the FCCPA and FDCPA (the Fair Debt Collection Practices Act, which is the federal act that is often used in conjunction with alleged FCCPA violations).

FCCPA Legislation

The FCCPA is designed to protect consumers, including patients, from intentionally unfair collection practices by creditors. The law contains 19 subsections that identify violations for which a consumer debtor can seek relief.  Three of the most common violations are:

1. Contacting a debtor represented by an attorney when the creditor should have known of the debtor’s legal representation. 
2. Abusing or harassing a debtor with repeated correspondence. “Harassing” can include just a few attempts to collect if the practice knows the debtor is not responsible for paying the balance. For example, treating a patient for a work injury is enough to indicate that workers’ compensation insurance should be responsible for payment.
3. Using an auto-dialer to call a debtor’s cell or work phone.

What Constitutes a Violation of FCCPA?

Everyday collection practices by practitioners can violate the provisions of the FCCPA. A few examples of violations are: 

1. Communicating by letter directly or through a collection agency with a patient regarding outstanding charges after receiving notice that the patient has retained legal counsel.
2. Sending a patient an invoice when a worker’s compensation insurer should have been billed in lieu of the patient after receiving notice that the insurer is responsible for care.
3. Attempting by letter to collect on a debt after receiving notice that the patient had been declared bankrupt.
4. Calling the debtor’s personal and work phone after the debtor said to stop calling and could not pay.

Defending a FCCPA Violation

By following the recommended actions above, you will be in a position to defend against a violation. The FCCPA states “[a] person may not be held liable ... if the person shows … the violation was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid such error.”  Maintain procedures to identify and immediately record changes to a patient’s collection information so when an error does occur a monetary award to the plaintiff will not be justified. We recommend that if you are sued, you contact a defense attorney to determine whether you have a bona fide error defense or should consider an early resolution. 

Penalties

A physician in violation of the FCCPA can be burdened with the following civil penalties : 

1. Actual damages
2. Additional statutory damages up to $1,000 per action
3. Punitive damages
4. Injunctions
5. Court costs
6. Attorneys’ fees

In the event of a class action suit, the practice could be liable for additional statutory damages up to $1,000 for each named plaintiff.

Physicians should be especially wary of attorney’s fees. Because the FCCPA requires a defendant to pay the attorneys' fees of a prevailing plaintiff, further litigating and defending against an action can lead to extremely high fees.

Lessons Learned 

• Ensure that your practice has written policies and procedures in place that mandate employees to properly record changes to a patient’s collection information immediately upon receiving it.
• Ensure that all staff members are adequately trained regarding these new requirements and can implement your practice’s policies. 
• If you are sued under the FCCPA, be sure to contact a defense attorney well-versed in this area of the law who can identify whether you should settle your claim or whether you have a bona fide error defense.

Potential Damages       

While violations of this law can result in a provider facing civil penalties, the frequency of such claims is currently low, but increasing. The primary cost tends to be attorneys’ fees.