Anderson v. Hammerman

1

KATHLEEN ANDERSON, ET AL. v. EVAN HAMMERMAN, ET AL.

No. 1254-2023

Court of Special Appeals of Maryland

November 6, 2024

Circuit Court for Montgomery County Case No C-15-CV-22-004542

Wells C.J., Leahy, Eyler, Deborah S. (Senior Judge, Specially Assigned) JJ.

OPINION

WELLS C.J.

In this appeal, appellants Kathleen Anderson and Bianca Diehl ("Consumers"), supported by three public service organizations ("Amici"),^[1] contend that the Circuit Court for Montgomery County erred in dismissing their putative class action complaint alleging that appellees, the Center for Innovative GYN Care, P.C.; Innovations Surgery Center, P.C.; 42 Services, LLC d/b/a Tower Surgical Partners; and Evan Hammerman (collectively, "Collectors"), violated Maryland's Consumer Debt Collection Act ("MCDCA") and Consumer Protection Act ("MCPA") by filing lawsuits against them in an attempt "to collect money that is not owed to them or not owed at all." See Md. Code, § 14-202(8) of the Commercial Law Article ("Com. Law"); Com. Law § 13-301(14)(iii).

In dismissing the complaint, the circuit court concluded, among other things, that Maryland's common law litigation privilege barred such claims against debt collectors like the Collectors here.

Consumers then appealed to this Court and present three questions for our review:

1. Does the common law litigation privilege provide immunity from statutory consumer protection claims under the [MCDCA] and [MCPA]?

2. Does the professional services exemption to the [MCPA] apply to a claim alleging that an attorney violated the Act by misrepresenting fees incurred by his client, where the attorney is seeking to collect those fees from a consumer under a contractual fee-shifting clause?

3. Did the Circuit Court err in holding that Appellants failed to state a claim against 42 Services, LLC t/a Towers Surgical Partners?

In responding to the first question, we resolve an issue of first impression. Construing the common law litigation privilege in light of its purpose and scope, and these consumer protection statutes in light of their language, remedial purpose, and legislative history, we hold that Collectors are not immune from MCDCA/MCPA liability for filing suit against consumers to demand payment of money that Collectors allegedly know is not owed.

We also conclude that the statutory exemption for professional services in the MCPA, Com. Law § 13-104(a)(1), does not foreclose relief against Hammerman for attempting to collect attorneys' fees based on allegedly false statements about his legal services as in-house counsel for Tower Surgical Partners and affiliates. Likewise, the challenged complaint is sufficient to state a claim against Tower Surgical Partners for unfair debt collection practices. Because the circuit court erred in ruling that Consumers failed to state viable MCDCA and MCPA claims against Collectors, we will reverse the judgment dismissing Consumers' Corrected Amended Complaint (the "Complaint") and remand for further proceedings.

BACKGROUND

When determining whether the circuit court erred in dismissing the Complaint, we must assume the averments in it are true. See Williams v. Ewrit Filings, LLC, 253 Md.App. 545, 549 n.1, cert. denied, 478 Md. 518 (2022). Consequently, our background summary is predicated on those allegations.

After each Consumer underwent surgery performed by an Innovative GYN Care physician,^[2] Collectors filed lawsuits, claiming Consumer owed more for those medical services, over and above what her health insurer paid. According to Consumers, Innovative GYN Care charges and bills for the services of its surgeons and is affiliated with the following entities seeking to collect for related services:

• 360 Surgical Services, LLC ("360 Surgical Services"), which bills for services rendered by surgical assistants;

• Innovations Surgery Center, which "shares the principal address of [Innovative GYN Care]" and bills for the use of surgical facilities;

• Tower Surgical Partners, which bills on behalf of Innovative GYN Care and files collection actions for them, 360 Surgery Services, and Innovations Surgery Center; and • Evan Hammerman, who is Tower Surgical Partners' general counsel "and is de facto in-house counsel for Innovations Surgery Center, Innovative GYN Care, and 360 Surgery Services and other affiliated entities that this medical practice uses[,]" and filed complaints against Consumers on behalf of Innovative Surgery Center and Innovative GYN Care.

Both Consumers received checks from their health insurers as covered payments for their medical services. Although Diehl's insurer denied coverage for some services that it determined were duplicative, not medically necessary, or submitted with incorrect identifying information, Tower Surgical Partners previously told her that her account would be "zeroed" if she endorsed and forwarded her insurance checks to Innovations Surgery Center and 360 Surgery Services, at a post office box in Pennsylvania that Tower Surgical Partners owned. In addition, Innovative GYN Care's "'Financial Policy Disclosure Statement' provided to Diehl at the time of surgery promised '[w]e will not balance bill for any amounts not covered with the out-of-network benefit as long as the payment you receive is given in full to [] Innovative GYN Care.'" Tower Surgical Partners told Anderson the same, so that once Tower Surgical Partners received her checks, "'she would be good' and her account would be 'zeroed.'"

Both Consumers, following instructions from Tower Surgical Partners, sent the checks they received from their insurers to a post office box in Pennsylvania. Based on statements by Tower Surgical Partners and Innovative GYN Care, neither believed she owed anything else.

Nevertheless, Collectors filed the following complaints:

• Represented by Hammerman, Innovations Surgery Center filed suit against Anderson in the District Court for Montgomery County, claiming she owed $12,856.25 in principal, $1,859.75 in prejudgment interest, plus $1,928.44 in attorneys' fees. In support, attached bills showed charges from Innovations Surgery Center for $1,356.25 and from 360 Surgery Services (which was not a party to the lawsuit) for $11,500.

• Represented by Hammerman, Innovative GYN Care and Innovations Surgery Center filed suit against Diehl in the Circuit Court for Charles County, claiming a total debt of $66,934.64. An attached bill from 360 Surgery Services, who again was not a party to the suit, showed unpaid charges of $14,190.48.

In both lawsuits, the complaints are accompanied by affidavits from Hammerman and Anna Grigoryan-Santos, who is also a Tower Surgical Partners employee. Using nearly identical language in each, Grigoryan-Santos asserted that she had personal knowledge that the allegations in the complaints were true because the Consumers owed the claimed amounts for medical services. In his affidavits, Hammerman stated that he billed Innovative GYN Care for "at least" six hours of work before filing each case, which included drafting motions for summary judgment, even though he never filed such a motion in either case and could not have done so in the district court case because summary judgment is not available in that forum.

On December 12, 2022, Consumers filed a putative class action complaint against Innovative GYN Care, Innovations Surgery Center, Tower Surgical Partners, and Hammerman. According to Consumers, these Collectors waived any right to payment of amounts not covered by Consumers' health insurance. Moreover, their complaint alleged that Collectors were not entitled to recover amounts allegedly owed to a third party, 360 Surgery Services, which was not named in either of the complaints that Collectors filed against Consumers.

Following amendments filed March 7, 2023, the Complaint now alleges that Collectors' payment policies and practices are unfair and deceptive- designed to induce consumers into undergoing surgery in the expectation that they will not be required to pay out-of-pocket because their costs would be limited to what their health insurers paid for those services. According to Consumers, Collectors violated the MCDCA (Count One) and MCPA (Count Two) by filing lawsuits against them with knowledge that the claimed debts are not owed.

Collectors moved to dismiss Consumers' Complaint, arguing that (1) the common law litigation privilege absolutely immunized all Collectors from liability for filing suit; (2) as an attorney, Hammerman is not liable for his role in these collections because of the professional services exemption in the MCPA, Com. Law § 13-104(a)(1); and (3) the Complaint does not state a claim against Tower Surgical Partners because there are no allegations that Tower Surgical Partners engaged in any collection activity. After briefing and a hearing, the circuit court ruled from the bench that the litigation privilege broadly bars Consumers' claims, the MCPA exemption for attorneys also bars claims against Hammerman, and the Complaint does not set forth facts that state a claim against Tower Surgical Partners. Noting previous amendments and corrections, the court dismissed the Complaint with prejudice. Consumers noted this timely appeal.

STANDARD OF REVIEW

In a decision interpreting the same statutory framework at issue in this appeal, our Supreme Court summarized the legal standards governing the dismissal of a class action complaint by plaintiffs alleging violations of the MCDCA and MCPA:

A defendant may seek dismissal of a complaint under Maryland Rule 2-322(b)(2) if the complaint "fail[s] to state a claim upon which relief can be granted." Whether a motion to dismiss was properly granted or not by a trial court is a question of law we review de novo, with no

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