Kelley v. Med–1 Solutions Llc

952 N.E.2d 817

Brian J. KELLEY, et al., Appellants,

v.MED–1 SOLUTIONS, LLC, et al., Appellees.

No. 49A04–1008–PL–517.

Court of Appeals of Indiana.

Aug. 2, 2011.

Robert E. Stochel, Hoffman & Stochel, Crown Point, IN, Attorney for Appellants.Peter A. Velde, John B. Drummy, Nicholas W. Levi, Kightlinger & Gray, LLP, Indianapolis, IN, Attorneys for Appellees.

OPINION

DARDEN, Judge.

STATEMENT OF THE CASE

Brian J. Kelley, Denise D. Boyd, Yvonne S. Emous, Bertie M. Housley, and Bruce E. Kennedy (collectively, the “Debtors”) appeal the trial court's entry of summary judgment in favor of Med–1 Solutions, LLC, William J. Huff, Francis Niper, Courtney Gaber, and Richard Huston (collectively, “Med–1”).

We affirm.

ISSUES

The Debtors raise the following issue:

Whether the trial court properly granted Med–1's motion for summary judgment and denied the Debtors' motion for summary judgment.

Med–1 raises the following issue:

Whether Med–1 is entitled to an award of appellate attorney fees.

FACTS

1. Med–1

Med–1 is a collection agency licensed in Indiana. Indiana Code section 25–11–1–1 defines a “collection agency” as “any individual, firm, partnership, limited liability company, or corporation” that “engag[es] directly or indirectly and as a primary or secondary object, business, or pursuit, in soliciting claims for collection, or in the collection of claims owed or due or asserted to be owed or due to another....” Ind.Code § 25–11–1–1(a), (b). “Collection agency” also includes “any person who sells, furnishes, or maintains a letter or written demand services ... designed for the purpose of making demand on any debtor on behalf of any creditor for the payment of any claim....” Id.

Huff is the owner of Med–1, which employs Niper, Gaber, and Huston as in-house counsel. Med–1 collects delinquent debts on behalf of medical providers, including St. Vincent Carmel Hospital, Inc. (“St. Vincent”) and Rush Memorial Hospital (“Rush Memorial”). In addition to collecting on delinquent accounts on behalf of its clients, Med–1, as a letter vendor, also produces and mails debt collection letters on behalf of, and in the name of, its clients.

At some point, Med–1 and St. Vincent entered into a contract, whereby they agreed, in part, to the following:

Agency Obligations. [Med–1] agrees that its collection practices shall be in compliance with all applicable state and federal laws. Pursuant to its collection practices, [Med–1] may initiate legal action against [St. Vincent's] non-FAP accounts.¹ Legal action may include lawsuit, judgment, interest applied to the balance through, as allowed by Indiana law, property or estate liens, and garnishment of wages.

....

Collection Agency Services. Collection agency services shall include all legal means with which to collect a debt, including listing the debt against the debtor's credit. [Med–1] will pay any attorney fees and/or court costs incurred in collection of the debt. These costs will be paid by [Med–1] and recovered from any payments prior to any reimbursement to client.

(Debtors' App. 150–51). Med–1 and Rush Memorial entered into a contract, whereby they agreed, in part, to the following: “Med–1 agrees to attempt to collect balances from patients using all available legal means, including, but not limited to, sending legal letters, calling patients, filing suit, and garnishing wages.” (Debtors' App. 154).

2. The Debtorsa. Kennedy

On January 8, 2004, Kennedy signed an “Assignment of Benefits Authorization,” agreeing to pay Rush Memorial “for all charges not paid by assigned insurance.” (Debtors' App. 67). In the event Rush Memorial assigned his account to a collection agency, Kennedy also agreed to “be responsible for the total of the unpaid balance” and “any court costs or reasonable attorney fees....” (Debtors' App. 67).

Subsequently, Rush Memorial referred four of Kennedy's accounts to Med–1 for collection. Accordingly, Med–1 mailed correspondence to Kennedy on January 21, 2004, February 19, 2004, March 22, 2004, and April 16, 2004, wherein it identified itself as a collection agency, collecting debt on behalf of Rush Memorial. Counsel for Med–1 signed the collection notices.

On February 17, 2006, Med–1 filed a notice of claim against Kennedy in the Rush Superior Court, Small Claims Division. Med–1 sought judgment in the amount of $3,778.80, which included attorney fees in the amount of $350.00. On or about March 20, 2006, Med–1 and Kennedy entered into a pre-trial settlement, whereby Kennedy agreed to pay Med–1 $3,848.80. The trial court approved the settlement agreement on March 27, 2006. Kennedy subsequently acknowledged that he knew that Med–1's requests for payment were on behalf of Rush Memorial.

b. Housley

On November 23, 2004, Housley signed a form, acknowledging her financial responsibility for all charges incurred due to medical services provided by St. Vincent. This form read, in part, as follows: “If your account is forwarded to a collection agency or attorney ... you are responsible for any court costs or reasonable attorney fees incurred in the collection of your account.” (Debtors' App. 63). Housley incurred charges under three separate accounts.

Between May 2, 2005, and July 15, 2005, Med–1, on behalf of St. Vincent and in St. Vincent's name, sent Housley a “Pre–Collection Agency Review Notice,” for each account, notifying her that her “account has been referred to the St. Vincent Collection Department.” ² (Med–1's App. 16). Thereafter, on behalf of St. Vincent and in St. Vincent's name, Med–1 sent Housley three “Collection Agency Referral Notifications,” one for each account, notifying her that her “account is now in the process of being referred to a Collection Agency” for “further collection effort.” ³ (Med–1's App. 17).

After St. Vincent referred the three accounts to Med–1 for collection, Med–1 mailed Housley correspondence, identifying itself as a debt collector representing St. Vincent in its attempt to collect a debt from Housley. Counsel for Med–1 signed the correspondence.

On August 15, 2006, Med–1 filed a notice of claim against Housley in the Hamilton Superior Court, Small Claims Division. Med–1 sought judgment in the amount of $2,336.45, which included attorney fees in the amount of $375.00. The notice included a copy of the Acknowledgment of Financial Responsibility form signed by Housley as well as an account summary of her accounts with St. Vincent. On November 1, 2006, the trial court entered a default judgment against Housley in the amount of $2,336.45, plus court costs. Housley never denied owing the debt to St. Vincent and later admitted during a hearing that she “knew that Med–1 was trying to collect the bill for St. Vincent.” (Med–1's App. 219).

c. Emous

On March 18, 2005, prior to receiving treatment at St. Vincent, Yvonne Emous signed a standard form, titled “Acknowledgment of Financial Responsibility,” which provided as follows:

By signing this form you agree to abide by all the terms contained herein. You also agree to pay [St. Vincent] all the charges promptly when due.... If your hospital account ... is forwarded to a collection agency or attorney: (1) whether or not legal proceedings are instituted, a collection agency fee not to exceed 20% of the account balance or One Thousand Dollars ($1000), may be added to your account balance forwarded; and (2) you will be responsible for any court costs, reasonable attorney fees, and interest as allowed by Indiana statute, incurred in the collection of your account.

(Med–1's App. 27) (Emphasis added).

On November 22, 2005, St. Vincent sent Emous a request for payment in the amount of $7,966.62, due December 6, 2005. On December 26, 2005, St. Vincent sent Emous a final notice that her account was past due and had incurred a late fee of $20.00. St. Vincent informed Emous that failure to pay her account in full by January 9, 2006, would result in “placement of [her] account with a collection agency.” (Med–1's App. 69).

In St. Vincent's name and on behalf of St. Vincent, Med–1 sent Emous a Pre–Collection Agency Review Notice and a Collection Agency Referral Notification on June 20, 2005, and July 5, 2005, respectively. On July 27, 2005, Med–1 sent Emous notice that, as a debt collector representing St. Vincent, it was attempting to collect a debt from Emous. Counsel for Med–1 signed the correspondence.

On August 15, 2006, Med–1 filed a notice of claim against Emous in the Hamilton Superior Court, Small Claims Division. Med–1 sought judgment in the amount of $3,573.50, which included attorney fees in the amount of $375.00. The notice included a copy of the Acknowledgment of Financial Responsibility form signed by Emous as well as an account summary of Emous' accounts with St. Vincent. On September 6, 2006, the trial court entered a default judgment against Emous in the amount of $3,573.50, plus court costs.

d. Kelley

On October 23, 2005, Kelley received medical treatment at St. Vincent. Prior to receiving treatment, he signed an Acknowledgment of Financial Responsibility.

On January 30, 2006, St. Vincent sent Kelley a request for payment in the amount of $537.09, due February 13, 2006. On March 3, 2006, St. Vincent sent Kelley a final notice that his account was past due and had incurred a late fee of $20.00. St. Vincent informed Kelley that failure to pay his account in full by March 17, 2006, would result in “placement of [his] account with a collection agency.” (Med–1's App. 29).

On March 22, 2006, Med–1, on behalf of St. Vincent and in St. Vincent's name, sent Kelley a Pre–Collection Agency Review Notice. On April 10, 2006, Med–1, again on behalf of St. Vincent and in St. Vincent's name, sent Kelley a Collection Agency Referral Notification. On May 2, 2006, Med–1 sent a letter to Kelley, identifying itself as a debt collector representing St. Vincent in its attempt to collect a debt from Kelley. Counsel for Med–1 signed the letter.

On October 31, 2006, Med–1 filed a notice of claim against...