Regulation F Itemization Date Lawsuit

Since Regulation F went into effect late in 2021, there have been several lawsuits claiming debt collectors were not following the rules. Ortiz v. Heley & Associates, a case currently in the judicial system, could set the precedent that your collection partners need to pay even closer attention to the date used in the Model Validation Notice. It is important to ensure they are using the “Service Date” (Transaction Date) for the itemization date to minimize the chance for a lawsuit, especially a class action suit. By using the Service Date as the basis for your timeline, it leaves little room for interpretation or error.

As part of Regulation F, the Consumer Financial Protection Bureau (CFPB) allows one of five dates to be used as the itemization date under the Fair Debt Collection Practices Act (FDCPA). Those dates are:

• Last Statement Date
• Last Payment Date
• Charge-Off Date
• Judgement Date
• Transaction Date (which we will refer to as Service Date)

The Case

In the class action lawsuit filed in Florida, the complaint alleges that the plaintiff received a Model Validation Notice from the defendant in regard to an unpaid utility bill. The notice, dated February 16, 2022, included an itemization table that said, “As of February 9, 2022, you owed $340.81.”

The complaint alleges that February 9 is not one of the acceptable dates. Using a date that is not permitted under Regulation F “wrongfully causes the least sophisticated consumer to falsely believe that the Represented Itemization Date is the Last Statement Date, the Charge-Off Date, the Last Payment Date, the Transaction Date, or the Judgment Date,” according to the complaint.

The class seeks to include anyone in Florida who received a similar notice from the defendant. It accuses the defendant of violating Sections 1692e, 1692e(2)(A), 1692f, and 1692g of the FDCPA because of the alleged issue with the itemization date.

Healthcare Impact

This case shows how using a date that does not meet Regulation F requirements could easily be used to litigate in the healthcare setting.

A simple way to remedy this is to ensure that your collections partner is using the “Service Date” in the Model Validation Notice. This date is consistent across communications with both the patient and your collections partner. Several of the other dates (Last Statement, Last Payment, Charge-Off Date, etc.) are not as consistent as the “Service Date” depending on how healthcare providers work through the debt process. By using this date, you and your collections partner will always have a set date to use in ongoing communications with patients.

• Last Payment Date would not work because if you have a consumer who has not had a previous payment, the data field would be empty.
• Last Statement Date would not work because if a consumer never received a statement until the validation notice, there may not be a last statement date. Thus, the field would be empty.
• You would not want to use Charge-Off Date because medical debt are not typically charged off prior to going to debt collections due to Medicare rules.
• We would not use Judgement Date because we do not file judgements on all consumers.
• By process of elimination, we are left with Transaction Date (Service Date). From a consumer standpoint, consumers will easily recognize the date as they can recall those dates from their appointments and providers generally include the service dates on their billing statements, creating consistency between the statement sent from the provider and the collection agency.

What You Should Do

It is important to work with your collections partner to ensure they are using the “Service Date” as the Transaction Date in their Model Validation Notice sent to patients. This will minimize the chance of a lawsuit based on the wrong date, which in turn will reduce the impact on the revenue recovered for your facility.

If you have more questions about Regulation F and what Americollect is doing to stay compliant with the CFPB and the FDCPA, please speak to your Client Relations Specialist.