On September 23, the Colorado AG announced a settlement with a Colorado-licensed debt collection company resolving allegations concerning its collection of medical debt from Colorado consumers. The Colorado Fair Debt Collection Practices Act imposes heightened requirements on collection agencies seeking default judgments for certain medical debt, including requirements governing the evidence that must be filed with a court before entry of a default judgment.
The settlement follows an investigation by the Administrator of the Colorado Fair Debt Collection Practices Act into the company’s medical debt collection practices. According to the stipulated final agency order, the company identified 44 Colorado accounts for which the Administrator alleged that compliant affidavits were not on file. Specifically, the Administrator alleged that the company:
- Failed to submit required evidence supporting medical debts. The Administrator alleged that, before seeking default judgments, the company did not file evidence satisfying applicable evidentiary requirements or otherwise establishing the amount and nature of the medical debt as required by the Colorado Fair Debt Collection Practices Act.
- Relied on allegedly insufficient assignment documents. In certain cases, the company allegedly submitted assignment documents that the Administrator asserted did not satisfy the Colorado Fair Debt Collection Practices Act’s requirements.
- Obtained default judgments on affected accounts. The Administrator identified 44 accounts that it alleged did not contain the documentation required under the Colorado Fair Debt Collection Practices Act.
The company disputed the Administrator’s findings and did not admit wrongdoing. To resolve the matter, it agreed to pay a $30,000 fine, cease and desist from violations of the Colorado Fair Debt Collection Practices Act, and use affidavits from authorized employees of medical providers when seeking default judgments on covered medical debt. The company must also seek to vacate certain existing default judgments and, depending on the circumstances, refund payments received after judgment where compliant documentation is not provided.
Putting It Into Practice: The settlement continues recent state regulatory attention to debt collection practices, including state enforcement involving debt collector licensing and collection activity (previously discussed here). Debt collectors handling medical debt should review state-specific documentation and litigation requirements before pursuing judgments and confirm that their procedures account for any heightened protections applicable to medical debt.
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