Hospital Chain Sued for Alleged TCPA Violations

January 29, 2016, 11:26 a.m. EST 4 Min Read

Prospect Medical Group, a California-based hospital chain, is one of the first healthcare providers sued since the Federal Communications Commission clarified Telephone Consumer Protection Act language last July concerning auto-dialing cell phones, consent to call and calling wrong numbers.

The class-action lawsuit alleges Prospect Medical’s Southern California Hospital, located in Culver City, Calif., used an automated dialer to call patient Donna Ratliff on her cell phone in order to collect a debt and didn't have her express consent to do so. Prospect Medical declined to speak about the case, waiting to be officially served with the complaint.

In a statement, the company said that it follows necessary practices to obtain mobile phone consent.

"All of our patients are asked to sign an irrevocable authorization permitting our hospitals to contact them via telephone - including, specifically, via cellphone - in their efforts to collect outstanding debt,” according to the statement.

Previous cases involving medical debt collections mostly have provided hospitals some leeway on calling patients for purposes of collecting a payment as part of care treatment. But healthcare providers need to make sure a debt is linked to the medical encounter during which the patient provided a cell number.

While the Prospect case deals with the issue of express consent and makes it clear collectors need to obtain it, the case doesn't cover one of the trickiest and most controversial parts of the FCC's ruling. What happens when a debt collector reaches someone in error, such as a reassigned number?

TCPA violation penalties are severe - $500 for each unsolicited call or $1,500 if the company intentionally makes a call after the cell phone user denies permission. Third-party agencies that don’t have consent can’t auto dial anybody without facing a TCPA violation. Callers are liable even if they have the permission of the person they're trying to reach but the phone number has been reassigned to another individual. For medical debt collectors, the FCC allows a number to be called just once without penalty, regardless of whether someone picks up. Medical providers, to protect themselves, should have a detailed process in place for getting consent, while adhering to the wishes of people who opt out. Whenever possible, they also should use email. "Callers must take proactive actions to prevent violations and have robust policies and practices in place, especially related to cell phone line ownership/use and consent," said Ed Falco, director at Auriemma Consulting Group. "The alternative is to risk facing punitive damages."

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For the collection industry, the FCC's July ruling means collectors can no longer rely on quantity of phone numbers over the quality of the numbers.

"The TCPA now says you have to be concerned about the collateral damage. If you don’t, you’re going to get fined. You simply can’t dial mobile phones if you don’t have consent," said Mitchell Young, senior director at Neustar, who oversees the collections, financial services, call center and data verticals.

Scott Pearson, a partner at Ballard Spahr LLC, is an advocate of companies that offer data-related services to help collectors navigate TCPA compliance such as making sure "you’re not getting a wrong number but a better number." "This is the new normal. This isn’t going away," he said. "People hate getting these calls at home and even though, for businesses, the more numbers you throw into an autodialer, the better the collection numbers, the collateral damage for consumers stirred regulators into action. A lot of companies still just don’t understand this key aspect of their business is really held in disdain by consumers." Sam Stuckal, senior executive advisor at CEB TowerGroup Financial Services, works with large banks and tier 1 insurance carriers. At times, those companies may need to enforce a payment agreement or claims subrogation and would work with a collection agency. "The feedback I’ve gotten from our customers [after the FCC’s ruling] is that this is a pretty serious event for them. It forces them to ratchet up their data management to keep track of potential customers and their contact information along with revocations of consent in order to stay compliant with TCPA," he said. "This is basically another trap they can fall into if they don’t get the identity management and supporting data plumbing under control. How do they keep track of all the people who don’t want to be contacted as well as calls that fall under the one strike rule? This takes a key piece out of the tool kit of any collection agencies with whom they partner.” Failure can lead to consumer anger, reputational damage and lawsuits, he added. TCPA class-action lawsuits generally have proven to be easy wins for plaintiffs. Stuckal said it’s going to be expensive for financial services firms and their agents to return to manually dialing customers and tracking the failure or success of every call to ensure they don’t make a second or third call. "Staying compliant becomes something of a big data problem within operations as there’s a great deal of transactional data to keep track of. It’s often a cliché, but companies are simply going to have to work smarter and harder. Improving data management to support identify management is critical,” he said. "It’s also essential to access identify data that’s both accurate and available in real-time or close.”