Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-5_06-cv-05176/USCOURTS-arwd-5_06-cv-05176-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1441 Petition for Removal

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IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

EDDIE DICKARD, individually and on 

behalf of all others similarly situated PLAINTIFF

 

v. Case No. 06-5176

OKLAHOMA MANAGEMENT 

SERVICES FOR PHYSICIANS, LLC,

ORTHOPEDIC MANAGEMENT

SERVICES, LLC DEFENDANTS

MEMORANDUM ORDER AND OPINION

This matter is before the Court on Defendants’ motion for

summary judgment (Doc. 56) and supporting documents (Docs. 57-

59, 61-63, 74); and Plaintiff’s response (Doc. 67-1) and

supporting documents (Docs. 68-69 and 80). 

For the reasons set forth herein, Defendants’ motion is

GRANTED and Plaintiff’s Complaint is DISMISSED. Further,

Plaintiff’s Motion for Class Certification (Doc. 47) is DENIED

AS MOOT.

STANDARD OF REVIEW

Summary judgment is appropriate only where there is no

genuine issue of material fact and the moving party is entitled

to judgment as a matter of law. Fed. R.Civ. P. 56(c). The burden

of proof is on the moving party to set forth the basis of its

motion. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The Court

must view all facts and inferences in the light most favorable to

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the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio,

475 U.S. 574 (1986). “The non-moving party, however, must still

“present evidence sufficiently supporting the disputed material

facts that a reasonable jury could return a verdict in [their]

favor.” Pope v. ESA Services, Inc., 406 F.3d 1001, 1003-4 (8th

Cir. 2005) (quoting Gregory v. City of Rogers, Ark., 976 F.2d

1006, 1010 (8th Cir. 1992)). Summary judgment is appropriate

where a plaintiff fails to present evidence sufficient to create

a jury question as to an essential element of his claim. Turner

v. Honeywell Fed. Manuf. & Tech., 336 F.3d 716 (8th Cir. 2003).

BACKGROUND

Defendants are in the business of providing management

services to physicians groups. These services include human

resources, contracting, payroll, accounting and billing.

Defendants had a contract with Intraoperative Monitoring Company

(“IM”) to provide these services to IM. (Doc. 59-1). 

Plaintiff was involved in two automobile accidents. As a

result of the injuries received, Plaintiff underwent surgery on

May 4, 2005. Medical services were provided by IM. (Doc. 58).

Defendants received the information on the medical services

provided to Plaintiff shortly after the surgery and, after

Plaintiff’s insurance company denied the claim, Defendants billed

Plaintiff for $1,124.35. Plaintiff received at least four

statements generated by Defendants on behalf of IM. All of the

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statements directed Plaintiff to send the amount due to IM. (Doc.

59-1). Plaintiff was never charged any fees, interest or

penalties by Defendants. All monies paid on behalf of Plaintiff

went directly to IM and were solely reimbursement for the medical

services provided to Plaintiff by IM. (Doc. 59-1). Further,

Plaintiff admits he owed the money and he voluntarily directed his

attorneys to pay the bill. (Doc. 58).

Plaintiff contends Defendants have repeatedly contacted

Plaintiff and other Arkansas residents in an effort to collect

outstanding consumer debts in violation of A.C.A. § 17-24-301,

which requires collection agencies to register with the Arkansas

State Board of Collection Agencies (“Board”)before contacting

Arkansas residents regarding alleged outstanding consumer debts.

(Doc. 1-2). Plaintiff contends Defendants did not register with

the Board during the period alleged in the complaint, and any

violation of the statute is a criminal offense pursuant to A.C.A.

§ 17-24-103. (Doc. 1-2).

Plaintiff alleges Defendants’ failure to disclose to him that

Defendants were not licensed by the Board and were prohibited from

any contact with him amounts to a fraud in violation of the Fair

Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692.

Plaintiff also contends Defendants asserted interest and control

over Plaintiff’s money which amounted to conversion on the part

of the Defendants. (Doc. 1-2). 

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ARGUMENT

Conversion

“Conversion is ordinarily said to consist of the exercise of

dominion over the property in violation of the rights of the owner

or person entitled to possession.” Thomas v. Westbrook, 206 Ark.

841, 177 S.W.2d 931, 932 (1944). Conversion can only result from

conduct intended to affect property. City Nat. Bank of Fort Smith

v. Goodwin, 301 Ark. 182, 187, 783 S.W.2d 335, 337 (Ark. 1990)

citing W. Prosser, Handbook of the Law of Torts § 15 (5th ed.

1984). The intent required is not conscious wrongdoing but rather

an intent to exercise dominion or control over the goods that is

in fact inconsistent with the plaintiff’s rights. W. Prosser,

supra. 

Defendants contend Plaintiff cannot prove the elements

necessary to sustain his cause of action for conversion.

Specifically, Defendants state the facts reflect Plaintiff has

suffered no damages and that Plaintiff testified in his deposition

the debt was legitimate and he consented to the payment of the

debt by his attorney. Plaintiff testified he never revoked his

consent for payment of the bill or demanded any payment back.

Further, Plaintiff testified the only amount he paid was the

amount of the bill for the medical services provided. He was not

charged any penalty, interest or fee. (Doc. 62-63). 

Finally, Defendants argue they never exercised control or

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dominion over Plaintiff’s money. The check was made out to

Intraoperative Monitoring Company (“IM”), the provider of the

medical services, mailed to IM’s post office box and deposited

into IM’s bank account. At no time did Defendants have dominion

or control of the money. (Doc. 57). 

Plaintiff contends he was entitled to possess his money and

Defendants intentionally took or exercised dominion or control of

it in violation of Plaintiff’s rights by asserting an interest in

fees, interest, costs and penalties that Defendants were not

lawfully entitled to possess. Plaintiff further contends that

even though he never paid any interest, penalty or fee, Defendants

profited by the transaction as they were paid by IM for the

services they provided in connection with the collection of

Plaintiff’s debt. Plaintiff asserts Defendants should be ordered

to disgorge those profits.

Defendants have shown there exists no issue as to material

facts on the claim of conversion. Plaintiff cannot show his money

was ever under the dominion or control of Defendants. Plaintiff

never paid anything more than what he admitted he owed for the

medical services provided and what was paid went directly to IM.

Plaintiff can show no material facts in dispute to prove his claim

of conversion. Defendants’ motion for summary judgment on the

claim of conversion is therefore GRANTED.

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Fraud

In order to prove fraud, under Arkansas law, Plaintiff must

prove five elements: (1) that Defendants made a false

representation of material fact; (2) that Defendants knew that the

representation was false or that there was insufficient evidence

upon which to make the representation; (3) that Defendants

intended to induce action or inaction by Plaintiff in reliance

upon the representation; (4) that Plaintiff justifiably relied on

the representation; and (5) that Plaintiff suffered damage as a

result of the false representation. Wal-Mart Stores, Inc. v.

Coughlin, —–S.W.3d —– (Ark. 2007) citing Bomar v. Moser, —Ark.—,

—S.W.3d—(Ark. 2007). It is also a “well-settled principle under

our case law that damages are an essential element of fraud, and

there must be an allegation of sufficient facts to satisfy the

damage element or the case is subject to a motion to dismiss.”

Wallis v. Ford Motor Co., 362 Ark. 317, 320, 208 S.W.3d 153

(Ark. 2005)citing Tyson Foods, Inc. v. Davis, 347 Ark. 566, 66

S.W.3d 568 (2002). 

Plaintiff contends Defendants committed fraud when they

contacted Plaintiff and failed to disclose they were not

registered with the Board as required by Arkansas statute.

Plaintiff contends this omission was material as it would have

been a substantial factor in influencing Plaintiff’s decision to

provide payment. Plaintiff contends this failure to disclose by

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Defendants that they were not licensed by the Board and therefore

prohibited from contacting Plaintiff was intended to induce

Plaintiff to act in reliance on the communication that a debt was

being lawfully sought. Plaintiff contends he justifiably relied

upon the Defendants’ representations through the unlawful contacts

and paid fees, interest, penalties and costs to Defendants.

Plaintiff was damaged as a result of this alleged fraud by the

payment of the fees, interest, penalties and costs paid by him to

Defendants. (Doc. 1-2). 

Defendants argue Plaintiff cannot prove he suffered any

general or consequential damages. (Doc. 57). According to

Plaintiff’s testimony he only paid the actual charges incurred for

the medical services he received. He was never charged any fees,

interest or penalty. All monies owed to IM were paid by

Plaintiff’s attorney’s to IM. His claim for damages is centered

on the argument that he is entitled to any profits Defendants

received from IM for collecting the money from Plaintiff. 

Defendants have shown there are no material facts in dispute.

Plaintiff admitted he owed the money and willingly paid it to IM.

Plaintiff can show no damages, a necessary element of a fraud

claim, as he never paid any fees, interest or penalties.

Plaintiff only paid what he acknowledged he owed. Plaintiff

cannot prove the necessary elements of fraud and there are no

material facts in issue. Defendants’ motion for summary judgment

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on the issue of fraud is, therefore, GRANTED.

Fair Debt Collections Practices Act (“FDCPA”)

The FDCPA is a consumer protection statute that forbids “debt

collectors” from making false or misleading representations and

from engaging in various abusive and unfair practices. 15 U.S.C.

§§ 1692-1692o (1998). Debt collectors that violate the Act are

subjected to civil liability for any actual damages sustained by

the complaining party. 15 U.S.C. § 1692k. Quinn III v. Ocwen

Federal Bank, FSB, —F.3d— (E.D. Ark. 2006). 

The FDCPA defines debt collector as “any person who uses any

instrumentality of interstate commerce or the mails in any

business the principal purpose of which is the collection of any

debts, or who regularly collects or attempts to collect, directly

or indirectly, debts owed or due or asserted to be owed or due

another.” 15 U.S.C. § 1692(a)(6). 15 U.S.C. § 1692(a)(6)(F)

excludes from the definition of debt collector “any person

collecting or attempting to collect any debt owed or due or

asserted to be owed or due another to the extent such activity .

. . (iii) concerns a debt which was not in default at the time it

was obtained by such person. . . “

Plaintiff alleges Defendants violated the FDCPA when they

failed to disclose that they had not registered with the

appropriate Board and were therefore prohibited by Arkansas law

from contacting Plaintiff and attempting to collect a debt from

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Plaintiff. (Doc. 1-2). Specifically, this failure to disclose

what Plaintiff considers a material fact amounted to false

representation of the character, amount or legal status of the

debt; a false representation of the services rendered or

compensation which may be received by any debt collector; a false

representation as to Defendants’ ability to take action that

Defendants legally could not take or did not intend to take; and,

Defendants’ failure to disclose these material facts amounted to

the use of a false representation or deceptive means to collect

or attempt to collect any debt or obtain information concerning

a consumer. (Doc. 1-2).

In support of their motion for summary judgment, Defendants

argue they are not debt collectors due to the exception found in

the FDCPA at 15 U.S.C. § 1692(a)(6)(F). (Doc. 57). Defendants

state they operate the day-to-day business office for IM, the

provider of medical services to Plaintiff. Under the arrangement,

IM transmits the billing information to Defendants within one week

of the day services were provided before the obligation is

considered in default. (Doc. 57). Defendants then submit the

insurance claim to the patient’s insurance company. If any

portion of the bill remains unpaid after the insurance claim is

paid, Defendants generate a statement in IM’s name and mail the

statement to the patient. (Doc. 57). The statements are mailed

in IM’s name, with IM’s address listed as the address to which

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payment is to be sent. (Doc. 57). 

It is undisputed that Defendants were responsible for

submitting IM’s insurance claims and sending out bills to patients

for amounts not covered by insurance. It is clear Defendants

obtained this right prior to the time the debt was considered in

default. 

Unlike “assignment”, the word “obtained” is not defined by

the FDCPA, therefore it should not be read to mean the same thing

as assigned. Other courts, in considering the exception at issue

here have determined “obtained” is meant to “encompass the

possession of rights and responsibilities vis a vis the debt . .

. Courts have applied the exemption found in §1692a(6)(F)(iii)

not only to those who have purchased a debt prior to default, but

also to those who had responsibility prior to default for

collecting the debt owed to another.” Franceschi v. Mautner-Glick

Corp., 22 F.Supp.2d 250, 254 (S.D.N.Y. 1998)(finding landlord’s

management agent was not a “debt collector” under FDCPA since it

obtained the right to collect rent before it became overdue.).

See also Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 106-

7 (6th Cir. 1996) (finding assignee of plaintiff’s installment

contract for a car purchase was not a debt collector because the

loan had been assigned before default.); Perry v. Stewart Title

Co., 756 F.2d 1197, 1208 (5th Cir. 1985)(mortgage servicing

company not a debt collector); Jones v. Intuition, Inc., 12

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F.Supp.2d 775, 778-79 (W.D. Tenn. 1998)(exemption applied to

management company responsible for collection of condominium

fees). The Congressional Report on the Act states the definition

of a debt collector does not include “mortgage service companies

and others who service outstanding debts for others, so long as

the debts were not in default when taken for servicing.” S.Rep.

No. 95-382 (1977) reprinted in 1977 U.S.C.C.A.N. 1695, 1698.

Plaintiff contends the debt was in default when Defendants

obtained it because the account was due and had not been paid.

(Doc. 69). Plaintiff ignores the process by which Defendants

obtained the account. At the time Defendants received the

information, there was no amount due by Plaintiff. Defendants

first submit the information to the insurance company and then

send a bill to Plaintiff. (Doc. 58). There is no account

balance due at the time the information is received by Defendants.

“The statute specifically does not apply to entities who acquire

a debt ‘not in default at the time it was obtained.’” 15 U.S.C.

§ 1692(a(6)(F)(iii). Whitaker v. Ameritech Corp., 129 F.3d 952,

959 (7th Cir. 1997). The Seventh Circuit found that Ameritech

was not a debt collector under the FDCPA because, “while Ameritech

does collect money owed to long distance companies and information

providers, it does not acquire those debts after they are in

default. It acquires those debts . . . at the moment each

telephone call is placed . . . even before the consumer receives

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a bill.” Id.

Under Arkansas law, courts must give statutes a reasonable

construction, not an absurd one. Jackson v. Delta Special School

Dist. No. 2, 86 F.3d 1489, 1497 n. 7 (8th Cir. 1996); see also

Federal Express Corp. v. Shelton, 265 Ark. 187, 578 S.W.2d 1,

9 (quoting Hervey v. Southern Wooden Box, Inc., 253 Ark. 290, 486

S.W.2d 65, 69 (1972)). The plain language of §1692a(6)(F) simply

states an individual in not a “debt collector subject to the FDCPA

if the debt he seeks to collect was not in default at the time he

purchased or otherwise obtained it.” See Quinn III v. Ocwen

Federal Bank, FSB, —F.Supp.— (E.D.Ark. 2006)(holding bank not

debt collector because debt was not in default when obtained);

Bailey v. Sec. Nat’l Servicing Corp., 154 F.3d 384, 387 (7th

Cir. 1998) (holding that the plain language of the FDCPA “tells

us that an individual is not a ‘debt collector’ subject to the Act

if the debt he seeks to collect was not in default at the time he

purchased or otherwise obtained it.”) 

Under the plain meaning of the statute, Defendants are

clearly not debt collectors. Defendants have proven there are no

issues as to material facts and they are entitled to summary

judgment. Therefore, Defendants’ motion for summary judgment on

Plaintiff’s claim of a violation of the FDCPA is GRANTED. 

Additional Discovery

Plaintiff claims the motion for summary judgment should not

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be decided at this time as additional discovery is warranted.

Additional discovery is not necessary as the key facts necessary

for resolution of Plaintiff’s claims are undisputed. Plaintiff

states he is still seeking the corporate information of

Defendants’ parent company, as well as any contacts the company

may have made with other Arkansas residents, and phone logs and

copies of statements sent to other individuals. (Doc. 68). The

information Plaintiff states he is seeking is related to his

desire to certify this action as a class action claim. That

information is not necessary to a resolution of the motion for

summary judgment currently before the Court. 

CONCLUSION

For the reasons reflected above, Defendants’ motion for

summary judgment is GRANTED and Plaintiffs’ Complaint is

DISMISSED. Further, Plaintiff’s Motion for Class Certification

(Doc. 47) is DENIED AS MOOT.

IT IS SO ORDERED this 15th day of October, 2007.

 /s/ Robert T. Dawson 

Honorable Robert T. Dawson

United States District Judge 

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