Bright v. Ball Memorial Hospital Ass'n, Inc., 79-1134

• Decision Date: 21 February 1980
• Docket Number: No. 79-1134,79-1134
• Citation: 616 F.2d 328
• Parties: Kathy BRIGHT and Susan Barber, Plaintiffs-Appellants, v. BALL MEMORIAL HOSPITAL ASSOCIATION, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 328

616 F.2d 328

Kathy BRIGHT and Susan Barber, Plaintiffs-Appellants, v. BALL MEMORIAL HOSPITAL ASSOCIATION, INC., Defendant-Appellee.

No. 79-1134.

United States Court of Appeals Seventh Circuit.

Argued June 14, 1979.

Decided Feb. 21, 1980.

Kenneth J. Falk, Legal Services Organization, Muncie, Ind., for plaintiffs-appellants.

Jon H. Moll, Muncie, Ind., for defendant-appellee.

Before TONE and BAUER, Circuit Judges, and WILL, Senior District Judge. ^*

WILL, Senior District Judge.

Appellants Kathy Bright and Susan Barber seek reversal of the district court's determination that appellee Ball Memorial Hospital Association, Inc. ("Ball Memorial" or "Hospital") was not a "creditor" within the meaning of the Truth in Lending Act ("Act"), 15 U.S.C. §§ 1601, et seq., and seek a further determination that Ball Memorial violated the provisions of the Act as to them. For the reasons stated, we affirm the district court's judgment on grounds other than those relied upon by the district court.

BACKGROUND

Ball Memorial is a not-for-profit hospital incorporated under the laws of the State of Indiana. Located in Delaware County, Indiana, Ball Memorial serves its own and four surrounding counties and operates as the primary referral hospital for East Central Indiana. It is a general public hospital, admitting all persons without regard to ability to pay.

Upon admission to the hospital, inpatients are shown and asked to sign an "Initial Credit Disclosure Statement and Consent to Treatment" form. The Initial Credit Disclosure Statement initially states: "You are requested to remit the balance due on your account with the hospital at the time of discharge." This Statement further sets forth, however, conditions under which an inpatient may pay the account balance in installments "IF IT IS NECESSARY" for the patient to use such a procedure. The conditions include the imposition of a "FINANCE CHARGE of 3/4% per month on any unpaid balance, unpaid for more than thirty (30) days." Similarly, one of the pamphlets contained in the "Hospital Patient Guide" given to each inpatient informs the patient that the account is "payable at the time of your discharge," but also informs the patient that, if unable to pay the entire bill,

you or your relative must be prepared to talk with the credit manager . . . to make satisfactory credit arrangements. Our credit department will discuss with you financial arrangements and will set up the payment of your account according to your ability to pay.

This pamphlet also makes "FINANCIAL DISCLOSURE" of a "FINANCE CHARGE" which "will be added to all uncollected or past due accounts."

Pursuant to these written directives and additional oral instructions, Ball Memorial will make arrangements, prior to discharge, with inpatients without insurance or other third-party coverage who are unable to pay the bill in full upon discharge such that an installment payment schedule is established. These schedules sometimes call for payment in more than four installments. Regardless of whether the agreements contemplate more than four installments, a 3/4% monthly charge is assessed on the outstanding account balance each month while the installments are paid. Patients making these arrangements subsequently receive from the Hospital an initial bill and a coupon book embodying the installment plan arranged, and subsequently receive monthly statements of their balances as the installments are paid. They do not receive the billing statements which are described in Ball Memorial's general billing cycle, infra.

Inpatients not making such installment payment arrangements at the time of discharge receive an initial bill from Ball Memorial on the fourth day after discharge which delineates the specific charges assessed to their accounts. On the reverse side of this initial bill is a schedule of information headed "FINANCE CHARGE," which advises the patient that a "FINANCE CHARGE" of 3/4% per month or a 50cents "HANDLING CHARGE," whichever is greater, will be added to any unpaid balance of 30 days or more, but that no such charge would be imposed if the bill were paid in full within 30 days. The schedule concludes by stating that "All charges are in compliance with the Truth and (sic) Lending Act and Uniform Consumer Credit Code."

If an inpatient has not made payment arrangements with the Hospital, on the eighteenth day after discharge the patient is mailed the first billing statement which indicates the total amount due. On its face, the statement states: "Your account is now due and payable. Please remit today." This statement, as do all subsequent statements, also bears the language: "Payment is due in full when service is rendered." On its reverse side, the statement contains a schedule of information headed "FINANCE CHARGE" which is identical to the schedule of information contained on the reverse side of the initial bill, except for the addition of the following:

9) The chart below demonstrates the minimum monthly payment required

under Ball Memorial Hospital's credit policy.

                -------------------------------------------------------------------------------
                  IF YOUR                                                                  OVER
                 ORIGINAL
                BALANCE IS   10-200  201-300  301-400  401-500  501-600  601-700  701-800  800
                -------------------------------------------------------------------------------
                   YOUR
                  MINIMUM
                MONTHLY PMT
                    IS         10      15       20       25       30       35       40      5%
                -------------------------------------------------------------------------------
                

10) You may pay a larger part or all of the balance of your account at any

time.

Where no payment arrangements have been made, on the forty-eighth day after discharge the patient is mailed a second billing statement identical to the first in all respects except that the face now bears the language: "No doubt you have overlooked payment of your account, please make your remittance now." It is at the forty-eighth day that Ball Memorial considers an account to be delinquent. If payment in full is received before this time, the monthly charge which would have been assessed on the first month is waived. At this point, the monthly charge of 3/4% of the unpaid balance or 50cents is first assessed.

If no payment arrangements are made, Ball Memorial mails a third statement on the sixty-second day after discharge. This statement is identical to the first two, except it bears the language: "We are surprised that you continue to ignore your past due account. We must insist on immediate payment." Along with this statement, inpatients automatically receive a coupon book, dividing the patient's obligation into monthly installment payments along lines consistent with the table set forth above. If at this point the patient begins making payments pursuant to the coupon book, the patient does not receive the fourth or fifth statements discussed below. Rather, the patient will receive a monthly statement showing the payments received, the monthly charges imposed, and the balance due. These bills are on forms identical to those used for inpatients who arranged installment payment schedules prior to their discharge from the Hospital, and continue until the bill is paid in full.

On the seventy-sixth day after discharge, a patient who has not arranged to pay his bill or begun making installment payments is mailed the fourth statement. This statement is identical to the first three, except it now bears the language: "It is apparent that you have ignored all our previous notices. If there is any reason for delay of your payment contact this office now." A fifth and final statement is mailed on the ninetieth day after discharge. This statement is identical to the first four, except it is stamped "Final Notice" in red, and contains the legend: "Final Notice. Unless this account is paid in full by ______ it will be turned over to an outside collection agency."

In addition to these written statements, Ball Memorial attempts to make contact with patients by telephone during the same time period in an effort to secure payment. The Hospital's decision finally to turn inpatient accounts over to an outside collection agency is apparently made on a case-by-case basis after the fifth and final statement is sent. Accounts are not assigned out for collection where patients are making installment payments.

Ball Memorial's billing procedures with respect to outpatients are similar to those used for inpatients, but differ in several respects. Outpatients apparently receive neither the Initial Credit Disclosure Statement nor the Hospital Patient Guide at the time of service. The Hospital generally treats these patients on a cash basis, and only in rare circumstances where the outpatient's bill is large will it initially attempt to arrange an installment payment plan. The initial bill received by outpatients on the fourth day after discharge is not identical to that received by inpatients. Rather, an outpatient's initial bill is mailed on the statement form used generally by Ball Memorial. Outpatients subsequently receive the same series of first through fifth statements, except that the periodic charge disclosed on the reverse side of the statement form is labeled a "HANDLING CHARGE." Coupon books are not mailed to outpatients routinely with the third statement, but are apparently sent only to those whose bill exceeds $40. Outpatient accounts are automatically turned over to a collection agency fourteen days after the fifth statement is sent.

Appellant Bright was an inpatient at Ball Memorial July 6-10, 1977. While in the Hospital, Bright was apparently shown a copy of the Initial Credit Disclosure Statement, but did not sign it. Presumably, she was also given a copy of the Hospital Patient Guide. At the time of her discharge, she made no arrangements with the Hospital to repay her bill. Bright subsequently received her initial bill, and the first,...