Med. Recovery Servs., LLC v. Neumeier

• Decision Date: 05 April 2018
• Docket Number: Docket No. 44836
• Citation: 415 P.3d 372,163 Idaho 504
• Court: Idaho Supreme Court
• Parties: MEDICAL RECOVERY SERVICES, LLC, an Idaho limited liability company, Plaintiff-Appellant, v. Jared NEUMEIER, Defendant-Respondent.

163 Idaho 504

415 P.3d 372

MEDICAL RECOVERY SERVICES, LLC, an Idaho limited liability company, Plaintiff-Appellant,

v.Jared NEUMEIER, Defendant-Respondent.

Docket No. 44836

Supreme Court of Idaho, Boise, December 2017 Term.

Filed: April 5, 2018

Smith, Driscoll & Associates, PLLC, Idaho Falls, for appellant. Bryan N. Zollinger argued.

Hopkins, Roden, Crockett, Hansen & Hoopes, PLLC, Idaho Falls, for respondent. Sean J. Coletti argued.

BRODY, Justice.

This case centers on efforts to collect payment for medical services. Medical Recovery Services, LLC ("MRS"), a licensed collection agency, appeals from a district court decision affirming rulings of the magistrate court in favor of the patient. We affirm the district court's decision.

I. FACTUAL AND PROCEDURAL HISTORY

In late 2012, Jared Neumeier received medical services from Dr. Eric G. Baird, a medical provider operating through Idaho Falls Surgical Specialists, PLLC. During his visit, Neumeier provided Dr. Baird's office with information regarding his Blue Cross of Idaho insurance coverage. Neumeier left the office expecting that the bill would be submitted to his insurer. Following his visit, for reasons that are not part of the record, the office did not submit the bill to Neumeier's insurer, and instead sought payment directly from him. The office sent the bill to an incorrect address.

In April 2014, without a response from Neumeier, Dr. Baird's billing agent assigned the delinquent account to MRS for collection. Pursuant to the assignment, MRS acquired Dr. Baird's contractual rights in the agreement with Neumeier, as well as interest in any claim against Neumeier for payment of services in the amount of $1,190.28. Thereafter, MRS continued to try to contact Neumeier by sending him mail at an incorrect address. Throughout this time, Neumeier did not receive any of the attempted communications from Dr. Baird or MRS, nor did he receive any other form of demand for payment related to his visit. During this same time, Neumeier saw Dr. Baird for other unrelated medical services, which resulted in a separate bill that Dr. Baird's office submitted to Neumeier's insurer for payment.

In April 2015, MRS sent a letter addressed to Neumeier at his correct address. The one-page letter—which was attached to MRS's complaint and is the only communication to Neumeier from either Dr. Baird or MRS found in the record—took the form of a notice letter under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692a -o. In addition to stating Neumeier's contact information, the notice letter provided an amount of debt ($958.63 exclusive of interest), the name of the creditor (MRS), and paraphrased recitations of the required inclusions under the Act. The undated notice letter did not identify Dr. Baird or connect the debt with a particular bill or treatment.

On May 14, 2015, without a response from Neumeier, MRS sent the account to its legal counsel with instructions to file an action to recover the debt. Thereafter, on Saturday, May 16, 2015, Neumeier returned home from a two-week vacation and first opened the notice letter. On Monday, May 18, 2015, Neumeier visited Dr. Baird's office under the belief that the notice letter was a fraud or scam. During this visit, the office discovered that it had never submitted the bill to Neumeier's insurer; however, the office also informed Neumeier that the account had already been assigned to MRS for collection. On the same date, MRS filed a complaint against Neumeier, seeking a total award of $1,891.37, including $958.63 for the principal amount, $282.39 in statutory prejudgment interest, and attorney's fees and costs. The next day, Neumeier contacted MRS and was informed that he was "too late" because the account had already been forwarded to its legal counsel. Thereafter, Neumeier contacted MRS's legal counsel, which told him that he owed over $1,800. A month later, Neumeier was served with the complaint and summons.

Subsequent to Neumeier's May 18th visit, Dr. Baird's office submitted the bill to Blue Cross for payment. As shown by an explanation of benefits form that Neumeier received from the insurer, Blue Cross paid all but $42.66 of the bill, which was designated as a copayment balance. Shortly thereafter, Dr. Baird's office notified Neumeier that it was waiving the copayment balance. The office also informed MRS that the account had been satisfied, and MRS in turn notified its counsel. The record is silent as to how MRS's contractual rights and interest in any claim against Neumeier related to the post-assignment interaction between Dr. Baird and Neumeier.

Once the account was satisfied, Neumeier reached out to MRS in an effort to have the debt collection action terminated. MRS refused, and Neumeier moved to dismiss the complaint pursuant to Idaho Rule of Civil Procedure 12(b)(6). The motion was supported by an affidavit from Neumeier. MRS filed its opposition—with an affidavit from an MRS manager—in which it sought denial of the motion and requested that the magistrate court enter summary judgment in its favor for the amount of $0. At a hearing on the dismissal motion, the magistrate converted Neumeier's motion to a summary judgment proceeding. The magistrate ultimately granted summary judgment in favor of Neumeier while denying the same for MRS, and, in turn, entered judgment for Neumeier and awarded him attorney's fees and costs as the prevailing party.

Following a motion from MRS, the magistrate set aside the judgment and allowed the parties to submit supplemental briefing on the unresolved issue of MRS's entitlement to statutory prejudgment interest. Thereafter, the magistrate ruled that MRS was not entitled to prejudgment interest. Accordingly, the magistrate reinstated and affirmed its prior decision, awarded additional fees and costs to Neumeier, and entered judgment in favor of Neumeier. The magistrate later denied MRS's motion to reconsider, and a first-amended judgment was entered to reflect an award of additional fees and costs to Neumeier.

From there, MRS appealed the matter to the district court. The district court dismissed the appeal after MRS failed to timely file the requested transcript and to pay the required transcript fee. The district court subsequently reinstated the appeal after finding that MRS's failures constituted excusable neglect. The court eventually affirmed the decisions of the magistrate and awarded Neumeier additional fees and costs. MRS now timely appeals to this Court.

II. STANDARD OF REVIEW

When reviewing a decision of a district court acting in its capacity as an appellate court, this Court

reviews the trial court (magistrate) record to determine whether there is substantial and competent evidence to support the magistrate's findings of fact and whether the magistrate's conclusions of law follow from those findings. If those findings are so supported and the conclusions follow therefrom and if the district court affirmed the magistrate's decision, we affirm the district court's decision as a matter of procedure.

Losser v. Bradstreet , 145 Idaho 670, 672, 183 P.3d 758, 760 (2008) (quoting Nicholls v. Blaser , 102 Idaho 559, 561, 633 P.2d 1137, 1139 (1981) ). "[T]his court does not review the decision of the magistrate court. ‘Rather, we are procedurally bound to affirm or reverse the decisions of the district court.’ " Pelayo v. Pelayo , 154 Idaho 855, 859, 303 P.3d 214, 218 (2013) (citation omitted) (quoting Bailey v. Bailey , 153 Idaho 526, 529, 284 P.3d 970, 973 (2012) ).

III. ANALYSIS

This case turns on the summary judgment decision. Once the underlying bill was resolved independent of the litigation, MRS acknowledged that it was no longer seeking collection of the principal amount and instead sought summary judgment for $0. Even with that amount, the summary judgment analysis influenced the subsequent decisions on prejudgment interest and attorney's fees and costs. MRS appeals each of these decisions, arguing that the district court erred in affirming (1) summary judgment in favor of Neumeier, (2) the denial of prejudgment interest, and (3) the determination of Neumeier as the prevailing party. Both parties claim they are entitled to attorney's fees and costs on appeal.

The dispositive question running through each of these issues is whether the debt underlying MRS's claim was valid. In an action for debt collection, it stands to reason that a debt collector can only be entitled to recover on a valid debt. Both the magistrate and district court concluded that there was never an amount due and owing against Neumeier, and, consequently, MRS was not pursuing a valid debt. Under the above-stated standard of review, we must consider whether this determination is based on legal conclusions drawn from factual findings that are supported by substantial and competent evidence in the record. If that is the case, we will affirm the decision of the district court as a matter of procedure. Losser , 145 Idaho at 672, 183 P.3d at 760.

A. The District Court Did Not Err in Affirming the Decision of the Magistrate to Grant Summary Judgment in Favor of Neumeier.

MRS argues that granting summary judgment in favor of Neumeier was in error, and that, instead, it was entitled to summary judgment. We review a grant of summary judgment under the same standard used by the trial court. Read v. Harvey , 141 Idaho 497, 499, 112 P.3d 785, 787 (2005). "The court must grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." I.R.C.P. 56(a). Generally, when considering a motion for summary judgment, we construe all disputed facts and make all reasonable inferences in favor of the nonmoving party. Sprinkler Irrigation Co. v. John Deere Ins. , 139 Idaho 691, 695–96, 85 P.3d 667, 671–72 (2004). Yet, where the evidentiary facts are undisputed and the trial court rather than a jury will be the trier of fact, summary judgment can be...