In my practice, I often see that large corporations have large law firms and sophisticated information technology departments that monitor their business operations, while the small business owner struggles to stay abreast of the law and avoid unforeseen legal entanglements. Unfortunately, sometimes the law is more of a trap for the unaware than a protection from mistreatment. A case in point recently came to my attention when a local businessman contacted me regarding a lawsuit that had been filed against his business.
A doctor’s office got sued for sending an ordinary billing statement in the amount $260 to its patient. Whether or not the billing statement was a technical violation of Florida’s Consumer Collection Practices Act, the doctor will spend thousands of dollars in litigation fees and thousands more to settle the claim. The law is an unfair trap for the unwary. I felt so bad for the doctor, that I wrote my congressman and asked that the law be changed to make it fairer to the small business owner. A copy of that letter follows:
October 13, 2015
The Honorable Mike La Rosa
State House of Representatives
201 West Central Avenue
Lake Wales, FL 33853
Re: The Florida Consumer Collection Practices Act §559.55
Dear Representative La Rosa:
I am a practicing attorney who resides in your district. I have recently become aware of a situation that needs the attention of the Florida legislature. A local doctor’s office contacted me because they are being sued on by a patient to whom a statement for $160 was mailed shortly after she had filed for Chapter 7 bankruptcy. The suit alleges that this statement was a violation of the Florida Consumer Collection Practices Act, and asks for a jury trial and requests actual damages, statutory damages, costs and attorney’s fees pursuant to §559.77 Florida Statutes.
The facts are:
1) The debtor filed a Chapter 7 bankruptcy case in Tampa on July 16, 2015. 2) A Notice of Bankruptcy was mailed on July 19, 2015. 3) A standard invoice from the doctor was mailed to the debtor on August 4, 2015.
The debtor has not pursued any claim for violation of the bankruptcy stay because the bankruptcy court would view such a violation as harmless. On the other hand, the debtor has filed a suit in County Court seeking damages for violation of Florida’s Consumer Collection Practices Act (the “Act”). The Act is bad law in that it can be used by an attorney for no other purpose than to generate fees and revenue for the law firm
In all cases, the creditor has no liability if the violation was not intentional, resulted from a bona fide error, and the creditor had procedures in place designed to avoid the violation. Here’s the problem; in the event of a mere innocent technical violation where there are no actual damages, and no statutory damages, and no punitive damages, the Court nonetheless must award attorney’s fees to the debtor’s attorney. That seems terribly unfair to me, and I suspect some attorneys file claims simply to produce income for themselves.
Florida’s Consumer Collection Practices Act is a trap for Florida residences and a boon for Florida attorneys. If the business fights the claim and losses, it will be liable for substantial attorney’s fees. Most businesses will not take that risk and will immediately pay about $2,000 in attorney’s fees and $500 to the plaintiff to make the case go away.
I would like to see this act amended to include a time frame of 30 days or so after the bankruptcy is filed which acts as a grace period for creditors to adjust their billing to accommodate the provisions of the act. This allows for small business owners who are less aware of the provisions of the act and less technically savvy to be able to adjust their billing and collection practices to conform to the act. I find that large corporations have systems in place to stop billing and collections activities immediately when notified of a filed bankruptcy. However, many small businesses do not. The small business owner is also less able to bear the costs of paying the penalties imposed by act. I also do not think that the drafters of the act intended it to be a fee generating source for the attorney when the letter of the law, but not the intent, is violated. Please amend the Act to exclude any normal invoice issued within 30 days of a debtor filing bankruptcy.
If you have any questions regarding this matter, I would be more than happy to speak with you. Thank you for your service and consideration of this matter.
With best wishes, I remain
Sincerely,
James C. McClendon II
I will post any response that I receive to my request for a legislative remedy. In the meantime, please feel free to contact me with any questions you may have concerning compliance with Florida’s business regulations.