Sharing Information with Trusted Vendors Does Not Confer Article III Standing for FDCPA Claim

The en banc Eleventh Circuit has issued its third and presumably final opinion in the tortured history of Hunstein v. Preferred Collection & Management Services, Inc., 2022 U.S. App. LEXIS 25233 (11th Cir. Sept. 8, 2022).  The court held that the plaintiff failed to allege facts sufficient to establish Article III standing to assert a claim under the Fair Debt Collection Practices Act (FDCPA).  Writing for the majority, Judge Grant cited the Supreme Court’s holding in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), that “harm from a statutory violation ha[s] to be ‘real’ in order to be concrete. . . .”  As unfortunate as Mr. Hunstein’s circumstances may have been, the court held that he did not allege sufficiently concrete and particularized facts to establish Article III jurisdiction.  But Hunstein is unlikely to be the final word on what constitutes “concrete harm.”  The day before issuing its opinion in Hunstein, the Eleventh Circuit concluded, in an unpublished decision, that a plaintiff’s allegation that the “time wasted in trying to determine the correct amount of his debt” (and some related emotional distress and loss of sleep) constituted a sufficient concrete injury to confer Article III standing in an FDCPA case.  Toste v. Beach Club at Fontainebleau Park Condo. Ass’n, 2022 U.S. App. LEXIS 25076 (11th Cir. Sept. 7, 2022).  While both Hunstein and Toste arrived at the Eleventh Circuit on motions to dismiss—the court allowed the district court to look beyond the four corners of the complaint in Toste, something that did not occur in Hunstein.  In Toste, the court explained that the defendants had “raised a factual challenge to subject matter jurisdiction (rather than a facial challenge)” and that as a result both the Eleventh Circuit court and the district court were “free to go beyond the complaint and examine record evidence such as depositions and affidavits.” 

In Hunstein, the plaintiff relied for standing on a bare statutory violation of section 1692c(b) of FDCPA.  He contended that when a debt collector shares information, however securely, with a trusted third-party vendor, the mere sharing itself constitutes the very type of “communication” FDCPA was meant to prohibit.  As a review of the stack of amicus briefs submitted in Hunstein shows, there is no legislative history or case law to support Mr. Hunstein’s view, but the opinion did not address the merits.  The debt underlying the Hunstein litigation was owed for medical care or treatment provided to Mr. Hunstein’s then minor child.  The privacy policies of that healthcare provider are publicly available.  Like most hospitals’ and health systems’ privacy policies, those policies clearly contemplate the sharing of non-public information by the provider with any of its “business associates”—those trusted vendors who, in a healthcare setting, use and disclose patients’ protected health information as authorized by the Health Insurance Portability and Accountability Act of 1996 (and regulations thereunder, collectively, “HIPAA”).  Although not discussed in Hunstein, the use and disclosure of “protected health information” among business associates, including business associates’ business associates, is clearly and expressly permitted, subject to HIPAA’s standards.

Another lesson of Hunstein concerns data use and vendor management.  When selecting an outside vendor to perform key tasks or provide essential services, a healthcare provider must assure that the working relationship is properly documented and specify exactly what uses and disclosures of non-public information are acceptable.  This is essential to remain aligned with the circumstances under which consumers’ information has been provided.  Had there been a “public” disclosure in either TransUnion or Hunstein, the results in both cases would be materially different.

The Hunstein opinion includes a notably tart exchange between Judge Newsom, who dissented at length joined by three colleagues, and Chief Judge Bill Pryor, who authored a lengthy concurring opinion.  The subject of the unusually prickly exchange between two judges usually regarded as ideological bedfellows was whether or not the issues presented were “tricky.”

Posted by Leslie Bender.

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