Joy Williams v. Louisville Recovery Serv., LLC

• Court: Court of Appeals for the Sixth Circuit
• Decided: December 3, 2024
• Docket: 24-5303
• Status: Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 24a0478n.06

No. 24-5303

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Dec 03, 2024 KELLY L. STEPHENS, Clerk ) JOY WILLIAMS, ) Plaintiff-Appellant, ) ON APPEAL FROM THE ) UNITED STATES DISTRICT v. ) COURT FOR THE WESTERN ) DISTRICT OF KENTUCKY LOUISVILLE RECOVERY SERVICE, LLC, ) Defendant-Appellee. ) OPINION )

Before: BATCHELDER, MOORE, and BUSH, Circuit Judges.

ALICE M. BATCHELDER, Circuit Judge. Joy Williams made several visits to the

emergency room for medical treatment. Because she never paid the medical bills from any of

these visits, her healthcare provider turned the bills over to a collection agency. When that agency

then attempted to collect on those debts several years later, Williams sued under the Fair Debt

Collection Practices Act, alleging that the agency had unlawfully threatened to collect on time-

barred debts. The district court disagreed and held that the statute of limitations for collecting on

these debts had not yet expired. We affirm.

I.

Between 2011 and 2015, Joy Williams had made seven relevant visits to the emergency

room at Hardin Memorial Hospital. Each time she did so, Williams first signed a “Conditions and

Authorization for Treatment” form and then received treatment from Elizabethtown Emergency No. 24-5303, Williams v. Louisville Recovery Service, LLC

Physicians, a third-party healthcare provider. While the authorization form contained many

provisions, only three are relevant here. First, the form authorized the Hospital and its third-party

providers to perform various “diagnostic tests” and “procedures” to determine the patient’s health

problem. Second, the form clarified that most of the Hospital’s healthcare providers are

“independent contractors and practitioners” and that these third-party providers bill separately.

And third, the form explained that, by accepting treatment, the patient also agreed to “accept full

responsibility for all charges associated with the care provided.”

Because Williams never paid the medical bills from any of the relevant visits,

Elizabethtown Emergency Physicians turned her bills over to Louisville Recovery Service, a

collection agency. Louisville Recovery then reported the debts to the major credit bureaus, which

hurt Williams’s credit score. All in all, Williams owed $1,986.61 across her eight unpaid bills.

Several years passed before Williams eventually discovered the negative history on her

credit report. Believing that she did not have any outstanding medical debt, Williams sent a letter

to Louisville Recovery disputing the bills. Louisville Recovery then responded to Williams one

year later and provided her with an “account itemization” that identified the eight outstanding bills

from her emergency room visits. Soon after that, on April 1, 2021, Louisville Recovery followed

up with another letter that threatened to pursue legal action if Williams failed to pay.

Williams sued Louisville Recovery under the Fair Debt Collection Practices Act, alleging

that Louisville Recovery had unlawfully threatened to collect on time-barred debts. Both parties

then moved for summary judgment. The district court held that the statute of limitations for

collecting on these debts had not yet expired and awarded summary judgment to Louisville

Recovery. Williams now appeals.

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II.

We review a district court’s award of summary judgment de novo. Ward v. NPAS, Inc., 63

F.4th 576, 582 (6th Cir. 2023). Summary judgment is appropriate 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.” Fed. R. Civ. P. 56(a). In making that determination, we view the evidence in the light most

favorable to the non-moving party. Raimey v. City of Niles, 77 F.4th 441, 447 (6th Cir. 2023).

III.

To bring a claim under the Fair Debt Collection Practices Act, a plaintiff must show that

(1) she is a “consumer”; (2) she incurred the debts “primarily for personal, family or household

purposes”; (3) the defendant is a “debt collector”; and (4) the defendant’s conduct violated the Act.

Wallace v. Wash. Mut. Bank, F.A., 683 F.3d 323, 326 (6th Cir. 2012). Here, the parties dispute only

this fourth element—that is, whether Louisville Recovery’s threat-to-sue letter violated the Act.

The Fair Debt Collection Practices Act makes it unlawful for a debt collector to “use any

false, deceptive, or misleading representation or means in connection with the collection of any

debt.” 15 U.S.C. § 1692e. That prohibition means, among other things, that a debt collector cannot

threaten “to take any action that cannot legally be taken.” § 1692e(5). A debt collector makes

such an unlawful threat if it threatens to take legal action against a time-barred debt. See Buchanan

v. Northland Grp., Inc., 776 F.3d 393, 398-99 (6th Cir. 2015). The only issue in this appeal, then,

is whether the statute of limitations for collecting on Williams’s debts had already expired when

Louisville Recovery sent its threat-to-sue letter.

The statute of limitations for collecting a debt in Kentucky depends on whether the contract

creating the debt is written or oral. If the parties’ contract is a written agreement, then Kentucky

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uses a 15-year statute of limitations.1 Ky. Rev. Stat. Ann. § 413.090. But if the parties’ contract is

an oral agreement, then Kentucky instead uses a 5-year statute of limitations. Ky. Rev. Stat. Ann.

§ 413.120(1). Here, we must first determine whether the contracts creating Williams’s debts were

written or oral before we can ultimately decide whether Louisville Recovery unlawfully threatened

to collect on time-barred debts. Louisville Recovery’s threat to sue violates the Fair Debt

Collection Practices Act only if the 5-year statute of limitations for oral contracts applies.

Under Kentucky law, a written contract is one that contains all the essential terms for a

contract in writing. Cornett v. Student Loan Sols., LLC, 672 S.W.3d 852, 858 (Ky. Ct. App. 2023).

A written agreement contains all the essential terms when the document includes the parties to the

contract, the price to be paid, and the performance to be rendered. Id. If the contract is missing

any of these terms, then Kentucky treats that partially written agreement as an oral contract. Mills

v. McGaffee, 254 S.W.2d 716, 717 (Ky. 1953).

Williams argues that the authorization forms she signed failed to create written contracts—

and are therefore subject to the 5-year statute of limitations—because the forms did not identify

the parties, the price, or the performance. We disagree and address each issue in turn.

A.

First, Williams argues that the authorization forms failed to create written contracts because

they did not identify Elizabethtown Emergency Physicians as a party to the contracts. But this

argument fails because Kentucky does not require that a contract name its third-party beneficiaries.

1 Kentucky now uses a 10-year statute of limitations for written contracts created after July 15, 2014. Ky. Rev. Stat. Ann. § 413.160. But because this new statute of limitations applies only to Williams’s final medical bill from July 23, 2015—and because Louisville Recovery timely attempted to collect on that debt within the 10-year window—we refer only to the 15-year statute of limitations. -4- No. 24-5303, Williams v. Louisville Recovery Service, LLC

Olshan Found. Repair & Waterproofing v. Otto, 276 S.W.3d 827, 831 (Ky. Ct. App. 2009); see

also Restatement (Second) of Contracts § 308 (Am. L. Inst. 1981) (“It is not essential to the

creation of a right in an intended beneficiary that he be identified when a contract containing the

promise is made.”). Nor does Kentucky treat an otherwise valid written contract as an oral

agreement merely because it did not identify its third-party beneficiaries by name. See Home

Indem. Co. v. St. Paul Fire & Marine Ins. Co., 585 S.W.2d 419, 424 (Ky. Ct. App. 1979). So, taken

together, these two principles mean that the 15-year statute of limitations will apply here if

Elizabethtown Emergency Physicians qualifies as a third-party beneficiary of Williams’s contract

with the Hospital. Id.

A non-party qualifies as a third-party beneficiary when the contract was created for that

party’s “actual and direct benefit.” Sexton v. Taylor County, 692 S.W.2d 808, 810 (Ky. Ct. App.

1985). In determining whether a contract is created for a third party’s benefit, we consider both

the agreement’s terms and its surrounding circumstances. Prime Finish, LLC v. Cameo, LLC, 487

F. App’x 956, 959 (6th Cir. 2012) (citing Olshan, 276 S.W.2d at 831).

Here, Williams concedes, as she must, that Elizabethtown Emergency Physicians is a third-

party beneficiary of the authorization forms, and we need not look further than the forms

themselves to see why. Indeed, the forms make clear that the Hospital uses mostly “independent

contractors and practitioners” to provide care, that these independent contractors and practitioners

“bill[] separately,” and that the patient agrees to “accept full responsibility for all charges

associated with the care provided.” Under this arrangement, the patient’s promise to pay benefits

the third-party providers—not the Hospital—because the Hospital rarely provides patient care

directly and therefore does not bill most patients who sign the form. So because Elizabethtown

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Emergency Physicians directly benefits from the Hospital’s contract with Williams, it qualifies as

a third-party beneficiary under those agreements.

B.

Next, Williams argues that the authorization forms failed to create written contracts

because they did not include a price. True, the forms did not assign a specific price for the services

to be provided, but that does not transform these written agreements into oral contracts because

Kentucky does not require a written contract to assign such a price when the agreement otherwise

includes a “definite promise to pay.” Lyons v. Moise’s Ex’r, 183 S.W.2d 493, 495 (Ky. 1944)

(applying Kentucky’s 15-year statute of limitations). And here, the authorization forms included

such a definite promise because Williams agreed to “accept full responsibility for all charges

associated with the care provided.”

Williams responds that Lyons does not apply unless the parties’ agreement includes a

definite promise to pay and an “objective standard” for calculating the total price. But Williams

misreads Lyons because not even the contract at issue there included an objective standard for

determining price separate from the definite promise to pay. See Lyons, 183 S.W.2d at 496

(explaining that the contract contained only a definite promise to pay). Lyons held instead that a

definite promise to pay “all charges” incurred—like the one Williams made here—is itself what

supplies the objective standard for later calculating the price. Id. That is, the party has agreed in

writing to pay all the charges that she incurs, and that is a definite amount that we can later calculate

through parol evidence. Id.

C.

Finally, Williams argues that the authorization forms failed to create a written contract

because they did not describe the performance to be rendered. But this argument, too, misses the

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mark. Kentucky does not require written contracts to provide every detail of performance—only

to describe the required performance with reasonable certainty. Fisher v. Long, 172 S.W.2d 545,

547 (Ky. 1943). And reasonable certainty simply means that each party can understand the other’s

intended performance. Id.

Here, the authorization forms reasonably described the performance required under the

contract. Each form explained that the Hospital (through its third-party providers) would perform

various “diagnostic tests” and “procedures” to determine Williams’s health problem, and given the

context in which these forms are signed—that is, at the emergency room while a patient’s condition

and required treatment are still unknown—the forms could not reasonably have been any more

specific about the performance that would be provided. For that reason, we conclude that any

reasonable patient could have understood the performance required of the Hospital under the

contract. Indeed, to hold otherwise would require hospital emergency rooms to hand “patient[s]

an inches-high stack of papers detailing . . . each and every conceivable service” that the hospital

provides, cf. DiCarlo v. St. Mary Hosp., 530 F.3d 255, 264 (3d Cir. 2008), and Kentucky law does

not require such an absurd result, Fisher, 172 S.W.2d at 547 (instructing courts to give Kentucky

contracts a “practical interpretation”).

***

In sum, we hold that the authorization forms included all the essential terms for a contract,

and that they are therefore written contracts subject to Kentucky’s 15-year statute of limitations.

That means that the statute of limitations for collecting on Williams’s debts had not yet expired

when Louisville Recovery threatened to sue, which in turn means that Louisville Recovery did not

violate the Fair Debt Collection Practices Act.

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IV.

Because the statute of limitations for collecting on Williams’s debts had not expired when

Louisville Recovery threatened to sue, Louisville Recovery’s threat did not violate the Fair Debt

Collection Practices Act. We AFFIRM the district court’s award of summary judgment.

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