Man may sue over billing mistake that damaged his credit.

A man whose credit was damaged when an ambulance company sent his invoice to the wrong address can sue for negligence, a New York trial court has held. (Witherwax v. Transcare, Inc., No. 114065/03 (N.Y., N.Y. County Sup. Ct. Apr. 22, 2005).)

In 2000, Charles Witherwax experienced chest pain and called for an ambulance. Transcare, Inc., which contracted with a local hospital for ambulance services, dispatched an ambulance to Witherwax's home and transported him to the hospital, and Transcare personnel stayed with him while he checked in.

The company later sent his invoice to an incorrect home address (the correct number on the wrong street). Witherwax never received the invoice and Transcare never received payment, so it turned his debt over to Paul Michael Associates, a debt collection agency. Paul Michael in turn reported the debt to three credit-reporting agencies.

Witherwax first became aware of the problem when "he received a notice from a credit card company saying it was denying him a credit line because of derogatory information published about him by a credit-reporting agency," said David Stone, a New Rochelle, New York, lawyer who is representing Witherwax. "He's about to retire, and all of a sudden, his credit rating has been downgraded."

Witherwax sued both Paul Michael and Transcare in federal district court in 2002, claiming violations of the Fair Debt Collection Practices Act. He settled with Paul Michael in 2003 but continued the case against Transcare, alleging that the company also was liable for negligence, gross negligence, and defamation.

The district court held that the act was not applicable to Transcare because it was a creditor rather than a debt collector, rejecting Witherwax's allegation that Transcare was liable for Paul Michael's actions under the act. The court declined to exercise jurisdiction over Witherwax's state law claims.

The New York County Supreme Court dismissed Witherwax's defamation, gross negligence, and punitive damages claims, but it allowed his negligence cause of action to proceed.

"Transcare is liable for the negligence of its agent, the debt collector (Paul Michael)," wrote Justice Marilyn Shafer. "Engaging an outside entity to collect a debt does not excuse Transcare from the wrongful acts of its agent committed during the course and scope of its agency."

Transcare was responsible for both Paul Michael's negligence and that of its own personnel, who recorded the wrong address and sent the invoice there, Stone said. "Transcare is the one who committed negligence to start with. An ambulance company, or creditor, can't turn around and lay it off on someone else. If Mr. Witherwax had no recourse, it would be wrong."

Stone pointed out that Witherwax is an attorney himself, but added that "there are a lot of people out there who don't have the same wherewithal [to defend themselves] and get trampled by companies."