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Erroneous bill from hospital prompts defamation claim.

Byline: Virginia Lawyers Weekly

A woman who received a bill from a hospital, even though she was not a patient, can sue the hospital for defamation after it referred the erroneous bill to a debt collector.

Background

In August 2015, Children's Hospital of the King's Daughters sent an invoice to Dawn Adams for medical services it provided to a child named Nathaniel Kaufman. Kaufman is neither Adams's child nor related to Adams. Adams called CHKD to dispute the invoice. CHKD informed Adams that the invoice resulted from a billing error and that it would correct the error. CHKD nevertheless referred the invoice to Security Collection Agency, a debt collector, falsely asserting that Adams was responsible for the invoice.

Adams filed a two-count complaint against CHKD, asserting claims for defamation and under the Virginia Consumer Protection Act. In response, CHKD filed the demurrer.

Defamation claim

As an initial matter, CHKD claims that it did not perform the conduct Adams alleges led to her damages, i.e., the inaccurate credit reporting. Under Virginia law, however, "the author or originator of defamation is liable for a republication or repetition thereof by third persons, provided that it is the natural and probable consequence of his act, or he has presumptively or actually authorized or directed its republication." The court finds that Adams adequately alleges that a natural and probable consequence of CHKD disclosing false information about Adams to Security Collection was that Security Collection would then report Adams's "unpaid" invoice to others, including Equifax. The court also finds that Adams adequately alleges that CHKD presumptively authorized Security Collection to report the false indebtedness to Equifax to induce payment.

CHKD next argues that Adams has not sufficiently alleged the intent necessary for a common law defamation claim under Virginia law. The court disagrees. Adams claims she notified CHKD that she was not responsible for the invoice, and CHKDdespite agreeing that the invoice was erroneousnevertheless opted to disclose the false indebtedness to Security Collection. As such, CHKD knew, or should have known, that the information it reported to Security Collection was false and that Security Collection would relay this information to others, including Equifax. Assuming the allegations in Adams's complaint to be true, CHKD therefore acted with the requisite intent to support a defamation action, including a claim for punitive damages.

CHKD also contends the defamation claim is precluded by 1681h(e) of the Fair Credit Reporting Act. The court disagrees. FCRA 1681h(e) precludes certain claims against credit reporting agencies. But because CHKD is not a CRA, a user of information, or a furnisher of information to a CRA, it does not qualify for immunity under 1681h(e).

Consumer protection claim

CHKD argues that Adams has not adequately pleaded a VCPA claim because she does not allege that CHKD made a misrepresentation upon which Adams relied or that CHKD made a misrepresentation in connection with a consumer transaction. The court agrees.

While Adams adequately alleges that CHKD acted with an intent to deceive, because she claims that CHKD knew Adams did not owe it money but nevertheless relayed inaccurate information to Security Collection in an effort to collect payment, there is no allegation in the complaint asserting that the alleged misrepresentation was directed at Adams or that Adams relied upon the misrepresentation. Because Adams has not adequately pleaded that there was a misrepresentation made to her upon which she relied or that the alleged misrepresentation was in connection with a consumer transaction, the court finds that the VCPA claim is not adequately pleaded.

CHKD asserts that federal consumer protection law precludes Adams from bringing a VCPA claim. The court disagrees. Similar to the discussion of 1681h(e) qualified immunity regarding the defamation claim, 1681t(b)(1)(F) does not preempt the VCPA claim because CHKD is not a "a person who furnish[es] information to consumer reporting agencies"; CHKD furnished Adams's consumer information to a debt collector, not to a CRA.

Demurrer sustained in part, overruled in part.

Adams v. Children's Hospital of the King's Daughters, Case No. CL2018-2656, Sept. 21, 2018. Norfolk Cir. (Lannetti). VLW No. 018-8-085, 12 pp.

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Title Annotation:Adams v. Children's Hospital of the King's Daughters, Norfolk Circuit Court, Virginia
Publication:Virginia Lawyers Weekly
Date:Sep 28, 2018
Words:693
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