For Immediate Release: Wednesday, Nov. 10, 2004
Contact: Chris Burley, Bazelon Center
for Mental Health Law, 202-467-5730 x 133
Debt Collectors Won’t Seek Payment from
Bankrupt Mental Health Provider’s Former Clients
Washington, DC—Debt collectors for the now-bankrupt CPC Health
Corporation (CPCHC) agreed earlier this week to halt efforts to collect
payment from hundreds of former clients of the Montgomery County
mental health provider, settling a class action lawsuit brought by
the clients against CPCHC’s debt collection agency.
“This settlement is a tremendous vindication for the plaintiffs,” said
Erik Pritchard, an associate attorney at Ross, Dixon & Bell,
a national law firm that represented former clients in the lawsuit. “It’s
hard enough to seek help without having to fear that someone’s
going to come after you later with a bogus bill.”
CPCHC was once Montgomery County’s largest mental health provider,
serving 4,000 patients a year at Chestnut Lodge Hospital, residential
and outpatient facilities, the Lodge School, three group homes and
several programs within county public schools. When CPCHC filed for
bankruptcy in 2000, Management Advantage was contracted to collect
payment from former clients and sent letters demanding allegedly
overdue payments from approximately 1,000 CPCHC clients.
“Management Advantage opted for a slapdash approach to squaring
CPCHC’s debts,” said Tammy Seltzer, senior staff attorney
at the Bazelon Center for Mental Health Law, a national legal advocacy
group that served as co-counsel in the case. “Many folks who
were approached about supposed debts live fairly close to the margins.
They were shocked by large bills that seemed to come out of left
field.”
In April, 2002, former clients of CPCHC filed a class action lawsuit
in the Federal District Court of Maryland against Management Advantage,
alleging violations of federal and state laws governing debt collection.
According to attorneys for the clients, collection letters were deficient
and inaccurate, and as such, violated the Fair Debt Collection Practices
Act and the Maryland Consumer Debt Collection Act.
“After the debt collectors started calling, many former clients
were waiting for the other shoe to drop,” said Seltzer. “Now
they’ve won some peace of mind. They don’t have to worry
anymore.”
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The Bazelon Center for Mental Health Law is
a national legal advocate for people with mental disabilities. For more information, see www.bazelon.org.
Ross, Dixon & Bell is a national law firm, with offices in Washington,
Chicago, Irvine, and San Diego. For more information, see www.rdblaw.com.
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