Preston v. SB&C, Ltd.: Charity-Care Notice Duty Extends to Collection Agencies Collecting Hospital Debt Under RCW 70.170.060(8)(a)

1. Introduction

This decision arises from a federal class action in which plaintiff Mikrae E. Preston sued SB&C, Ltd. (a collection agency, “Skagit Bonded Collectors, LLC”) for debt-collection conduct related to a hospital bill. Preston alleged violations of the Washington Consumer Protection Act (CPA), the Washington Collection Agency Act (CAA), and the federal Fair Debt Collection Practices Act (FDCPA). After dismissing some claims and reserving others, the United States District Court for the Western District of Washington certified a narrow question of Washington law: whether the charity-care notice requirement in RCW 70.170.060(8)(a) applies when the entity collecting a hospital debt is a collection agency rather than the hospital.

The factual posture matters: Preston alleged she was income-eligible for charity care at the time of treatment, that the hospital failed to determine eligibility before billing and pursuing collection, and that SB&C sued and obtained judgment without any charity-care disclosures. Only later did Preston learn of charity care and receive a partial reduction, which SB&C refused to honor based on the hospital system’s policy excluding accounts reduced after judgment.

The core legal issue is statutory reach: does the charity care act’s billing/collection notice requirement extend to third-party collectors and assignees, or is it limited to communications “by a hospital”?

2. Summary of the Opinion

Procedurally, the court emphasized that it answers only the certified question and leaves federal issues (notably FDCPA) to the federal court, while explaining that failure to provide charity-care notice may be evidence supporting a non-per-se CPA claim.

3. Analysis

3.1 Precedents Cited

A. Certification posture and scope discipline

• Kellogg v. Nat'l R.R. Passenger Corp. (199 Wn.2d 205 (2022)) — Cited for the de novo standard of review for certified questions based on the certified record. This frames the court’s approach as legal interpretation rather than fact-finding.
• Greenberg v. Amazon.com, Inc. (3 Wn.3d 434 (2024)) — Cited for the principle that the court will not decide issues outside the certified question and within the province of the federal court. Although the majority discusses CPA doctrine at length, it explicitly limits its holding to state law and uses Greenberg as a boundary marker.

B. CPA framework for “per se” and “non-per-se” unfairness/deception

• Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co. (105 Wn.2d 778 (1986)) — Supplies the five-element CPA test (unfair/deceptive act; trade/commerce; public interest; injury; causation). The majority uses this to clarify that the certified question bears primarily on the first element (unfair or deceptive act).
• Panag v. Farmers Ins. Co. of Wash. (166 Wn.2d 27 (2009)) — Central influence. The majority relies on Panag for two propositions:
  • CPA protection can be broader than common law or other statutes, including where conduct “does not fall within the laws’ prohibitions.”
  • Debt collection affects the public interest, and strong public policy in regulating collectors can support CPA liability even beyond explicit statutory prohibitions.
  This case functions as the doctrinal bridge to treat charity-care policy as a relevant “public interest” benchmark even when the CAA did not yet contain a specific charity-care notice provision.
• Klem v. Washington Mutual Bank (176 Wn.2d 771 (2013)) — Used as an example that non-per-se misconduct (there, improper notarization practices in nonjudicial foreclosure) may qualify as unfair/deceptive under the CPA without an explicit legislative per se declaration.
• Greenberg — Also used substantively (not only for scope) as an example that even where no statute regulates a practice (price gouging), the conduct may still be actionable under CPA as unfair/deceptive.

C. Charity-care notice in debt-collection litigation; limits of intermediate authority

• Fairway Collection, LLC v. Turner (29 Wn. App. 2d 204 (2023)) — The majority distinguishes it: Fairway addressed per se CPA theories grounded in FDCPA/CAA violations and did not decide whether failure to provide charity-care notice is independently unfair/deceptive under non-per-se CPA theories; nor did it decide whether RCW 70.170.060(8)(a) applies to collection agencies. The case therefore informs background but does not control the certified question.

D. Statutory interpretation baseline

• Dep't of Ecology v. Campbell & Gwinn, LLC (146 Wn.2d 1 (2002)) — Cited for the fundamental objective in statutory interpretation: ascertain and carry out legislative intent, and if meaning is plain, apply plain meaning.

E. Assignment doctrine

• Puget Sound Nat'l Bank v. Dep't of Revenue (123 Wn.2d 284 (1994)) (quoting Est. of Jordan v. Hartford Accident & Indem. Co. (120 Wn.2d 490 (1993))) — Cited for the “steps into the shoes” principle: the assignee takes applicable rights and liabilities. The majority uses this to support that charity-care notice obligations do not evaporate when hospital receivables are assigned to a collector.

F. Dissent’s interpretive and contract/assignment authorities (and their role)

Although not adopted by the majority, the dissent (Madsen, J.P.T.) provides an alternate interpretive method likely to be invoked in future litigation. Authorities the dissent relies on include:

• HomeStreet, Inc. v. Dep't of Revenue (166 Wn.2d 444 (2009)), quoting Agrilink Foods, Inc. v. Dep't of Revenue (153 Wn.2d 392 (2005)) and Duke v. Boyd (133 Wn.2d 80 (1997)) — for strict plain-meaning application when language is unambiguous.
• State v. Bunker (169 Wn.2d 571 (2010)) — for grammar tools, including limits on applying the last antecedent rule where it produces absurd results.
• Cent. Puget Sound Reg'l Transit Auth. v. WR-SRI 120th N. LLC (191 Wn.2d 223 (2018)), quoting State v. Larson (184 Wn.2d 843 (2015)) — for prioritizing statutory text as the “surest indication” of intent.
• Schultz v. Werelius (60 Wn. App. 450 (1991)) — referenced within the assignment discussion, emphasizing statutory interpretation remains necessary when determining what liabilities pass.
• Bostain v. Food Express, Inc. (159 Wn.2d 700 (2007)) — for the general proposition that courts interpret statutes to effect legislative intent.

3.2 Legal Reasoning

A. The court’s interpretive move: “other written communications” + policy of charity care

The majority reads RCW 70.170.060(8)(a) as capturing more than hospital-issued invoices. It focuses on the statute’s breadth—“All hospital billing statements and other written communications concerning billing or collection of a hospital bill”—and concludes that collection-agency collection letters and pleadings are “other written communications” concerning hospital-bill collection.

That textual inference is reinforced by a purposive justification drawn from the charity care act’s policy declaration in RCW 70.170.010: rising health care costs and access to care require a system ensuring eligible patients can obtain financial assistance. The majority treats repeated notice as essential to making the statutory benefit real; without notice, the entitlement is functionally lost.

B. CPA backdrop: why the timing gap in the CAA did not insulate SB&C

A key defense theme was that, because the CAA’s express charity-care notice requirement (RCW 19.16.250(29)(a)) took effect after the events, SB&C had no such duty at the time. The majority rejects that inference because it assumes CPA liability exists only via per se statutory violations. Relying heavily on Panag v. Farmers Ins. Co. of Wash., the court reaffirms CPA breadth: conduct can be unfair/deceptive when contrary to public interest reflected in a comprehensive statutory scheme, even if not expressly regulated at that time by the CAA.

Importantly, the court does not hold (and did not need to hold to answer the certified question) that every failure to include the statutory sample language is automatically actionable; rather, it says failure to provide any notice may be unfair or deceptive and “may provide evidence” supporting a non-per-se CPA claim—leaving the rest of the CPA elements to the federal court.

C. Assignment as a second, independent route to applicability

The majority adds an alternative ground: even if one doubted direct statutory reach, SB&C, as assignee, “steps into the shoes” of the hospital. Citing Puget Sound Nat'l Bank v. Dep't of Revenue (and Est. of Jordan v. Hartford Accident & Indem. Co.), the court reasons that assignment cannot expand the claim against the patient in a way that strips statutory protections. Therefore, if the hospital’s collection communications must include charity-care notice, an assignee collecting the same hospital debt must likewise provide it.

D. Dissent’s counter-model (text/grammar and “by a hospital”)

The dissent would answer “no” based on strict text: “by a hospital” modifies the “other written communications” clause, limiting the notice obligation to hospital-sent communications. The dissent also argues the required sample notice (“our financial assistance office”) is hospital-specific, making application to collection agencies awkward or “absurd.” It further contends the majority misapplies assignment law by effectively treating statutory duties as assignable, and emphasizes the record lacks the hospital-collector contract.

The majority, however, treats the “substantially similar statement” language and the act’s purpose as sufficient to avoid the dissent’s practical mismatch concerns, and it rejects the idea that later-enacted CAA specificity implied earlier permissibility.

3.3 Impact

A. Immediate compliance consequences for collection agencies

• Expanded duty in hospital-debt collections: Agencies collecting hospital debt in Washington should treat charity-care notice as required in “written communications” concerning hospital-bill collection, even when the hospital is not the sender.
• Litigation documents implicated: Because the case facts involve a collection lawsuit and complaint, the decision’s reasoning suggests pleadings and pre-suit demands may be scrutinized as “written communications” about collection.
• Operationalizing “substantially similar”: Agencies must craft compliant notice that meaningfully directs debtors to the hospital’s financial assistance resources (website/phone), rather than omitting the topic entirely.

B. Effects on hospitals and assignment/servicing arrangements

• Assignment no longer a notice “workaround”: The opinion’s assignment analysis is aimed at preventing hospitals (and their assignees) from defeating charity-care access by transferring accounts to third parties.
• Contractual risk allocation: Expect hospital-collector contracts to allocate responsibility for providing charity-care notice and for indemnity/defense costs if notices are challenged.

C. CPA litigation trajectory

• Non-per-se CPA theories strengthened: Plaintiffs may frame omission of charity-care notice as “unfair or deceptive” conduct contrary to the charity care act’s public policy, even where another statute does not expressly regulate the precise conduct at the time (a move consistent with Panag, Klem, and Greenberg).
• But not automatic liability: The court signals only that such omission “may provide evidence” for the first CPA element; plaintiffs still must prove the remaining Hangman Ridge elements (public interest impact, injury, causation).

D. Statutory interpretation and separation-of-powers debates

The dissent sets up a foreseeable line of future argument: whether the majority’s reading effectively rewrites “by a hospital” and whether assignment principles can impose statutory “duties” on non-hospital entities. Those challenges may reappear in future cases addressing the boundaries of “substantially similar” compliance, the precise communications covered, and remedies.

4. Complex Concepts Simplified

• Certified question: A federal court can ask a state supreme court to answer a specific state-law question needed to decide a federal case. The state court answers only that question; the federal case continues in federal court.
• RCW 70.170.060(8)(a) notice requirement: The charity care act requires specified (or “substantially similar”) language on hospital billing/collection communications telling patients they may qualify for free or discounted care and how to contact financial assistance.
• Per se vs. non-per-se CPA claim:
  • Per se CPA: the legislature has declared that violating a statute automatically satisfies the CPA’s “unfair or deceptive act” element.
  • Non-per-se CPA: even without a specific statutory violation, conduct can still be “unfair or deceptive,” especially if contrary to public interest reflected in a broad statutory policy.
• “Steps into the shoes” (assignment): When a claim (like a debt) is assigned, the assignee generally gains the same rights—and remains subject to the same limits—associated with that claim. The majority applies this to prevent assignment from stripping patients of statutory notice protections.
• Plain meaning and grammar canons: Courts often begin with the text and grammar. The dissent relies on the idea that “by a hospital” limits the notice duty to hospital-issued communications. The majority, by contrast, emphasizes the statute’s breadth (“other written communications”) and the act’s access-to-care purpose.

5. Conclusion

Preston v. SB&C, Ltd. establishes that the charity-care notice requirement in RCW 70.170.060(8)(a) applies to collection agencies collecting hospital debt, not only to hospitals. The court ties this result to (1) the statute’s inclusion of “other written communications” about billing or collection, (2) the charity care act’s core policy of ensuring access to care through meaningful notice of financial assistance, and (3) assignment principles preventing transfer of hospital debt from erasing statutory protections.

Practically, the decision presses Washington hospital-debt collectors to build charity-care notice into their collection communications and supplies plaintiffs with a stronger platform for non-per-se CPA theories premised on undermining the charity care act’s public-policy scheme—while leaving the ultimate CPA merits and any FDCPA consequences to the federal forum.