Federal lawsuit alleges that collection law firm Gurstel Chargo told disabled veteran that he “should have died.” (Updated)

A Minnesota-based collection law firm, Gurstel Chargo, is in the news after allegedly making some incredibly insensitive and offensive remarks to Michael Collier, a disabled military veteran. According to a lawsuit filed in U.S. District Court in Arizona, Gurstel Chargo garnished the bank account of Collier’s wife. The lawsuit alleges that the garnishment froze the veterans benefits that Collier’s wife received as a result of Collier’s disability, which a judge later ruled were exempt from Gurstel’s garnishment. But according to the lawsuit, when Collier called Gurstel to get the money back, an unidentified legal assistant allegedly told him that “he would have to sue in order to get the funds back.” When Collier tried to explain that the funds were exempt veteran disability payments, the lawsuit alleges that the legal assistant told him

F— you! Pay us your money! You can’t afford an attorney. You owe us. I hope your wife divorces you’re a–. If you would have served our country better you would not be a disabled veteran living off social security while the rest of us honest Americans work our a- – off. Too bad; you should have died.

The lawsuit further states that after hanging up the phone, Collier–who suffered head and spine injuries while serving in the U.S. Army–became very distraught and upset. Collier hired attorney Floyd W. Bybee and sued Gurstel for violating the Fair Debt Collection Practices Act and other related laws.

As you can imagine, allegations of a debt collector telling a disabled veteran that he “should have died” has created a backlash. The story has been picked up by a number of news outlets and bloggers, including prominent legal bloggers Mark Bennett, Scott Greenfield, and Sam Glover. And it’s 2012, so no controversy would be complete without people taking to Twitter to denounce Gurstel Chargo. The uproar was significant enough to prompt Gurstel to issue the following statement on its website

We learned late last week of the lawsuit filed by Michael Andrew Collier and Kim Collier-Dingman.  Gurstel Chargo takes the allegations made in the lawsuit very seriously and we have immediately launched an internal investigation to determine the facts.  We are extremely disturbed by the allegations stated in the Complaint, as they are contrary to the policies, practices and values of our firm.   We expect that all Gurstel Chargo employees fully comply with all state and federal laws, and we thoroughly train our employees to perform their job in a lawful and respectful manner.  Under no circumstances does our firm tolerate the type of conduct alleged in the Complaint.

The Complaint states that the wrongful remarks were made during a telephone call.  We have requested from the attorney that filed the Complaint the phone number of the phone that Mr. Collier was allegedly on, an approximate date on which the call occurred, whether the person who made the alleged wrongful comments was male or female, all in order to help us to get to the truth about what occurred.  We have been informed by Mr. Collier’s attorney that he is unaware of any of this information.  To date, we have discovered no information to substantiate the allegations, but our investigation continues. Should these allegations prove to be true, we will take immediate corrective and disciplinary action.

Before I weigh in with my thoughts on the situation, I should offer a little background. I worked for Gurstel Chargo as a collection attorney for about three years. I found that I didn’t have the stomach for collections, so in February of 2009 I resigned and started my own law firm dedicated to helping consumers dealing with debt collectors. In my consumer rights practice, I have represented dozens of consumers in collection cases brought by Gurstel and have sued Gurstel twice under the FDCPA. I don’t have any particular axe to grind against them and am on good terms with a number of their attorneys and employees. I haven’t worked there in well over three years so I don’t have any inside information about Collier’s allegations or any actual knowledge of the firm’s current culture or atmosphere. My comments, therefore, are based on my observations about the collection industry in general, rather than about Gurstel specifically.

I should start by noting that the allegations in Collier’s lawsuit are just that–allegations–and Collier has the burden of proving that Gurstel actually made those inflammatory comments. Given my experience suing collectors under the FDCPA and working with consumers nearly every day,  I’m inclined to believe Collier’s story, but as an outsider to the situation I obviously don’t know what really happened.

Much of the commentary on this situation has focused on the irony of Gurstel’s silly “Accountability Matters” marketing campaign. Bennett, Greenfield, and Glover all justifiably picked up on this theme. But I want to focus on what motivates a collector to say such horrible things to another human being. I think it’s overly simplistic to demonize all collectors as heartless or sadistic. I personally know a number of collectors who are caring and who follow the letter and spirit of the FDCPA at all times.

Instead, I believe that the root of the problem lies in the way a modern collection outfit is structured. Individual collectors are paid on a commission-type arrangement. Their livelihood depends upon how much money they collect. Collection law firms set monthly collection goals for each of their collectors and are ruthless in holding their collectors to those goals. A collector’s paycheck and continued employment are directly related to how much money he collects. Collectors are fired every day for not meeting their goals and it must be demoralizing to be part of this revolving door of employees. Given this cut-throat environment, it’s not surprising that some collectors would resort to the type of inhumane tactics that Collier alleges Gurstel used. When you put tremendous pressure on someone to produce or be fired, it’s only a matter of time before some people respond by breaking the rules. We’ve seen this dynamic play out countless times in professional sports with the various steroid and PED scandals. As one of my consumer rights colleagues has said, compensation drives conduct.

So while I don’t condone an individual collector’s harassment or abuse, I believe that the majority of the blame needs to go to the collection owners who set up the dog-eat-dog system in the first place and then insulate themselves from the day-to-day collection operations. This structure creates plausible deniability and allows them to expres shock and disbelief when one of their collectors is accused of doing something illegal. And as long as the money continues to roll in, there is no incentive for agency owners to change their collector compensation model. But any collection agency owner that truly wants to clean up his organization would be wise to take an honest and thorough look at how he’s treating and paying his collectors.

Update (10/23/12):

On October 19, 2012, Gurstel issued the following statement on its website:

This is an update to Gurstel Chargo’s previous statement dated Oct. 15, 2012, regarding the Michael Collier case.  According to plaintiffs’ attorney, a Gurstel Chargo employee made the telephone call referred to in the Complaint to a cell phone owned by Mr.Collier. Yesterday, plaintiffs’ attorney provided the cell phone number on which Mr. Collier claims to have received the call and indicated that the call was made after the May 24, 2012 hearing referred to in the Complaint.  As a matter of standard procedure, Gurstel Chargo records and retains record of all phone calls placed from the firm to consumers. A thorough review of the Gurstel Chargo phone database reveals that no call from Gurstel Chargo to the number provided by plaintiffs’ attorney was made at any time from the hearing date through the filing of this lawsuit.

In addition, the persistent reporting by the media that the Collier’s funds were illegally garnished is not accurate. The funds were properly and legally garnished.  Only upon documentation being provided by the consumer, Mr. Collier, indicating the funds in his account were exempt, did it become proper to extinguish the garnishment.  Gurstel Chargo did not and could not have known the funds were exempt in the absence of this documentation.

Gurstel Chargo has filed its Answer to the Collier federal court case denying the allegations of wrongdoing. In particular, Gurstel Chargo’s Answer states that the despicable phone call allegedly made to Mr. Collier by a Gurstel Chargo employee did not occur.   Since Gurstel Chargo filed its Answer, the plaintiffs’ attorney has walked back plaintiffs’ allegations by filing an Amended Complaint correcting errors made in the initial set of allegations.

Now that the truth is beginning to emerge, Gurstel Chargo is concerned that false claims and statements about the firm and its employees are being wrongly perpetuated. The allegations in the Complaint are simply not true.  Gurstel Chargo consistently and continuously trains its employees, and stresses its expectation that all of its team members conduct the firm’s business in a respectful and professional manner at all times. Nothing to the contrary occurred in this case.

Gurstel’s statement is correct, Collier’s lawsuit has been amended. The amended complaint removes a description of a conversation that Collier allegedly had with a Gurstel attorney following a court hearing, as well as an allegation about how Collier’s wife reacted to the situation. The most serious allegation in the original complaint, the alleged remarks quoted above, remain in the amended complaint. Based on Gurstel’s October 19, 2012 statement, it’s clear that they deny Collier’s allegations and intend to contest his lawsuit vigorously. We’ll just have to wait for the litigation to play out to see what really happened.