Last week, the defendant filed its answer brief in Bratton v. Sisters of Charity of Leavenworth Health System, Inc., an appeal now pending before the Montana Supreme Court involving a challenge to the defendant’s use of prepaid cards to make refunds to the plaintiff. In addition, the Montana Bankers Association, the American Bankers Association, and the Consumer Bankers Association filed an amicus brief in support of the defendant.
In her lawsuit, the plaintiff alleged that SCL Health (SCL), her healthcare provider, violated Montana law by directing its bank to issue two prepaid cards to the plaintiff to refund credit balances on her account with SCL. The district court rejected the plaintiff’s argument that SLC violated Montana law by transferring to the bank without her consent SLC’s obligation to refund the credit balances on her account. According to the court, rather than transfer its duty to the bank to make the refunds, SCL had the bank withdraw money from SCL’s general account and send the cards to the plaintiff, a situation the court viewed as similar to SLC authorizing the bank to issue a wire transfer or cashier’s check. It found that the plaintiff’s consent was not necessary “just because SLC Health refunded Bratton’s money in a manner Bratton found inconvenient.” The court also rejected the plaintiff’s claims of conversion, unjust enrichment and constructive trust, as well as her claim under the Montana Consumer Protection Act.
In its answer brief, the defendant highlights the plaintiff’s ability to obtain, upon request, a check from the bank for the amounts on the prepaid cards without incurring any cost. (The defendant also notes that the prepaid cards could be: exchanged for cash at banks or credit unions without the plaintiff paying any fees, used to withdraw cash from ATMs without the plaintiff paying any fees, and used at point-of-sale locations, including online, without the plaintiff paying any fees.) The defendant asserts that the plaintiff’s ability to obtain a check for the amounts on the prepaid cards without activating the cards refuted her argument that she and other cardholders were harmed because they could not access their refunds without agreeing to the bank’s cardholder agreement.
In their amicus brief, the trade groups argue that the plaintiff’s “idiosyncratic preference” for receiving her refunds via paper checks instead of prepaid cards “should not impair the ability of financial institutions to offer Montanans services that have become standard nationwide.” The trade groups observe that the plaintiff’s argument that SCL forced her to obtain her refunds from the bank rather than SCL by paying her with debit cards rather than paper checks was based on a misunderstanding of how banks facilitate payments to third parties. They demonstrate that there is no material difference between prepaid card and check transactions in terms of who is making payment and whether any payment obligation has been transferred. According to the trade groups, by issuing the prepaid cards, “[the bank] was never obligated to Appellant on the underlying refund. The obligations it assumed were the obligations of a financial institution instructed to tender funds—the same obligations it would have had if presented with a check.”
The trade groups also discuss the important role debit cards play in modern finance, the benefits they provide to consumers, and the applicable regulatory framework. They argue that if the plaintiff prefers a different regulatory regime, she is free to seek further rulemaking but “should not ask this Court to act as legislator and regulator and impose [her] ill-considered views on businesses and consumers doing their best to navigate an increasingly paperless economy.”