Sort of like the definition of used-car dealer in my state.  Five transactions or less per year, you're not in business and don't need a license.  More than that, you are and you do.  

If you consider what he's selling as receipts (the bill stamped "Paid In Full"), then his customer is the patient who eventually pays the account when the settlement funds are received.  Does it make much difference, whether it's on Schedule C or Schedule D?  I suppose if it's long-term, and for Medicare Tax purposes (assuming he's maxed out already on Social Security).  Next he'll want to be doing it with his pension account, and you'll have to worry about UBTI.  

Facts and circumstances.  My guess is that he's a radiologist.  They're the only medical professionals sophisticated enough to do stuff like that.