I've been through similar situations and I also work in collections (not debt collections but the collection laws are universal.
Don't bother with the BBB, they won't do a thing. The only time the BBB makes any difference is if a business is registered with them otherwise they are of no use.
Next yes the Federal Trade Commission would handle any complaints regarding unfair debt collection practices. All collection agencies have to abide by the Fait Debt Collection Practices Act (FDCPA) and the agency that contacted you is clearly in violation.
Part of the FDCPA is that the collection agency can not make idle threat, or threats that they can not follow through with. Obviously they can not send you a 1099C because it is past the timely filing to do so.
If they call you again, ask for proof of the debt in writing. When collection companies contact you they are required by law to send you a collection notice in the mail. ON the back of this notice it will explain how to dispute the charges. If you receive a letter, immediately respond that you are disputing the charges and are requesting that they provide proof of this debt, also include the information that you had previously had this debt investigated and it was removed from your credit report. Don't provide any proof you have, leave the burden of proof up to them. They will not be able to prove this is your debt so they will be force to write it off.
Next time they call, you will be more prepared because you have more info. When the threaten with the 1099c you can calmly explain to them that they are beyond the time frame to send that to you. Also if you are in the state of TX, we have the homestead act and they can not put a lien against your house for credit debts. If you are outside TX check your local state laws so that you will be prepared in case they threaten that. They will say whatever they can to rattle you and scare you into paying. Stand firm, and stay calm (they hate that). I once had a creditor yelling at me, while I remained calm, then the supervisor got on the phone and yelled at me, it was really quite funny.
Here is the FTC website that should be helpful:
You shouldn't need a lawyer to clear this up, but you could mention it to your attorney if this escalates and see what he/she says.
Hang in there, I'm sure they won't be able to prove anything on this!