CFPB’s New Focus on Medical Debt Recovery | Seyfarth Shaw LLP


Medical service providers who engage in medical billing, debt collection and credit reporting are at the center of new regulations and enforcement efforts. Civil litigation will certainly follow. Under its new director, Rohit Chopra, the Consumer Financial Protection Bureau is “working to end unfair medical debt collection and coercive credit reporting practices that add pressure on American families.” The Bureau targeted that “$88 billion in unpaid medical bills are currently in collection – affecting one in five Americans.” ID. A federal law on consumer protection, the “law without surprises”, came into force this year. It provides billing and collection rights to medical patients, both insured and uninsured. The Bureau issued a bulletin, warning that attempting to collect a medical debt prohibited by law without surprises may violate federal consumer debt collection practice law. A plethora and ever-increasing number of state laws also heavily regulate medical billing, collection, and credit reporting practices.

Recently, Director Chopra described the medical billing situation in America as one in which it is “all too common for patients and their families to be caught in a catastrophic loop between their provider and their insurance company.” Director Chopra explained that “[e]Even when a patient is trying to fight to get an accurate bill or insurance claim paid, medical debt collectors have a weapon that’s hard to fight: the credit report. ID. Director Chopra expressed his “concern[] that the credit reporting system is being used as a tool of coercion to get people to pay medical bills they may not even owe. ID. And he characterized medical debt as “hard to call. . . a real debt” because, he specifies, “[f]Few people choose to incur medical debt, and patients typically have no idea how much they will be charged for a service or procedure. There is no prior disclosure or interest rates to compare. Individuals and families have to deal with a billing and collection system that can be described as error-ridden, confusing and labyrinthine. » Identifier. Further evidence of his hostility to medical debt in general, Director Chopra, after observing that “58% of people’s collection and credit debt comes from medical bills,” said that: “Having a collection brand medical debt on a credit report can make it difficult to get credit, rent or buy a home, or find a job. Families are being pushed into bankruptcy by medical debts they cannot pay. Coercive credit reports to obtain medical debt payments can also deter families from seeking the medical care they need. Coercive credit reports interfere with the relationship between patients and their doctors and can lead to worse medical outcomes. ID. As a result, Director Chopra announced that the Bureau “will be looking closely at the Big Three credit reporting agencies to ensure that they are not being used as a tool to coerce and extort medical bills from patients that they maybe don’t even have to”. ID. The Bureau will “assess whether it is appropriate for unpaid medical billing data to be fully included in credit reports.” ID. The Bureau “will partner with the Department of Health and Human Services to ensure that patients are not charged and do not pay illegal surcharges for medical care [and will] investigate how best to facilitate patient access to financial assistance programs offered by medical providers. ID.

The The Big Three Credit Reporting Agencies announced accordingly that they would each take action that would result in the total removal of nearly 70% of commercial medical debt collection lines from consumer credit reports. “Effective July 1, 2022, paid medical collection debts will no longer be included in consumer credit reports. Additionally, the time before an unpaid medical debt appears on a consumer’s report will be reduced from 6 months to a year, giving consumers more time to work with insurance and/or healthcare providers. to settle their debt before it is posted on their account. Credit Report. In the first half of 2023, “the big three credit reporting agencies” will also no longer include medical collection debts under $500 in credit reports.” ID.

Now is the time for medical service providers to review their medical billing, collections, and credit reporting policies and procedures with legal counsel to proactively protect themselves from aggressive regulatory oversight, enforcement, and litigation. civilians who started. With a long history of representing clients across the healthcare, life sciences and pharmaceutical ecosystems, and representing financial services and commercial clients with their consumer credit billing, collection and regulatory, compliance, enforcement, and civil litigation credit reporting, our team of highly qualified and experienced attorneys are ready to help.


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