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  • Washington State Attorney General wins two suits under medical billing practices

    State Issues

    On February 1, the Attorney General from Washington State successfully sued a large healthcare group to pay over $158 million for settlement of funds under the state’s Consumer Protection Act (CPA). The Washington AG stated that the healthcare group violated state law which requires hospital management to notify patients about financial assistance and to screen them for eligibility before trying to collect payment. The healthcare group has been ordered to pay $20.6 million in patient refunds and will forgive $137.2 million in medical debts; it will also pay $4.5 million to cover the attorney general’s costs. Among others, the consent decree includes several injunctions to be engaged in or refrained from for five years, including maintaining charity care policies, and not collecting payment for medical services unless presented with either of two stated stipulations. Lastly, the consent decree states that if the healthcare group violates a condition, it would have to pay up to $125,000 per violation. The defendants do not admit the allegations of the complaints filed in the first lawsuit from February 2022. 

    Similarly, on February 2 the Washington AG successfully entered into a motion for partial summary judgment against a medical debt collection agency working within the healthcare group for sending 82,729 debt collection notices under the Collection Agency Act (CAA). The court agreed with the AG’s finding that the agency’s debt collection notices failed to make the required disclosures under the CAA. Damages have not yet been awarded. 

    State Issues Medical Debt FDCPA Washington State Attorney General

  • New York Governor highlights NYDFS in 2024 State of the State proposal

    State Issues

    On January 2, New York Governor Kathy Hochul revealed a proposed plan focused on consumer protection and affordability as the initial part of the Governor’s 2024 State of the State address. The plan includes changes to New York’s consumer protection laws, regulations for buy now pay later products, increased paid medical and disability leave benefits, measures to eliminate co-pays for insulin in specific insurance plans, and legislation addressing medical debt.

    Changes to consumer protection laws would give the Attorney General more power to enforce the laws and help the state to address unfair and abusive business practices. Additionally, proposed legislation would require buy now pay later providers to obtain licenses and introduce regulations focusing on disclosure, dispute resolution, credit standards, fee limits, data privacy, and preventing excessive debt.

    NYDFS also detailed Governor Hochul’s plan to update and broaden New York’s hospital financial assistance law to provide increased protection against medical debt. The proposed legislation aims to limit hospitals’ ability to sue low-income patients (earning less than 400 percent of the Federal Poverty Level) for medical debt and expand financial assistance programs. It also seeks to cap monthly payments and interest rates on medical debt while enhancing access to financial aid. This consumer protection and affordability plan builds on Governor Hochul and her administration’s efforts to make New York more affordable and livable.

    State Issues NYDFS New York Consumer Protection Medical Debt Consumer Finance Buy Now Pay Later Unfair

  • NY enacts the Fair Medical Debt Reporting Act

    State Issues

    On December 13, the New York governor signed into law S4907A, or the Fair Medical Debt Reporting Act (the “Act”), a medical debt credit reporting bill that will bar credit reporting agencies from directly or indirectly incorporating medical debt into consumer credit reports. The Act specifically prohibits hospitals, health care professionals, and ambulances from reporting medical debt to credit agencies. The Act defines medical debt as any amount owed or claimed by a consumer “related to the receipt of health care services, products, or devices provided to a person” by a hospital, health care professional, or ambulance service. Notably, obligations charged to a credit card are excluded from medical debts unless the card is specifically designated for health care expenses under an open-ended or closed-end plan. 

    State Issues State Legislation New York Medical Debt Credit Reporting Agency Credit Report Consumer Protection Consumer Finance

  • CFPB report on FDCPA highlights medical debt collection issues

    Federal Issues

    On November 16, the CFPB released its annual Fair Debt Collection Practices Act report, which highlighted challenges specific to medical debt collection. For example, 8,500 complaints were submitted in 2022 related to medical debt collection and described problems such as collectors billing for services never received, collecting the wrong amounts, miscommunication with insurance companies or financial assistance programs, or placing bills on credit reports without prior consumer contact. The report emphasized collectors may violate federal law when they pursue inaccurate medical bills and stressed the need for medical debt collectors to comply with the Fair Debt Collection Practices Act, the No Surprises Act, and the Fair Credit Reporting Act.

    The report also includes developments in state law regarding medical debt collection, including recent legislation in Colorado, New York, Maine, and Nevada. Additionally, the report contains sections related to supervision of debt collection activities, enforcement actions, education and outreach initiatives, rulemaking, and research and policy initiatives. 

    Federal Issues CFPB Medical Debt FDCPA Consumer Protection FCRA

  • Minnesota amends health care provision in extensive new law

    Privacy, Cyber Risk & Data Security

    On November 9, the State of Minnesota enacted Chapter 70--S.F.No. 2995, a large bill to amend certain sections of its current health care provisions. The bill covers extensive changes to healthcare provisions, from prescription contraceptives, hearing aids, mental health, long COVID, and childcare, among many others.

    One of the significant new laws requires a hospital to first check if a patient’s bill is eligible for charity care before sending it off to a third-party collection agency. Further, the bill places new requirements on hospitals collecting on a medical debt before it can “garnish wages or bank accounts” of an individual. The Minnesota law also outlines how a hospital wishing to use a third-party collection agency, must first complete an affidavit attesting that it has checked if the patient is eligible for charity care, confirmed proper billing, given the patient the opportunity to apply for charity care, and, under certain circumstances, if the patient is unable to pay in one lump sum, offered a reasonable payment plan instead.

    Privacy Privacy, Cyber Risk & Data Security Minnesota Health Care Medical Debt Debt Collection

  • CFPB shares concerns and actions regarding medical debt collection

    Federal Issues

    On October 4, Seth Froman, the CFPB’s General Counsel and senior advisor to Director Chopra, delivered remarks at the New Jersey Citizen Action Education Fund’s Financial Justice Summit. He heralded the work and mission of the CFPB, and focused on the impact of medical debt.  He emphasized the CFPB’s concerns that families are being “saddled with medical bills they should not – or do not – owe,” and mentioned a recent enforcement action ordering a medical debt collector to pay more than a million dollars in penalties and redress “because the collector continued to collect on debts without verifying that they were valid after consumers disputed them.” He further discussed the impact of medical bills on consumer credit, such that consumers have a “strong incentive to pay the medical bill, even when they think it’s not the right amount or don’t owe it at all.” 

    Federal Issues CFPB Medical Debt Consumer Finance Debt Collection Consumer Protection

  • CFPB announces consumer reporting rulemaking

    Federal Issues

    On September 21, the CFPB announced the beginning of its anticipated rulemaking regarding consumer reporting, including a proposal to remove medical bills from credit reports. This announcement builds upon a hearing the CFPB held in July 2023 on medical billing and collections, highlighting its range of negative impact on marginalized communities (covered by InfoBytes here). In the CFPB’s announcement, Director Rohit Chopra emphasized the inconsequential “predictive value” of medical bills in credit reports despite their prevalence in American households, thus the agency's goal is to alleviate the burden on individuals facing medical debt. The Bureau’s press release highlighted components to its outline of proposals and alternatives under consideration, such as (i) prohibiting consumer reporting companies from including medical bills in consumers’ credit reports; (ii) prohibiting creditors from relying on medical bills for underwriting decisions; and (iii) prohibiting debt collectors from leveraging the credit reporting system to pressure consumers into paying their debts. The rule would not prevent creditors from accessing medical bill information, such as validating need for medical forbearances, or evaluating loan applications for paying medical debt.

    In addition to the proposed removal of medical debt from consumer reports, the Bureau’s outline includes other notable proposals regarding consumer reports. The Bureau’s proposals include:

    • As previously covered by InfoBytes, applying the FCRA to data brokers by altering the FCRA definitions of “consumer report” and “consumer reporting agency”, to “address whether and how the FCRA applies to newer actors and practices in the credit reporting marketplace, including questions such as coverage of data brokers and certain consumer reposting agency practices regarding marketing and advertising.” In particular, the Bureau is also considering a proposal that would provide that data brokers selling “consumer reports” containing consumers’ payment history, income, and criminal records would be considered a consumer reporting agency. The Bureau is also exploring clarifications on when data brokers qualify as consumer reporting agencies and furnish consumer reports.
    • Clarifying whether “credit header data” qualifies as a consumer report, which could limit the disclosure or sale of credit header data without valid reasoning.
    • Clarifying that certain targeted marketing activities that do not directly share information with a third party nevertheless are subject to the FCRA.
    • Proposing a definition of the terms “assembling” and “evaluating” to include intermediaries or vendors that “transmit consumer data electronically between data sources and users.”
    • Clarifying whether and when aggregated or anonymized consumer report information constitutes or does not constitute a consumer report. Specifically, the Bureau contemplates providing that a data broker’s sale of particular data points such as “payment history, income, and criminal records” would “generally be a consumer reports, regardless of the purpose for which the data was actually used or collected, or the expectations of that data broker
    • Establishing the steps that a company must take to obtain a consumer’s written instructions to a obtain a consumer report.
    • Addressing a consumer reporting agency’s obligation under the FCRA to protect consumer reports from a data breach or unauthorized access.

    Federal Issues CFPB Medical Debt Agency Rule-Making & Guidance

  • California AG advocates for medical payment reforms

    State Issues

    California Attorney General Rob Bonta submitted a letter to federal agencies urging the federal government to adopt regulations and statutory protections to help protect patients who may need to use medical credit cards and installment loans to pay for healthcare-related bills.

    The letter notes that medical payment products exacerbate health disparities, that patients seeking medical care may not be in an appropriate position to make complex financial decisions, and offers California’s protections against medical payment products as a model framework.

    In the letter, which is addressed to the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, the CFPB, and the Treasury, Bonta recommends (i) designating medical credit card debt as medical debt and not consumer debt; (ii) ensuring providers properly screen patients for financial aid and charity care before offering a medical payment product; (iii) limiting enrollment when patients may be distressed or under the influence of medication; (iv) providing written notice of financial assistance and potential eligibility for charity care; (v) making reasonable efforts to notify patients about the level of insurance coverage of medical expenses; and (vi) reducing patient cost-sharing responsibilities.

    State Issues California State Attorney General Medical Debt Consumer Finance Consumer Protection

  • CFPB reports on New Mexican consumers’ complaints

    Federal Issues

    On August 10, the CFPB posted a blog entry sharing insights into medical debt and junk fees in New Mexico in advance of CFPB Director Rohit Chopra’s scheduled meeting with New Mexico elected officials this week. The blog entry noted that the CFPB’s public consumer complaint database contains more than 11,600 complaints from New Mexicans, primarily focused on issues with credit products, consumer reporting, and debt collection. The CFPB indicated that almost 18 percent of New Mexico’s population had medical debt (totaling ~$881 million) and the average amount owed per individual is $2,692. Building on the CFPB’s recent hearing on medical billing and collections (covered by InfoBytes here), the CFPB stated that “along with several other states, New Mexico has alerted the CFPB to its concern about fees that consumers are routinely compelled to pay to access consumer financial services or forced to pay for services they do not want.”

    Federal Issues CFPB Medical Debt Debt Collection New Mexico

  • CFPB holds hearing on medical billing and collections

    Federal Issues

    On July 11, CFPB Director Rohit Chopra delivered prepared remarks at a public hearing on medical billing and collections. Chopra commented on the prevalence of medical debt in the country, which affects over 100 million Americans, while $433.2 billion of the national GDP is sourced from consumers’ out-of-pocket expenses. Specifically, the CFPB hearing addressed the effects of medical payment products, including special-purpose credit cards and installment loans used to cover the cost of medical treatment, which Chopra claimed can leave patients “worse off.” The Bureau highlighted the predatory nature of such medical credit cards, which typically have a higher interest rate than other cards and are often presented to consumers by their providers. According to Chopra, the Bureau recently launched a public inquiry (covered by InfoBytes here) to answer questions related to these products.

    During the expert panel discussion, multiple panelists raised issues regarding the federal requirements for hospital financial assistance programs that exist in exchange for tax benefits. Panelists criticized the complicated processes patients must follow for such programs and compared it to the simple and fast online application process for medical credit cards. Panelists also highlighted the need to include stronger, clearer federal requirements for hospital financial assistance programs, such as setting standards on income and setting minimums or floors, so consumers can access such services more easily. Panelists commonly noted that state requirements for hospital financial assistance programs are more robust than the federal requirements. In response to Chopra’s question on what the panelists wish to see from the Bureau regarding regulation, one panelist asked for a ban on deferred interest, noting the “special regulatory authority” the Bureau has. Another panelist requested that the agency ban medical credit cards from being offered in a medical setting, citing her communication with clients who claim they feel “pressured” to sign the paperwork in that setting. Additionally, another panelist requested that the Bureau prohibit the reporting of medical debt on credit reports—mentioning Colorado’s headway in being the first state to ban such reporting and noting the Bureau’s potential to ban it at a federal level. The panelists each applauded the agency’s efforts to bolster regulations on medical payment products.

    Federal Issues Agency Rule-Making & Guidance CFPB DHHS Department of Treasury Credit Cards Consumer Finance Medical Debt Installment Loans

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