The Consumer Financial Protection Bureau (CFPB) has issued two letters in support of state efforts to prohibit medical debt reporting. In March 2024, CFPB Director Rohit Chopra sent a letter to the California State Senate in support of Senate Bill 1061, which would prohibit the practice of including medical bills on credit reports. In April 2024, CFPB Assistant Director Brian Shearer sent a letter to the Connecticut State Senate in support of Senate Bill 395, which would prohibit health care providers from reporting medical debt to consumer reporting agencies (CRAs) for use in a consumer reports.
Both letters address (i) the CFPB’s research that medical debt is less predictive of credit risk, and unpaid medical bills are unreliable information, (ii) the CFPB’s view that the credit reporting system should not be used to coerce consumers into paying medical debt, and (iii) the state’s ability to enact laws exceeding the consumer protections under federal laws such as the Fair Credit Reporting Act (FCRA). The letters also highlight the CFPB’s FCRA ongoing rulemaking to eliminate creditor use of medical debt. Both letters conclude with the following statement: “States have long been valued and critical partners in establishing and fortifying protections for consumers, and we welcome the opportunity to continue to work together in support of this bill and other consumer protection endeavors.”
The Connecticut bill was enacted on May 7, 2024 and is effective July 1, 2024. The law prohibits health care providers from reporting medical debt to CRAs for use in credit reports and requires such providers to include a provision in their contracts with debt collection agencies that states the reporting of medical debt to a CRA is prohibited. The law further states that any medical debt that is reported to a CRA shall be void. The State Commissioner of Social Services may also withhold Medicaid funding from any healthcare provider that violates the prohibition on reporting medical debt.
The California bill is still pending in the state Senate.
As we previously blogged, Colorado and New York enacted new laws in 2023 to limit the reporting of medical debt. Colorado amended the Colorado Consumer Credit Reporting Act to prohibit debt collectors and collection agencies from making a false, deceptive, or misleading representation that a medical debt will be included in a consumer report or factored into a consumer’s credit score unless the information is used in connection with a credit transaction involving, or that may reasonably be expected to involve, a principal amount that exceeds the national conforming loan limit value determined annually by the federal housing finance agency, which value is $766,550 in 2024. New York enacted the “Fair Medical Debt Reporting Act” to prohibit hospitals, health care professionals, and ambulance services from reporting medical debt to CRAs.
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