The Consumer Financial Protection Bureau on Nov. 16, 2023 released its annual report regarding its activities taken in 2023 to administer the Fair Debt Collection Practices Act, spotlighting, among other topics, the collection of medical debt.
A copy of the Report is available at: Link to Report
Emphasizing the "significant actions" taken by the CFPB concerning the collection of medical debt, the Report highlights the CFPB's "continued concerns" about the "medical collection ecosystem." The Report specifies that the collection of medical debt that is either inaccurate or not owed raises significant concerns under the FDCPA and the Fair Credit Reporting Act, statutes that are enforced by the CFPB.
Specifically, the Report notes that roughly 15% of all collection complaints the CFBP sent to industry members for review and response involved medical debt, with consumers primarily complaining of the inaccuracy of medical debt being sought and the quality of information being provided during the medical debt collection process.
The Report goes on to note the "commonly" reported complaints as:
- The medical bill being collected has already been paid or should have been paid by someone else.
- Medical bills are collected long after services are provided.
- Medical bills that patients have no prior knowledge of appear on their credit reports.
The Report includes concerns the CFPB had with debt collector's responses to complaints. It notes many medical debt collectors were quick to cut bait by closing the account in issue and deleting the account from a consumer credit report in response to a dispute of the accuracy of the information being reported. The CFPB suggests that this behavior raises questions as to whether there are deficiencies in the quality and quantity of information medical collectors receive at placement or at sale of the medical debt. The CFPB also said it suggests that medical debt collectors may not have confidence in the data and information provided to them regarding a medical debt's accuracy.
Citing the challenging nature of medical billing, including consumers being faced with "multiple bills from different providers, confusing procedure codes, opaque pricing, and uncertain insurance coverage" as well as emergency medical services that fail to provide up-front service costs, the CFPB concludes that many medical debts sought for collection may not be owed or may be seeking to collect the wrong amount due to:
- Prior payment of the bill.
- Insurance or financial assistance being responsible for the bill.
- The services provided are being billed at a higher billing code.
- State laws may provide for a bill to not be owed or to be owed in an amount different from that which is billed and sought for collection.
- Federal laws may provide that the bill is not owed.
In this regard, the Report reminds the industry that collection of debts, medical or otherwise, that are not owed or are in the wrong amount may violate the FDCPA, specifically under 1692f(1), which the CFPB explains permits the collection of a debt only where (1) expressly permitted by the underlying agreement creating the debt and no law prohibits its collection or (2) where a law expressly permits the charge.
The CFPB's Report highlights "contexts" where the collection of medical debt runs afoul of certain federal or state laws:
- The bill may be prohibited by the federal No Surprises Act.
- The bill may be prohibited under the federal Nursing Home Reform Act.
- State law may prohibit recovery of a medical bill above a "reasonable amount" for the medical services provided.
Considering this, the Report advises state and federal regulators, as well as private litigants, to pay careful attention to whether medical debt collectors are collecting debts not owed or are in the wrong amount and, if state law provides, whether the bills sought do not reflect "reasonable" amounts for the medical services provided.
The Report also suggests that a debt may be invalid or inaccurate for any number of reasons and invites consumers and regulators to routinely challenge medical debt collectors on the accuracy of the debts they collect only on the assumption that the debt may be invalid or inaccurate.
The Report concludes with the CFPB's stated intention of taking further action regarding medical debt collection and working with states to further consumer protection. Given the CFPB's posture towards medical debt, the accuracy and propriety of medical debt balances being collected will continue to face heightened scrutiny from state and federal regulators.
Ralph T. Wutscher
Maurice Wutscher LLP
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