On October 1, the Consumer Financial Protection Bureau (CFPB or Bureau) issued an advisory opinion aimed at debt collectors and emphasizing their obligations under the Fair Debt Collection Practices Act (FDCPA) and Regulation F. The opinion specifically emphasizes the prohibitions on false, deceptive, or misleading representations, and unfair or unconscionable means to collect or attempt to collect medical debts.
According to the Bureau, debt collectors will be strictly liable under the FDCPA and Regulation F for engaging in the following practices when collecting medical bills:
- Collection of Amounts Not Owed Because Already Paid. Debt collectors must ensure they are not attempting to collect amounts that have already been paid, either fully or partially, by the consumer, insurance, or a government payor. According to the CFPB, collecting such amounts would violate the FDCPA’s prohibitions against unfair and deceptive practices.
- Collection of Amounts Not Owed Due to Federal or State Law. Debt collectors must not attempt to collect amounts that consumers are not legally obligated to pay. Examples cited by the Bureau include state workers’ compensation laws or the Nursing Home Reform Act that may relieve consumers of certain medical debts.
- Collection of Amounts Above Permitted Limits. Debt collectors must adhere to federal and state laws that limit the amounts that can be charged for medical services. For example, the No Surprises Act restricts the charges for out-of-network emergency services.
- Collection of Amounts for Services Not Received. Debt collectors must not attempt to collect amounts for services that were not actually rendered. The Bureau cited practices such as “upcoding,” where a patient is billed for more expensive services than those received, as being prohibited.
- Misrepresentation of the Nature of Legal Obligations. Debt collectors must not misrepresent the legal status of a debt. According to the CFPB, this includes presenting uncertain payment obligations as settled or determined amounts.
- Substantiation of Medical Debts. Debt collectors must have a reasonable basis for asserting that the debts they collect are valid and the amounts correct. The Bureau emphasized that this includes obtaining appropriate documentation to substantiate the debt, consistent with patient privacy laws.
In conjunction with the advisory opinion, the CFPB also released a consumer advisory titled “Pause and review your rights when you hear from a medical debt collector.” It advises consumers to verify the accuracy of medical bills, negotiate amounts owed, and seek legal assistance if necessary. In the advisory, the CFPB recommends not hastily paying medical debt without first ensuring its validity and exploring potential reductions or disputes.
Our Take:
Medical debt continues to be a hot topic at both the federal and state levels. As we have discussed here, here, and here multiple states have recently introduced legislation concerning the reporting and collection of medical debt. On June 11, the Bureau released a proposed rule amending Regulation V, which implements the FCRA, concerning medical debt, discussed here. The proposed rule would remove a regulatory exception that currently allows creditors to obtain and use information on medical debts for credit eligibility determinations. Additionally, the proposed rule would generally prohibit consumer reporting agencies from furnishing consumer reports containing medical debt information to creditors. The Bureau aims to finalize the rule by early 2025. While the CFPB’s most recent advisory opinion did not necessarily say anything new when it comes to medical debt collections, it makes clear that medical debts are and will continue to be a front and center focus of the CFPB for the foreseeable future.