New CFPB Bulletin Addresses Unlawful Medical Debt Collection and Credit Reporting

On January 13, 2022, the CFPB released a bulletin to remind debt collectors of their obligations under the No Surprises Act, which protects consumers from certain unexpected medical bills. The bulletin reminds companies that if they attempt to collect on prohibited debts, they face potential liability under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). 

The No Surprises Act protects participants, beneficiaries, and enrollees in group health plans and group and individual health insurance coverage from surprise medical bills associated with certain emergency services, non-emergency services from non-participating providers, and air ambulance services. It also requires certain healthcare facilities to disclose Federal and State patent protections against balance billing and includes protections for uninsured (or self-pay) individuals. 

“Too many Americans have been shocked by surprise medical bills and forced to pay up through credit report coercion,” said CFPB Director Rohit Chopra. “Our action today should serve as a reminder not to collect on or furnish credit reporting information about invalid medical debt.”

“The No Surprises Act is the most critical consumer protection law since the Affordable Care Act,” said Health and Human Services (HHS) Secretary Xavier Becerra. “After years of bipartisan effort, we are finally providing hardworking Americans with the federal guardrails needed to shield them from surprise medical bills. We are taking patients out of the middle of the food fight between insurers and providers and ensuring they aren’t met with eye-popping, bankruptcy-inducing medical bills. This is the right thing to do, and it supports President Biden’s vision of creating a more transparent, competitive and fair health care system.”

The bulletin includes the following reminders to debt collectors, information furnishers, and credit bureaus: 

• Attempting to collect a debt stemming from a charge that exceeds the amount permitted by the No Surprises Act, would violate the FDCPA's prohibition of misrepresenting the character, amount, or legal status of any debt. In addition, debt collectors are also prohibited from using unfair or unconscionable means to collect or attempt to collect any debt, including the collection of any amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law. Courts have emphasized that collecting an amount that exceeds what is owed would violate the prohibition on unfair or unconscionable debt collection practices.

• Many debt collectors furnish information about unpaid medical debts to credit bureaus. Furnishers must have reasonable written policies and procedures regarding the accuracy and integrity of consumer information provided to credit bureaus. Credit bureaus preparing a consumer report must follow reasonable procedures to assure the maximum possible accuracy of information contained in the consumer report. Both credit bureaus and furnishers must conduct reasonable and timely investigations of consumer disputes to verify the accuracy of consumer information.

• For furnishers and credit bureaus, the accuracy and dispute obligations imposed by federal consumer financial protection law apply with respect to debts stemming from charges that exceed the amount permitted by the No Surprises Act.

The No Surprises Act can be found here, on page 1577.