*Garrett Kelly is not licensed to practice law in any jurisdiction; his bar application is pending in Virginia.

On March 1, the Consumer Financial Protection Bureau (CFPB) released its “Medical Debt Burden in the United States” report, which questions whether consumer credit reports should include unpaid medical billing data.

According to the report, the CFPB found that medical debt is the most common debt collection tradeline on credit reports in the U.S., totaling $88 billion in medical bills in 2021.

COVID-19 further increased medical expenses among both insured and uninsured patients, especially in minority communities that were already disproportionately susceptible to medical debt compared to the national average. The CFPB also found that “medical billing data on a credit report is less predictive of future payment than reporting on traditional credit obligations.”

In the press release accompanying the report, the CFPB discussed the “challenging and burdensome nature of the medical system,” and emphasized that the system is supported by a “credit reporting infrastructure where mistakes are common.” In his remarks on the report, CFPB Director Rohit Chopra observed that “it’s hard to call medical debt real debt. Few people choose to take on medical debt, and typically, patients have no idea how much they will be charged for service or a procedure.” Overall, the press release conveys the CFPB’s concern that coercive credit reporting is perpetuating the extraordinary scope of the medical debt burden.

In light of the report, the CFPB intends to prioritize the following steps to curtail coercive credit reporting of medical debt:

  • Closely scrutinize the procedures used by consumer credit reporting agencies to ensure the accuracy of medical billing data and exclude furnishers of inaccurate information from the credit reporting system; and
  • Work with other federal agencies, including the U.S. Department of Health and Human Services and the U.S. Department of Veterans Affairs, to enforce new standards for reporting medical billing data, and to increase access to the financial assistance programs offered by medical providers.

Troutman Pepper will continue to monitor the CFPB activity and other important updates within the consumer financial services industry.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Garrett Kelly Garrett Kelly

Garrett helps companies in the financial services industries resolve business disputes and commercial litigation. His clients benefit from his understanding of the complex regulatory landscape faced by financial institutions.

Photo of Stefanie Jackman Stefanie Jackman

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including…

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including banks and nonbanks, mortgage banking lenders and servicers, debt collectors and buyers, third-party service providers, health care and medical revenue cycle service providers, credit and prepaid card companies, auto lenders, and fintechs. She regularly advises her clients on issues arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, the FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA.

In addition to her litigation and government investigations work, Stefanie focuses a significant portion of her practice on providing compliance-related advice to her clients. She regularly counsels clients on conducting compliance assessments relating to their debt collection, credit reporting and dispute resolution processes, fair lending and underwriting, and vendor oversight, as well as the functionality of their overall compliance management system. Stefanie also brings her litigation and enforcement experience to bear in assisting clients in designing new products and processes, including product structuring, advertising, online application flows, underwriting, and servicing-related strategies.

Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan specializes in the defense of consumer actions, including class and mass actions, general business litigation, as well as regulatory compliance.

Photo of Alan D. Wingfield Alan D. Wingfield

Alan Wingfield is a partner in the firm’s Consumer Financial Services practice, with a focus on Financial Services Litigation and consumer law compliance counseling. Alan has represented businesses in many venues nationally in class action and individual consumer litigation. Alan’s practice includes compliance…

Alan Wingfield is a partner in the firm’s Consumer Financial Services practice, with a focus on Financial Services Litigation and consumer law compliance counseling. Alan has represented businesses in many venues nationally in class action and individual consumer litigation. Alan’s practice includes compliance counseling to help businesses with the myriad federal and state consumer protection laws and laws regulating financial services companies.