As discussed here, on July 7th the Consumer Financial Protection Bureau (CFPB), U.S. Department of Health and Human Services, and the U.S. Department of Treasury (collectively, the agencies) jointly issued a Request for Information (Request) seeking public comment on medical credit cards, loans, and other financial products used to pay for health care. On September 11, California Attorney General Rob Bonta sent a response letter to the agencies specifically addressing the Request’s questions regarding health equity concerns, consumer confusion, best practices for medical providers who offer medical payment products, and consumer protection. According to AG Bonta, “California is uniquely qualified to comment on the [Request] because it has enacted strong consumer protections to guard against patient harms from these products.”

Specifically, in 2019, California revised Business and Professions Code § 654.3 to prohibit medical providers from certain practices including:

  • Enrolling patients for a medical credit card or loan that contains a deferred interest provision.
  • Enrolling patients for a third-party credit card or loan if the patient is sedated or unconscious.
  • Completing any portion of an application for a third-party credit card or enrolling the patient for those products if the application was not entirely completed by the patient.
  • Charging treatment to a third-party medical credit card or loan without first providing the patient with a treatment plan containing a list of services to be charged, as well as a number of enumerated disclosures regarding insurance share of cost and the right to seek treatment that is covered by the patient’s insurance plan.
  • Charging treatment to a third-party medical credit card or loan more than 30 days before the treatment is rendered.
  • Retaining any amount charged to a third-party medical credit card or loan for treatment or services that were not rendered.

Against this background, AG Bonta made recommendations to the agencies on how to protect consumers from harm in their use of medical payment products, including:

  • The agencies should designate medical credit card debt as medical debt, not consumer debt, to ensure consumers receive the appropriate statutory protections.
  • The CFPB should use its authority under the Consumer Financial Protection Act (CFPA) to require that healthcare providers screen patients for eligibility for financial assistance before enrolling them in any medical payment product.
  • The CFPB should require providers of medical payment products to undertake reasonable efforts to ensure that consumers are not charged for services that should be covered by insurance or financial assistance.
  • The CFPB should utilize the Fair Debt Collection Practices Act (FDCPA) to hold providers of medical credit cards accountable. The FDCPA requires credit card issuers to “consider the ability of the consumer to make the required payments” before “open[ing] any credit card account for any consumer under an open end consumer credit plan.”
    • Note, we suspect that AG Bonta was intending to reference the Truth in Lending Act (TILA), which contains an ability to repay provision for credit cards.

Our Take:

The CFPB seems to be increasing its attention on medical financing products, and the California AG appears to also be focused on such products with equal priority. The specific requests made by the California AG may well find their way into CFPB guidance or be expressed in CFPB supervisory or enforcement matters in the future, but there is no current indication of CFPB rulemaking on these issues. We also would note that the response letter by the California AG comes at a time when cooperation between the Bureau and state attorneys general appears to be at a high point, and thus we wouldn’t be surprised to see joint enforcement or other activity on the issue of medical credit between the CFPB and one or more state attorneys general.