On December 13, New York Governor Kathy Hochul signed into law S4907A, which prohibits hospitals, medical providers, or ambulance services from providing negative information about medical debt to consumer reporting agencies (CRAs). The law also requires that these entities include a provision in their contracts with collection agencies prohibiting the reporting of any portion of a medical debt to a CRA. Any debt that is reported to a CRA will be deemed void. The law became effective immediately after it was signed.

Under the law, medical debt is defined as “an obligation or alleged obligation of a consumer to pay any amount whatsoever related to the receipt of health care services, products, or devices” by a licensed hospital or health care provider. Medical debt does not include debt charged to a credit card unless that credit card is offered specifically for the payment of health care services, products, or devices.

In the press release announcing the new law, a recent study was cited finding that 740,000 New Yorkers have medical debt on their consumer reports with people of color twice as likely to have medical debt furnished to a CRA and low-income people three times more likely.

New York is not alone in targeting medical debt. Colorado also passed a law this year that prohibits a CRA from issuing any consumer report containing negative information that the CRA knows or should know concerns medical debt. Additionally, medical debt has come under scrutiny from the Consumer Financial Protection Bureau as evidenced by its Fair Debt Collection Practices Act (FDCPA) Annual Report, discussed here, and its proposed Fair Credit Reporting Act (FCRA) rulemaking, which would prohibit CRAs from including medical debts in consumer reports and creditors from using medical collections information when evaluating borrowers’ credit applications, discussed here and here.

Industry has also taken steps to address medical debt. Earlier this year, the three nationwide CRAs jointly announced that medical debt with an initial reported balance of under $500 has been removed from U.S. consumer reports, discussed here.