Last month, the Consumer Financial Protection Bureau (CFPB) issued its 2023 Annual Report on the Fair Debt Collection Practices Act (FDCPA), which notes the CFPB’s activities and observations related to debt collection in 2022. The CFPB is continuing its trend of focusing its attention on medical debt.
The CFPB claims that the collection, furnishing, and reporting of medical bills is plagued by inaccuracies. Servicemembers, older adults, and other patients submitted more than 8,500 debt collection complaints to the CFPB concerning allegedly past due medical bills in 2022. Consumers complained that the pursued medical bills had already been paid, were not owed by the patient or family, or were for inaccurate amounts, collections of medical bills began long after services were provided – with some being collected decades after care, and collectors placed medical bills on consumers’ credit reports without first contacting consumers. Additionally, the CFPB reported that there were concerns about the quality and completeness of information received during the collections process.
In citing its own and studies from the American Cancer Society, the CFPB stated that billing and collection errors can have profound consequences for people’s financial, physical, and mental health, and warned that the following conduct may violate the FDCPA, the Fair Credit Reporting Act (FCRA), or the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices:
- Collecting on medical or dental bills not actually owed;
- Collecting the wrong amount;
- Collecting for services patients never received;
- Upcoding (or charging for more expensive versions of services than what was actually provided);
- Cramming (or inflating the underlying medical bills with charges for services the patients never received)
- Billing at rates that are inconsistent with state law;
- Medical bills prohibited by the No Surprises Act (which prohibits certain balance billing by out-of-network providers); or
- Attributing certain nursing facility debts to a caregiver in violation of the Nursing Home Reform Act.
Although none of this is new, the emphasis may signal continued and heightened regulatory enforcement by the CFPB. Beyond enforcement of federal laws, the CFPB has stated its opinion that recent state laws which regulate collection of medical debt and furnishing and reporting of medical debt information are neither barred by the First Amendment nor preempted by the FDCPA or FCRA.
While the FDCPA generally applies only to third party debt collectors – and not the original creditor – medical and dental practices should take note of the CFPB’s continued spotlight on medical debt for its downstream impact on them. The CFPB took particular notice that many third-party debt collectors would close their file upon a patient’s initial dispute without further investigation and found this suggests that many collectors may not have confidence in the information in their possession. As providers commonly engage collection agencies on a contingency fee model, physicians and dentists should remain diligent in their own billing and credit reporting practices and in the accuracy of the data they provide collection agencies, to maximize the return on their receivables.