Medical debt continues to capture the attention of state and federal government, with lawmakers and regulators continuing to target how medical debt is collected and how it is reflected on a consumer credit report.
As previously reported, a particular focus of the CFPB as iterated in its February 2022 report on medical debt is holding the nationwide consumer reporting agencies (“NCRAs”) and other reporting companies accountable for the accurate reporting of medical debt, including a duty to act against abusive furnishers who routinely report inaccurate information regarding medical debt.
In response, the NCRAs began rolling out guidance to data furnishers regarding their responsibilities as it relates to the changes the NCRAs are making in the reflection of medical debt on consumer reports.
On the state level, Virginia lawmakers were unsuccessful this week in their attempt to pass “HB 573 Statute of limitations; collection of medical debt,” which would have reduced the statute of limitations on medical obligations from five years to three years.
The bill also would have limited the length upon which a judgment taken on medical debt could be executed, reducing the time from as much as 20 years under current law to seven years for general medical services and to three years if the medical services were for “life-sustaining treatment.”
Ultimately HB 573 was vetoed by Virginia’s governor despite having received over 80 percent support in the Virginia House of Delegates and unanimous approval from the Virginia Senate. In announcing the veto, Gov. Glenn Youngkin explained that the legislation “. . . would create unintended consequences and have significant implications on financial regulations in the Commonwealth by inadvertently capturing other forms of debt other than medical debt.”
In addition, Gov. Youngkin noted that he commended the sponsor on “prioritizing this important issue and look(s) forward to working on this to find solutions to ensure that defined statutes of limitations can clearly resolve medical debt owed directly to health care providers.” The measure is now headed back to the Virginia House which will have the opportunity to override the veto during its “veto session,” slated for later this month.
Medical debt can already be a tricky receivable and HB 573 would certainly have the potential to add to the difficulties in compliantly collecting it.
For example, imagine the difference of opinion and opportunity for factual dispute regarding whether the medical services were “life-sustaining” and thus triggering the shorter three-year statute of limitation. Would it be out of the question to envision the necessity of expert medical input regarding the nature of the services provided to properly adjudicate a debtor’s defense to attempts to execute upon a judgment? How about in an FDCPA affirmative action brought by an allegedly aggrieved debtor?
The costs of establishing the appropriate limitations could very well outweigh the value of the litigation. Additionally, compliance measures would be required to assist with an entity’s internal ability to appropriately identify whether they had seven years versus three years within which to execute upon a judgment.
Medical collections can create difficult waters to navigate and any entity that handles medical debt needs to be ever vigilant with new developments in the landscape.