Washington, D.C. Bans Medical Debt From Credit Reports

Legislation that prohibits a health care provider or debt collector from reporting medical debt to credit reporting agencies has become law in Washington, D.C.

The legislation became law without the signature of Mayor Muriel Bowser, who said she supported the medical debt provisions, but opposed some unrelated provisions.

Among other things, the law:

• Prohibits a health care provider or debt collector collecting on a medical debt from:
• Garnishing of wages for those patients with a household income below 500% of the federal poverty level.
• Filing of property lien against a patient’s primary residence.
• Engaging in medical debt collection until 180 days after the consumer receives the first posted medical bill. There must be at least 90 days’ notice before collection begins.
• Places an interest rate cap at 3% annually.
• Requires that any medical debt sold to a collection company retain the patient’s payment plan arrangements.
• Requires that health facilities develop financial assistance policies and screen patients for eligibility.

In a letter to D.C. Council Chairman Phil Mendelson, Bowser wrote that requirements that health care facilities provide unlimited free medically necessary care for patients up to 200% of the federal poverty level and reduced-cost care up to 500% of the federal poverty level “creates substantial concerns for the District’s health care system and overall access to care.”

She wrote that the legislation’s requirements exceed those in neighboring states, which impose narrower obligations on health care facilities.

During the Biden Administration, the CFPB supported banning medical debt from credit reports. The CFPB adopted a rule to impose such a ban, but the rule was vacated by a federal district court.

Reportedly, at least 17 other states have banned medical debt from appearing on credit reports. Those states are: California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Oregon, Rhode Island, Vermont, Virginia and Washington. (See our blog about the bans on medical debt reporting in Colorado and New York here.)

At least some of the state laws, such as the Colorado law, are being challenged in court. Those challenges have been bolstered by a CFPB interpretive rule advising that such laws are preempted by the FCRA.