Virginia governor vetoes medical debt collection bill


Medical debt continues to capture state and federal attention, with lawmakers and regulators continuing to target how medical debt is collected and how it is reflected in a consumer credit report.

As previously noted, a particular focus of the CFPB, as reiterated in its February 2022 Medical Debt Report, holds the National Consumer Reporting Agencies (“NCRA”) and other reporting companies accountable for accurately reporting the medical debt, including the duty to act. against abusive providers who routinely report inaccurate medical debt information.

In response, NCRA has begun issuing guidance to data providers regarding their responsibilities regarding the changes NCRA is making in the way medical debt is considered on consumer reports.

At the state level, Virginia lawmakers failed this week in their bid to pass “HB 573 Statute of Limitations; Medical Debt Recovery,” which would have reduced the statute of limitations for medical obligations from five years to three years.

The bill would also have limited the length of time a medical debt judgment can be enforced, reducing the 20-year period under current law to seven years for general medical services and three years if medical services were for “life-sustaining treatment.

Ultimately, the Governor of Virginia vetoed HB 573 despite over 80% support from the Virginia House of Delegates and unanimous approval from the Virginia Senate. In announcing the veto, Governor Glenn Youngkin explained that the legislation “. . . would create unintended consequences and have significant financial regulatory implications in the Commonwealth by inadvertently capturing other forms of debt other than medical debt.

In addition, Governor Youngkin noted that he commends the sponsor for “prioritizing this important issue and looks forward to working on this issue to find solutions to ensure that defined statutes of limitations can clearly resolve medical debt owed directly to health care providers.” The measure now returns to the Virginia House, which will have the opportunity to override the veto at its “veto session,” scheduled for later this month.

Medical debt can already be a delicate debt and HB 573 would certainly have the potential to add to the difficulties of collecting it in a compliant manner.

For example, imagine the difference of opinion and the expediency of a factual dispute over whether the medical services were “vital” and thus triggering the shorter three-year statute of limitations. Would it be out of the question to envisage the need for medical expertise as to the nature of the services provided in order to rule correctly on the defense of a debtor faced with attempts to enforce a judgment? What about an FDCPA affirmative action brought by an allegedly aggrieved debtor?

The costs of establishing appropriate limitations may well outweigh the value of litigation. In addition, compliance measures would be required to help the entity be able to appropriately identify whether it had seven years or three years to enforce a judgment.

Medical collections can create difficult waters to navigate and any entity managing medical debt must be ever vigilant of new developments in the landscape.

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