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CFPB warns Surprise Act violations cannot implicate Fair Lending Laws | JD Supra

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from engaging in abusive, unfair, or deceptive practices when collecting consumer debt. The Consumer Financial Protection Bureau (CFPB) enforces the FDCPA and in a 2014 study, the CFPB determined that more than 43 million Americans have outstanding medical debt reported on their credit reports. Since the 2014 study, the CFPB has been closely monitoring the healthcare industry, the policies and practices of healthcare providers, and the practices used by debt collectors when attempting to collect medical debt. Although health care providers are considered “creditors” and not “collectors,” courts have found that creditors can be held vicariously liable for violations of the FDCPA by agents. collection acting on their behalf.

Therefore, health care providers may be subject to significant financial penalties imposed by the CFPB for violations of the FDCPA. Additionally, the CFPB works with the U.S. Department of Health and Human Services (HHS) and other agencies to ensure that patients are not forced to pay bills that exceed what is actually due. Thus, it is essential for health care providers to not only understand the obligations imposed by the FDCPA, but also to understand how the FDCPA interacts with other health laws and regulations.

For example, in January 2022, Congress passed the No Surprises Act (NSA), which protects participants, beneficiaries, and enrollees of group health plans and individual health insurance coverage from “surprise medical bills.” which are typically generated when an individual with health insurance receives care from a hospital, doctor or other out-of-network provider that they did not choose. The NSA partially prohibits separate out-of-network cost-sharing, including coinsurance or out-of-network co-pays, for all emergency services and some non-emergency services. It also prohibits separate out-of-network charges by providers who work at an in-network facility for additional care, such as radiology or anesthesiology. This includes eliminating “balance billing” which occurs when the out-of-network provider or facility charges consumers the difference between the charges billed and the amount paid by the consumer’s healthcare plan. Instead, healthcare providers must ensure that patient cost sharing, such as coinsurance or a deductible, is not higher than if the service were provided by an in-network provider and those costs must be considered in any in-network and out-of-network franchise. -maximum pocket.

The NSA also established rules highlighting the need for providers to establish an independent dispute resolution process to determine out-of-network payment amounts between providers or facilities and health plans; submit good faith estimates of medical items or services; establish a patient-provider dispute resolution process for uninsured persons; and to provide a means of appealing certain Medicare decisions.

The CFPB issued a 2022 bulletin reminding debt collectors that attempting to collect a debt from a charge that exceeds the amount authorized by the NSA could violate the FDCPA. FDCPA Enforcement Rule F prohibits the use of “any false, misleading, or misleading representation or means in connection with the collection of any debt”, including, for example, any misrepresentation of “the nature, amount or legal status of any debt.” The FDCPA and Regulation F also prohibit the use of “unfair or unreasonable means to collect or attempt to collect any debt,” including, for example, the “collection of any amount (including including interest, fees, charges or expenses incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or authorized by law.”

A debt collector would be violating the FDCPA if he represented that a consumer owed charges in excess of the amount allowed by the NSA for a debt resulting from out-of-network charges for emergency services. In such a situation, the health care provider who generated a bill that violates the NSA could also be held liable for the actions of debt collectors acting on the health care provider’s behalf.

This is important because the CFPB has the power to initiate administrative enforcement proceedings or civil actions after finding violations during regular reviews of debt collectors, targeted reviews (which typically involve a single entity with a volume significant number of consumer complaints or a specific concern that has come to the CFPB’s attention) or horizontal reviews (which involve the review of multiple entities). The CFPB may obtain “any appropriate legal or equitable relief for violations of the Federal Consumer Finances Act”, including, but not limited to:

  • Termination or reformation of contracts
  • Refund of money or return of real estate
  • Restitution
  • Restitution or compensation for unjust enrichment
  • Payment of damages or other pecuniary relief
  • Public notification regarding the breach
  • Limitations on the activities or duties of the person against whom the action is brought
  • Monetary civil penalties (which can go either to the victims or to financial education).

These penalties may also apply to healthcare providers, if they are found vicariously liable for the actions of debt collectors. The CFPB may also take the initiative to notify other government agencies, such as HHS and the Centers for Medicare & Medicaid Services (CMS), that certain health care providers have attempted to collect debts, which violates the NSA. Healthcare providers can also be named in consumer lawsuits for violations of the FDCPA. Consumers have one year from the date the violation occurred to sue debt collectors for violations of the FDCPA in any appropriate U.S. district court or other court of competent jurisdiction. A debt collector found guilty of violating the FDCPA may be liable for:

  • Any actual damage suffered as a result of this failure
  • Punitive damages awarded by the court in an individual action, up to $1,000
  • In a class action, up to $1,000 for each named plaintiff and compensation to be apportioned among all class members in the amount of up to $500,000 or 1% of the debt collector’s net worth, depending the lower amount.
  • Reasonable attorneys’ fees and costs in such action.

The CFPB also enforces the Fair Credit Reporting Act (FCRA), which prohibits providing inaccurate information to any consumer reporting agency after receiving a notice from a consumer that the information is inaccurate. Collection agents can also violate the FCRA if they report that a consumer owes a debt from a charge that exceeds the amount allowed by the NSA. FCRA violations can subject a debt collector to statutory damages of $100 to $1,000 per violation. Again, if health care providers generate bills that violate the NSA and send those bills to collection agents, the health care providers may also be held vicariously liable for FCRA violations or the CFPB could alert other federal agencies to the health care provider’s NSA violation.

Ultimately, attempting to collect medical debts that exceed the amounts allowed by the NSA could expose a debt collector and providers to enforcement action for violations of the FDCPA. Likewise, debt collectors and vendors could be violating the FCRA and Regulation V for reporting that a consumer owes a medical debt in excess of the NSA. Healthcare providers should ensure they comply with the NSA and are aware of the practices employed by debt collectors retained on their behalf.

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