New report examines medical debt complaints to CFPB

The report from consumer advocacy group and industry watchdog U.S. PIRG Education Fund finds that medical debt is a large and increasing source of difficulty for consumers.

U.S. PIRG Education Fund, a consumer group and industry watchdog, has issued a new report examining medical debt complaints filed with the Consumer Financial Protection Bureau through its online complaint portal. The report finds that medical debt is a large and increasing source of difficulty for consumers.

Many consumers face medical debt. However, medical billing is extraordinarily complex, increasing the chances of consumers having to deal with complications. The report claims that in many cases, consumers may be pursued for debts they do not owe, simply because a payment was incorrectly entered into a billing system, an insurance company glitch delayed payment to the provider, or a name was misspelled when debt was sold to a debt buyer.

“Understanding the frequency and severity of damaging medical debt collection practices is essential if public officials are to take the actions necessary to protect the public,” stated the report.

According to the report, 40 million Americans, nearly one in eight, are contacted about debt related to medical expenses each year. However, medical debt collectors often contact the wrong individuals seeking payment. Nearly two-thirds of 17,701 complaints about medical debt collection reviewed in the report assert that the debt was never owed in the first place, it was already paid or discharged in bankruptcy, or it was not verified as the consumer’s debt.

Although impacts on credit reports are not categorized by the CFPB, they appear to be a significant source of complaints: 1,810 complaint narratives, or 35 percent of all medical complaint narratives submitted, contain the text “credit report,” according to the document.

In addition, the report notes that medical debt collectors often employ aggressive, or even illegal, tactics. The report cites examples of medical debt collectors posing as police or attorneys, threatening arrest or even bodily harm, and filing frivolous, unsubstantiated lawsuits. By far the most common complaint the report found in the CFPB database was incessant calling. According to the data, more than a third of consumers contacted about a debt in collection said they were contacted at least four times per week, and only one in four consumers who asked the collector to stop calling reported that the calls actually stopped.

Medical debt accounts for more than half of all collection items that appear on consumer credit reports, the report claims. Many players in the financial industry, it stated, are recognizing medical debt is both often mistaken and not a good indicator of future creditworthiness, noting that many leading credit score companies have begun to remove medical debt from credit scores.

Fredrikson & Byron Law