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Collection Actions: 9.4.2.2 UDAP Challenges to Discriminatory or Unreasonable Health Care Pricing

UDAP actions have been brought to challenge hospital discriminatory pricing practices when hospitals charge uninsured patients several times the amounts paid by private insurers, Medicaid, or Medicare for the same procedures.573 Several cases have met with some success,574 including settlements of class actions.575 On the other hand, many courts have found discriminatory pricing not actionable under UDAP statutes,

Collection Actions: 9.4.2.3 UDAP Claims for “Double Dipping”

UDAP statutes might be used to challenge the practices of hospitals that sell their debts to debt buyers after those hospitals have received some sort of payment, reimbursement, or “credit” for such debt. The debt buyer then seeks payment for the full face amount of the debt.

Collection Actions: 9.4.2.4 Other UDAP Claims Related to Medical Debt

Some UDAP statutes provide that a violation of a federal or another state law is a per se UDAP violation.592 UDAP actions have been brought against health care providers that violate statutory or regulatory prohibitions against the balance billing593 of patients who are covered by Medicare, Medicaid, workers compensation, or private insurance.594 However, state UDAP actions against insurers over balance billing may be preempted by ERISA.

Collection Actions: 9.4.3.1 Generally

This section provides a state-by-state summary of statutes and regulations protecting consumers with medical debt, including state financial assistance laws, state credit and collection laws, and state balance billing laws. These medical debtor protection laws may limit what hospitals can charge uninsured and underinsured patients who are low- or moderate-income and require hospitals to establish charity care policies. Some state laws include debt collection protections and limits on interest.

Collection Actions: 9.4.3.2 Arizona

An Arizona statute protects consumers who are members of “health care services organizations” or health maintenance organizations (HMOs) from some instances of balance billing.620 Consumers have a private right of action to appeal certain balance billing decisions in arbitration.621

Collection Actions: 9.4.3.3 Arkansas

Arkansas has a two-year statute of limitations for medical debt collection actions, which may increase to five years depending on the passage of federal medical debt legislation.622 The limitations period begins to run from the date the services were performed or provided, or from the date of the most recent partial payment for the services, whichever is later.623

Collection Actions: 9.4.3.4 California

A California statute, which was amended and strengthened in 2021,624 prohibits discriminatory pricing for patients whose income is under 400% of the federal poverty level (“financially qualified patients”) and who are either uninsured or have “high medical costs.”625 “High medical costs” include those of patients whose annual out-of-pocket costs at a particular hospital exceed 10% of the patient’s family income.626 Hospitals cannot charge financial

Collection Actions: 9.4.3.5 Colorado

In 2023, Colorado enacted a law that prohibits the credit reporting of medical debt, or the consideration of medical debt in a consumer’s credit score. Debt collectors may not misrepresent that a medical debt will be included on a credit report.651

Collection Actions: 9.4.3.6 Connecticut

Effective October 1, 2022, Connecticut hospitals—and entities owned by or affiliated with hospitals—may not report health care debt to a credit agency for one year after the patient receives their first bill, initiate an action to foreclose a lien on a patient’s primary residence, or seek a court order for an execution to collect or garnish a patient’s wages.680 Patients also must be provided notice of facility fees charged by the health care provider.681

Collection Actions: 9.4.3.7 Delaware

Delaware passed a medical debt consumer protection law in 2023 that applies to large health care providers as well as debt collectors. Among other provisions, the law prohibits large health care providers and debt collectors from charging interest to patients; requires payment plans for medical debts over $500, which are to be capped at 5% of the patient’s gross income; and includes a complete ban on civil arrest warrants, wage garnishments, and home foreclosures by large health care providers or debt collectors.693

Collection Actions: 9.4.3.8 Florida

Florida provides that each licensed facility must provide information to prospective patients about the facility’s financial assistance policy, including the application process, payment plans, and discounts, as well as the facility’s charity care policy and collection procedures.695

Florida law limits medical fees that can be charged to a patient whose medical care has been covered by personal injury protection insurance.696

Collection Actions: 9.4.3.9 Georgia

In 2020, Georgia enacted the Surprise Billing Consumer Protection Act,697 which is intended to protect patients from billing disputes between insurers and out-of-network providers.

Collection Actions: 9.4.3.11 Indiana

Indiana law directs nonprofit hospitals to offer a charity care program, but the financial guidelines are not set forth in state law. Charity care applies to certain types of treatment referred to as “subsidized health services.”733

Collection Actions: 9.4.3.12 Kansas

Kansas forbids wage garnishments for two months after a debtor’s return to employment following an illness of the debtor or a family member that has kept the debtor out of work for two or more weeks.734

Collection Actions: 9.4.3.13 Louisiana

Louisiana provides a homestead exemption for the full value of the home for debts arising from catastrophic or terminal illness or injury.735 For surprise billing disputes, a private right of action may be available under Louisiana’s Health Care and Consumer Billing and Disclosure Protection Act.736

Collection Actions: 9.4.3.14 Maine

Maine prohibits debt collectors from reporting an individual’s obligation to pay medical debt to consumer reporting agencies if the debt collector has been notified that there is a court or administrative order requiring another party (other than the individual, such as a divorced spouse) to pay the medical debt relating to the individual’s child.737

Collection Actions: 9.4.3.15 Maryland

Maryland made significant changes to its medical debtor protection laws in 2021 and 2022. Hospital financial assistance policies must now provide free care for patients with an income at or below 200% of the federal poverty level.

Collection Actions: 9.4.3.16 Massachusetts

The Massachusetts Executive Office of Health and Human Services has issued a set of regulations governing the debt collection practices of hospitals and community health centers participating in the Health Safety Net program, which serves financially burdened patients.754 The Health Safety Net regulations prohibit participating hospitals from billing certain patients—including patients enrolled in MassHealth, patients receiving governmental benefits under the Emergency Aid to the Elderly, Disabled and Children program,

Collection Actions: 9.4.3.17 Minnesota

Minnesota law provides that a patient may bring an action to enjoin “extraordinary collection actions” taken by a nonprofit hospital if the hospital has failed to provide a plain language summary of its financial assistance policy.770 A prevailing patient is entitled to reasonable attorney fees and costs.771 The Minnesota Attorney General has also reached a settlement with Minnesota hospitals, requiring those hospitals to provide financial assistance to low-income patients.

Collection Actions: 9.4.3.19 Montana

Montana law requires most hospitals and specialty hospitals to offer charity care.776 Nonprofit hospitals must have policies consistent with federal law, and standards established by the Department of Public Health and Human Services (DPHHS). These policies must be made available to the public. The Department must adopt rules by July 1, 2024.

Collection Actions: 9.4.3.20 Nevada

Nevada’s definition of “medical debt” includes debts owed for services and goods provided by a medical facility, as well as “the financing or an extension of credit by a third party for the sole purpose of purchasing goods or services provided by a medical facility, a provider of health care or a provider of emergency medical services.”777

Collection Actions: 9.4.3.21 New Hampshire

New Hampshire requires hospitals and some other health care providers to adopt charity care plans for uninsured and underinsured patients, but the state law does not provide guidelines for the assistance.797

Collection Actions: 9.4.3.22 New Jersey

New Jersey requires hospitals to notify patients about charity care and sets up a mandatory screening process798 for charity care eligibility.799 If a patient qualifies for charity care and family income is below 200% of the federal poverty level, the patient is eligible for medically necessary services without cost.800 Charity care patients with incomes between 200 to 300% of the federal poverty level are billed according to a sliding scale.