Let’s say I hire you to paint my house. I give you my address, tell you what color and finish of paint I want, and I tell you that you will get paid when the job is done. You follow my instructions to the letter. You go to the address I give you and you paint the house just as I want it. It’s only after you finish that I realize I gave you the wrong address of my house. Who’s fault is it that the wrong house got painted? Yours, because you should have known that wasn’t my house? Or mine, because I gave you the wrong information?
I use this analogy to introduce you to an annual report that was issued yesterday by the Consumer Financial Protection Bureau on its regulation of the Fair Debt Collection Practices Act. The report included a section dealing with the issues it has with medical debt collection. The CFPB, using anecdotal information from consumers who file complaints with the Bureau, wants to blame collectors for collecting on debts that may have already been paid or where the information about the debt is not entirely accurate or understandable by the average person. The report notes that provider may “sometimes improperly inflate” medical bills by adding charges for services the patient never received. If true, it might be accurate to say that the collector could be violating the FDCPA by attempting to collect an amount that isn’t actually owed, but how is the collector supposed to know that the bill was inflated? Were they in the exam room? Did they code the procedures? Why are you holding the painter accountable for being given the wrong address?
Medical debt is the overwhelmingly most common debt on consumers’ credit reports, according to the CFPB’s analysis. That is going to put a spotlight on that type of debt. And rightfully so. Anyone who has been to a doctor or a hospital knows just how confusing it is. I’ve heard countless stories from people who work at agencies that specialize in collecting medical debts and are unable to make heads or tails of the statements and bills they receive. And they do this for a living.
There are plenty of heartbreaking stories of how medical debts have impacted consumers. But to blame the collection industry — because it’s the only part of the chain that you regulate — isn’t going to fix the problem. It’s not going to stop medical debts from happening. And if those debts aren’t collected, what impact will it have on doctors’ offices and hospitals?
The CFPB’s report lists a number of recent enforcement actions taken against debt collection operations. Those collection operations are accused of making false threats, coercion, and harassing individuals to make payments on debts. That is the kind of behavior that needs to be rooted out.
