A bill has been introduced in the Colorado legislature that would make it an unfair or deceptive trade practice for a debt collector or collection agency to take any legal action on a debt unless it has purchased complete ownership or the debt.
The bill is an attempt to reform the hospital and healthcare industry in Colorado by making providers use their own names when collection lawsuits are filed against consumers for unpaid medical debts. The state’s largest healthcare provider, UCHealth, has filed 15,000 collection lawsuits in the past four years, and the collectors working on behalf of UCHealth have been the plaintiffs in those lawsuits, according to a published report.
The industry is seeking to stop the bill from becoming law, arguing that naming the hospital as the plaintiff could violating privacy laws. If a cancer patient is sued by a cancer treatment center, for example, the patient’s privacy may be violated because people would be able to determine that the patient has cancer.
HB 1380 was introduced last month by Rep. Javier Mabrey.
Debt collectors would be engaging in unfair practices if they take any legal action on a debt against a consumer if they collector or collection agency is a named plaintiff unless the collector or collection agency has purchased complete ownership of the debt, without any ownership retained by the seller, original creditor, or other third party, according to the bill.
The bill also seeks to require credit services organizations to file notification with and pay a fee to the administrator of the state’s uniform consumer credit code every year, clarifies that debt management services providers can make regular payments but must meet the definition of a “plan” in the state’s debt management act, and repeals provisions outlining the fees that a debt management services provider may charge.
