For the second time in less than a month, ACA International has filed a lawsuit, this time accusing the Consumer Financial Protection Bureau of an “overtly political act” and overstepping its authority by issuing a rule couched in its October 1 Advisory Opinion related to the collection of medical debt.
The complaint, filed in the District Court for the District of Columbia, takes aim at new requirements introduced by the CFPB that ACA International claims fundamentally change how medical debt is collected. These requirements, introduced without the standard notice-and-comment period, impose new rules on debt collectors, including reviewing account-level documentation before collection, determining the reasonableness of charges, redefining default, and performing audits to confirm the accuracy of medical procedures billed. The plaintiffs, ACA International and Collection Bureau Services, Inc., argue that these changes are not only legally unfounded but also present significant operational burdens for medical debt collectors.
The background: The case centers on the CFPB’s October 1 Advisory Opinion, which plaintiffs argue bypassed established administrative procedures and introduced burdensome rules for medical debt collection. According to ACA International, the Advisory Opinion imposed four significant changes:
- Validation Requirement: Debt collectors must review account-level documents to confirm the debt’s validity before initiating collection efforts, rather than relying on information provided by healthcare providers.
- Reasonableness Standard: Debt collectors must independently assess the reasonableness of medical charges, rather than accepting healthcare providers’ pricing at face value.
- New Definition of Default: Medical debts are considered in default if unpaid at a given time, regardless of whether the creditor has deemed the debt to be in default.
- Medical Procedure Audits: Debt collectors must ensure that all medical procedures billed were actually performed, requiring them to audit healthcare providers’ documentation.
ACA International alleges that the CFPB’s Advisory Opinion essentially bypassed the requirements of the Administrative Procedure Act by issuing rules without public notice or the opportunity for industry comment. The lawsuit also emphasizes that the CFPB does not have the authority to regulate the medical billing industry, a domain historically overseen by other agencies such as the Department of Health and Human Services.
The claims: The plaintiffs are seeking both declaratory and injunctive relief. Specifically, they want the court to declare the Advisory Opinion invalid, arguing that it represents an overreach of the CFPB’s authority and violates the APA. ACA International is also asking the court to enjoin the implementation of the new rules, which are scheduled to take effect on December 3, citing the lack of transparency and the burden these new requirements place on debt collectors.
According to the complaint, the plaintiffs argue that the CFPB’s actions are politically motivated and timed to influence upcoming elections, pointing out the high-profile White House event that coincided with the issuance of the Advisory Opinion. ACA claims that the changes introduced would force debt collectors to assume regulatory responsibilities beyond their expertise and significantly increase the cost of compliance, ultimately harming both debt collectors and consumers.
