A District Court judge has denied motions from ACA International for a preliminary injunction and a temporary restraining order seeking to block the enactment of guidance issued by the Consumer Financial Protection Bureau related to how medical debts are collected.
ACA and one of its members filed the lawsuit against the CFPB last month in the District Court for the District of Columbia. The suit was in response to guidance released in October by the CFPB that issued a number of warnings, including one that indicated collectors must only collect on medical debts that have been substantiated to be legitimate, such as through documents detailing payments or financial assistance eligibility. Collectors must also not misrepresent the status or amount of the debt, even when insurance may still be applied to the balance.
The plaintiffs in this suit argue that these changes are not only legally unfounded but also present significant operational burdens for medical debt collectors.
Judge Dabney L. Friedrich held a hearing earlier this week on the motion from the plaintiffs, which sought to prevent the guidance from going into effect December 3. The judge denied the motions during the hearing and has not yet issued a written ruling detailing his reasons for his decision.
The plaintiffs argue that the CFPB’s actions are politically motivated and were timed to influence the November presidential 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.
