The Consumer Financial Protection Bureau announced in a court filing on Friday that it plans to revoke guidance it issued last year over how medical debts are collected, likely bringing an end to two lawsuits that were filed by the industry against the regulator. This guidance, originally issued last October, is separate from the CFPB’s rule on medical debt credit reporting, which is still being challenged in the courts.
The background: In the guidance, the CFPB announced that debt collectors who collect on medical debts violate federal law when collecting on inaccurate or legally invalid debts. How collectors were supposed to know this was one of the challenges being made by the industry in their lawsuits against the Bureau. The plaintiffs also accused the CFPB of bypassing the requirements of the Administrative Procedures Act by essentially issuing rules without public notice or providing an opportunity for comment.
What happened: In the filing, which was in the form of a motion for a joint stay, the Bureau announced it “is planning to revoke the Advisory Opinion.” The stay gives the Bureau time to do just that. The CFPB must provide an update to the court by mid-July and every 30 days thereafter regarding its process to revoke the guidance.
“Here, the Bureau’s revocation of the Advisory Opinion will moot the issues raised by Plaintiffs in their respective cases,” wrote the attorneys representing ACA International and a pair of collection operations, which sued the Bureau in two separate lawsuits. “Staying this matter to allow the Bureau time to revoke the Advisory Opinion is appropriate to preserve the Court’s and the parties’ time.”
What it was after: The CFPB outlined several illegal practices, including:
- Misrepresenting consumers’ rights to contest bills
- Double billing
- Exceeding legal limits
- Falsified or fake charges
- Collecting unsubstantiated medical bills
More background: The judge had originally denied motions filed by the plaintiffs seeking a preliminary injunction and a temporary restraining order. The guidance was set to go into effect in early December. The CFPB then delayed the enactment of the guidance until early January.
