The Maryland Office of Financial Regulation (OFR) has issued formal guidance outlining three major laws that significantly change how medical debts may be collected, reported, and enforced in the state. The laws — HB 428, HB 1020, and HB 268 — took effect on October 1.
The background: The new laws are designed to address concerns about aggressive medical debt collection practices and the long-term credit impact of medical bills. Regulators are urging collection agencies, consumer reporting agencies, and healthcare providers to review their procedures immediately to ensure full compliance.
The details:
- HB 428 adds new procedural requirements for debt collectors seeking a money judgment on medical debt. Collectors must specify in their complaint that the debt is medical and include the debtor’s primary residence address. Importantly, collectors are barred from using a money judgment to place a lien on a debtor’s primary residence. The bill also clarifies that debts on general-purpose credit cards are excluded, but debts on medical-only credit cards qualify as “medical debt”.
- HB 1020 changes how medical debt can appear on consumer credit reports. It prohibits healthcare providers and collectors from disclosing medical debt to consumer reporting agencies, and bans those agencies from maintaining or sharing adverse information related to medical debt. The law also forbids lenders from using medical debt information to determine creditworthiness. Every agreement between a provider and collector must now include a clause barring disclosure of medical debt information.
- HB 268 focuses on hospitals and collection timing. It maintains a three-year statute of limitations for hospital debt, regardless of whether the contract is “under seal,” and requires hospitals to give consumers 240 days to apply for financial assistance before initiating any collection activity. Hospitals are prohibited from filing suits for debts under $500, from reporting medical debts to credit bureaus, and from charging interest when a patient qualifies for free or reduced-cost care.
